What goes down must come up (sic)

By Nigel Smith, Group CEO

Why staying true to your brand is the key to unlocking the recession.

It’s a simple fact that for every action there is an equal and opposite reaction, so states the law of physics. Similarly, for those who remember the mid 70’s, the early 90’s, the Asian economic crisis in ’98, the ‘dot com’ crash, the downturn of 2001 and now the Global Financial Crisis, closely followed by Brexit the economic cycle of boom and bust is an all too familiar story.


What we know is that for every downturn there’s an upturn and the bad news won’t last forever. It’s also a simple truth that, for those who are prepared to see the downturn as an opportunity not a threat there’s a chance to emerge stronger when the markets pick up, if they get their strategy right and spot the gaps that are sure to appear.


There are many issues confronting companies in the current situation. From cross border trade to gearing, liquidity, cash flow, inventories, staff and many other factors that have a pressing urgency for most managers, mean a daily battle to sustain short-term performance and to balance the business. Unfortunately for a lot of companies the first port of call in cutting costs to achieve short-term savings is the marketing budget and this could be a mistake that will damage the long-term viability of the business.


Attack is the best form of defense

Effective branding is one of the most powerful weapons a company has to ensure survival and ultimately enhanced performance emerging from a recession. At its core branding is a process that has a positive influence on every aspect of a business. A company that has got its brand right knows its customers intimately, has products and services that meet their needs, a loyal and motivated staff and a differentiated proposition that is difficult for its competitors to match.


Ensuring that these elements are all in place is not a costly exercise. It just takes focus and dedication to delivering a single minded strategy, plus the ability to ensure that everyone who is part of the brand knows what it stands for and why it’s important to the customer. Great brands know what they stand for and that staying true to their brand promise should not be compromised under any circumstances.


Over 50% of the world’s top 50 brands have been in the market for more than 50 years They have all been through the cycle of boom and bust many times, but for brands like Coke and Pepsi, GE and IBM, staying true to their strategy has meant they have emerged stronger every time.

Over 50% of the world’s top 50 brands have been in the market for more than 50 years They have all been through the cycle of boom and bust many times.

At the same time, if you know you have your strategy right and you have a proposition that appeals to your customers, it’s not difficult to have the confidence to invest in supporting your brand through marketing when others are cutting back to save costs. During the mid 70s downturn American Express launched the ‘Don’t leave home without it’ campaign and BMW branded itself as ‘The Ultimate Driving Machine’. Both went on to achieve category leadership in the upturn. In the early 90s when others were cutting back Nike tripled its marketing spend, overtaking its main competitor Reebok and as a result came out of the recession with profits nine times higher than going in. This time it looks like Nike’s new ‘Fly Knit’ technology is set to shake up the sports shoe market yet again and help maintain their strong position as we emerge from recession


Weapons of war

So what’s the secret of effective branding in a recession? The answer is that the fundamentals remain the same but the competitive advantage that good branding practice gives you will enable you to win out in a tough market. History shows us companies that support their brand in a recession are seven times more likely to emerge stronger and more profitable. So what does this mean? These are the fundamentals that all brand owners should be thinking about:


More than ever make sure you understand your customers and how their behaviour has changed. Be sensitive to their needs and ensure you are in the right place to meet their needs. Not all customers turn off spending in a downturn, so make sure you know what segments will generate revenue and focus on them.


Stick to your vision for the brand, what it stands for, it’s positioning and what it means to the customer. Brands have emotional contracts with customers that are built up over a long time and the trust that consumers have invested in your brand can be easily undermined by short-term tactical measures. It can take years to re-build your brand equity when the upturn arrives.


Continue to offer value so your brand is the best choice in the mind of the customer, no matter the price. Customers are more aware of spending their hard earned money, so their expectations are higher, but beware of discounting as this will ‘commoditise’ your offer and undermine perceived value. Any brand can copy a price reduction but it’s hard to match a brand that is unique. So look for ways to add value without reducing your core price.


Look for new customers that may be trading down or migrating from brands that have exited the market. This can also mean positioning up to meet the needs of those who still have spending power. As the recession bites the market changes and there will be opportunities that weren’t there before, such as new territories and easier entry to wider distribution.


If you have to cut back make sure you cut out the dead wood and don’t prune the new growth that will flourish when the downturn is over. Keep investing in new product development. This is relatively low cost and will give you the competitive edge you need in future. Invest in your good people and recognise that your brand is the glue that will keep your team together through tough times. Re-focus on brand messaging and invest in building your brand culture to ensure you come through stronger.


Remember that a recession weeds out the weak brands and helps make the strong brands stronger. Change is an opportunity for those that can adapt and take advantage of the new conditions in the market. The branding process is the key to helping companies manage change in tough times and adapt to what is happening in the market.


Branding isn’t about advertising dollars. It’s a business process that will make sure your company is aligned to deliver on changing customer needs. It’s about getting all the big things and small things right. That doesn’t cost big money or even much more money it just requires the right approach. Investing to ensure your brand is fit for the upturn may be the best decision you can make.