What makes for strong brands during times of crisis?
As inflation continues to rise worldwide, Patrick Kampff, strategy director at Siegel+Gale, questions how brands can get prepared, and suggests some effective practices to employ for weathering tough times ahead.
Siegel+Gale provides some advice for marketers looking to prepare for the increasing cost of living / Regularguy via Unsplash
To say that the UK economy is undergoing tough times lately is an understatement. Reasons aside, it’s well understood that inflation is here to stay – at least in the short term. While this phenomenon is commonplace in other parts of the world, our generation is experiencing it for the first time since the 80s; we don’t necessarily know how to cope with it as consumers.
The price of everything is becoming more expensive by the minute, and people are now more conscious of their diminishing purchasing power. And while we marketers have all the reasons to panic, this is still an exciting moment for brands.
First, let’s go back to the basics. You must remember why a brand is a brand in the first place. While the benefits of being a brand are many, I can think of three that are important for moments like this:
Brands assign attributes: Be it quality, safety, reliability – you name it. Successful brands can attach labels that describe what they’re about, and that becomes etched on consumers’ minds
Brands simplify decision-making: After a brand has secured a position of what they are about and how they are different, it’s easier to drive preference when consumers compare other products on the shelf. Brands simplify this process by providing a shortcut to decision-making
Brands provide emotional rewards: As eight out of 10 purchases at the supermarket are non-planned, strong brands trigger consumers’ emotions to bypass the rational decision-making process when selecting what to buy
All in all, marketers need to remember there are a plethora of benefits to being a brand. And the point is, if you’re not a brand, you’re a commodity – meaning the product with the cheapest price wins. We’ll talk about this in a minute.
But before taking any desperate measures, brand managers need to grasp the emotional state of consumers during these times. It’s a scary moment indeed – people are dealing with uncertainty and, to some extent, fear. Will I need to cut back on spending? Will I make it through this month? Will I lose my job? As people are navigating times of increased volatility, strong brands provide reassurance to consumers. Through the benefits they provide, strong brands minimize risks in a moment when consumers are making harder choices and prioritizing where to invest their weakening pounds. There’s much more planning involved, so the value of certainty that brands can provide is amplified.
Price is what you pay; value is what you get
Say what you will, but strong brands provide security – and that’s worth their price premium – so consumers are less willing to trade down. It’s in moments like this that we test the real power of brands – or sometimes we find out they’ve been substituted by a cheaper alternative (read private labels). As a brand manager, you can’t know that until your consumers are pushed against a wall. Exciting, huh? But if the latter is true, it can also be terrifying. Whatever the situation, remember the three As to help your brand weather the inflation storm:
It’s tempting to lower prices in hopes of stimulating consumer spending and keeping your sales volumes stable. This is a major no-no. Avoid the price war at all costs. Lowering your price and engaging in a price war is often a zero-sum game that the one with the lower cost or higher economies of scale wins. That’s hardly a strong brand. Price wars are a race to the bottom that erodes equity, and all brand-building efforts go down the drain.
Quite the opposite, strong brands are not afraid of raising prices during crises to protect the quality of their products. If your category demands a price increase, be transparent with consumers on why you’re doing it so you don’t betray their trust.
When brand managers panic, one of the first reactions is to cut marketing spend or disappear from consumers’ minds. After all, the situation is already bad for everyone, so why should they roll out that new campaign? Wrong. Strong brands don’t go dark; they take the opportunity to adjust the messaging to one that shows empathy and concern for the situation.
It’s also worth mentioning that during crises, the cost of media placement usually decreases, and consumers are more receptive to messages since they are trying to make sense of what’s happening. Remember their emotional state – consumers are looking for reassurance, so there’s a clear angle to provide a powerful emotional effect.
Crises also provide a chance to assess your product portfolio. Strong brands compete on value provided, not price, so this is the moment to reduce SKUs that are less profitable. Products with features that add more cost than value to consumers should be reduced or removed.
As a brand manager, revisit your usage and attitude findings and double down on products that get the job done for consumers. Focus is key.
After understanding which areas or product lines are winners from a consumer behavior standpoint, seize the opportunity to amplify them through meaningful innovation that delivers and captures value.
Like cutting marketing budget, brand managers are also tempted to cut R&D spending during tough times. However, strong brands know this is the perfect moment to go back to the drawing board more focused. Consumers expect leading brands to lead, so lean on your equity and be bold.
While economic forecasts say inflation will continue to be part of our lives, there’s no reason for despair. Consumers might have less willingness to spend money, yet strong brands have the capacity to provide emotional reward and reassurance to consumers on every spend they make. Don’t underestimate the power of that.
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Siegel+Gale is a global branding company headquartered in NYC. Our core expertise spans brand development, brand strategy, design, and customer experience.Find out more