Until mid-2000, everybody was a .300 hitter.
US corporate earnings grew at an annual rate exceeding 20%. Productivity
was at twice the level of previous years. Stock prices seemed to
shatter the Law of Gravity as the Dow and NASDAQ skyrocketed to
over 11,000 and 5,000 points, respectively. Then things began to
unravel, and there’s no need to chronicle again the declines
that followed. Let’s just say that the US economy has slipped
into recession 20 times since 1900 and you may have an opportunity
to live through #21 very soon, the efforts of the Fed notwithstanding.
Consequently, now would be a great time to assess the battle worthiness
of your brand(s).
One topic that rises rapidly to the top during such an assessment
is the concept of value. In our last US recession (July ’90
– March ’91), the term “value” was redefined
as something much more than a synonym for “cheap” as buyers
began to see value in higher-end, quality products and services.
Today, value can be found (at least in some customers’ minds)
in a $72,000 Lexus LS430 as easily as in a Target storewide sale.
In the tough times ahead, the surviving brands will define value
in perfect alignment with what their most loyal customers believe
is of most value to them.
Genuine value requires genuine quality, and quality is much more
leverageable in the form of superiority. In today’s economic
environment, marketers who settle for simple differentiation as
an ultimate brand goal are creating an opportunity for more aggressive
competitors. In an uncertain economy, some marketers believe that
consumers and B2B customers cannot afford to pay for a premium-priced
brand with a reputation for superiority. Just the opposite is true.
Buyers in such times often avoid wasting their money on products
or service solutions that may be “unique” but fail to
deliver superior performance. Genuine value – the kind that
buoys corporate vessels on rough seas – calls for quality at
a reasonable price, not lower pricing for parity performance.
Another axiom that often gets mislaid in stormy weather is the
fact that virtually every purchase decision is emotionally based
in some way. That emotion can be channeled into brand preference
if prospects see the brand as a trustmark they can count on when
they are financially challenged. Volkswagen bounced back from horrible
sales declines a few years ago by re-creating the kind of superior
brand persona that had made the brand a hit thirty years earlier.
Apple’s “Think Different” campaign was a persona-driven
customer retention invitation that laid the foundation for a successful
launch of the iMac and G4 offerings. Harley-Davidson, Sears, Nike,
MasterCard, and IBM have all employed emotion to strengthen their
market positions It’s a good bet that these strategies will
serve their brand masters well even when there is less disposable
income in the marketplace.
On a more tactical level, it is critical in wobbly economies that
marketers understand the difference between unproductive and productive
awareness (a skill never mastered by some of the late great dot-coms).
Productive awareness is focused on those markets and prospects that
have already shown an interest in purchasing your breed of brand.
These loyalists must then be given a new set of reasons to stay
tethered to the brand, and those reasons must be explicitly relevant
to the new economic times that are crashing in on us. Such persistently
astute brand marketers as Nike, IBM, and Southwest Airlines find
a way to deliver their messages in the most impact-efficient manner
possible in good times and not so good times.
Unfortunately, one slippery slope to avoid is viewed by some as
unavoidable, namely, relying on discounting and price promotions
that can permanently devalue a brand. While short-term distribution
or share battles may require some tactical trimming, discounting
can become a potent narcotic that ultimately increases the already
rising pressure on earnings. Consider how the McDonald’s brand
was hurt by playing the value meal game with the likes of Burger
King and Taco Bell in the early 1990s. Or more recently, note what
happened at Dial Corp. when the company overstuffed the channel
with discounted inventory that ultimately created havoc with corporate
earnings. Successful long-term brand builders do not dilute their
brand identity, even to prevent short-term share loss.
Paradoxically, the single most important move a brand marketer
can take when facing economic challenges may be within the company
itself, rather than out in the marketplace. In difficult financial
times, every single member of your brand team – and every single
co-worker in your company – must be rabidly obsessive about
defending and growing your brand. Now is the time to send your people
through comprehensive brand training workshops that help them understand
why brand building is business building. Now is the time to rally
the troops with rousing brand events. Now is the time to have the
CEO speak and act with passion about the sanctity of the brand and
the need to create a brand momentum that will protect the company
against the ravages of a recessionary economy. Strong brand-driven
companies such as Starbucks, Charles Schwab, Sun Microsystems, and
IKEA are better prepared to cope with difficult financial markets
because their people have a better grip on what their brands are,
and how they can best be deployed.
We have feasted off of the good times for the past decade and now
we must make do with rations of our own making during the winter
ahead. May the best-prepared brands prevail... and prevail they
will.
