Economic slowdown, recession, depression, call it what you will. A bad economy affects everyone. When times are tight, the bottom line is dictated by the sense of value consumers place in your brand, or more precisely, how much they are willing to pay for that value. Both the value perceived by consumers and actual shareholder value are strongly influenced by brand. Brand can drive growth in an up market or protect the company’s value in a down market. One of the most important, but often overlooked aspects of a recession is the insecurity consumers experience. As consumers feel the pinch, they begin to search for change. Companies need to focus on actions that take advantage of the opportunities that change brings. Branding in a recession is all about investing in consumer retention and attraction.
During a recession, most companies cut back in every area of the business and start slashing prices to accommodate the shifting demand curve. While this may help in the short term, this strategy can actually damage both the company and its brands. There are tremendous lessons to be learned from previous recessions. Not everyone automatically loses out in an adverse economy. Historically, companies who invested in their brands during hard economic times retained their core audience, attracted new consumers and emerged stronger in the end.
In a poor economic climate, companies must recognize that consumer retention and attraction is the name of the game. You must invest in brand-building to win market share, not just mindshare or margin. Those who fail to see their consumers as an appreciating asset may soon find their brands and business devalued or defunct.
During a bull economy, consumers have more disposable income, spend more freely and take bigger risks. However, a bear economy forces people to evaluate their purchasing decisions with a critical eye towards value. Consumers’ spending habits change dramatically—they take inventory of their costs and the related benefits. If the value is not readily apparent, they could move on to a “safer” option.
Recessions are brought on by many factors, but are fed by consumers’ economic fears. People spend less overall and become far more selective about where they spend the little money they have. This tends to expose and amplify brand weaknesses. As consumers are far less forgiving and far more price-conscious, they abandon brands that fail to provide clear, meaningful and relevant value.
Branding cannot be reserved as an exercise in times of growth. To be effective it requires constant maintenance, perhaps even more so in times of crisis. Take care of your brand and your brand will take care of you. Neglect it and you’ll immediately feel the ill effects.
Brands are built over decades and generations. Think long term—make your competition chase you.