Peter Field, Les Binet, Mark Ritson, Utpal Dholakia… In times of recession let’s turn to the very best when it comes to branding. Because luckily there is a well proven playbook for how brands should act in a recession. In short, it’s about building strength during a hard time, so you can boost your growth and outperform your competitors when the economic recovery comes. Ready to future proof your brand?
1. Maintain or increase your brand building investments
During tough times brand building activities are often cut and what’s left of a reduced marketing budget is shoved into sales activation. This might seem rational, but it’s the wrong move.
Plenty of case studies[1] show that brands that keep or increase their brand building investments through recessions become growth winners as soon as the recession ends.
You build the salience and preference that make customers more likely to choose you. This impact is accumulated and will kick in and drive growth as soon as the economic sentiment shifts.
2. Defend your share of voice
In a recession, you tend to cut the marketing budget and media spending. Well, that goes for your competitors too, which presents an opportunity. With your competitors claiming a lower share of voice (SOV), it is easier to defend your own place out there or even go for an extra share of voice (ESOV), by spending a little bit more and being a little bit smarter. Share of voice not only increases brand awareness but also tends to correlate with higher future market share and revenue[2], which will give you a competitive edge after the recession.
3. Communicate with an emotional touch
It’s not rocket science; when times are tough, we all tend to keep a tighter grip on our wallets, as well as become more risk averse. Under these circumstances, emotional communication rather than rational will do the trick. Research[3] shows that customers appreciate trustable brands that offer solidarity in their communication, with a more significant weight on the emotional aspects and benefits of their brand.
4. Increase price to remain profitable – like a pro
The inflation situation is putting pressure on prices and for your brand to remain sufficiently profitable you will probably need to increase your prices. Well, that’s ok – if you do it like a pro and follow the cheat sheet of Utpal Dholakia[4]:
- Be open and clear about exactly how much and when the increase will occur. Communicate well ahead of time.
- Don’t try to sneak it in through product size or content reduction. Customers are not stupid.
- Be clear on terminology. It’s a “price increase”, not an “adjustment” or a “change”.
- Present a clear and specific explanation for your price increase.
- If possible and legitimate (and only if), link the price increase to customer value when you make the explanation.
5. How to handle your R&D and launches
Even in a positive economy product development and launches are associated with risk. So slashing product development and planned product launches should be the logical thing to do, right? Not necessarily. Research shows that products launched during a recession have higher long-term survival chances and higher sales revenues[5]. Companies that maintain their product development are often forced to focus their investment and effort on their absolute best prospects and tend to launch products of higher quality. Add that in a recession there are fewer new products to compete with, which relatively increases your chances of success*. Don’t forget the timing. When launching a new product, the best period is just after a recession’s midpoint*, when customers can sense that the tide is shifting.
6. To succeed you must have your brand strategy in order
As shown, a recession is not the worst time to build and strengthen your brand. Quite the opposite it can be the perfect backdrop. To be able to leverage you need to have your brand strategy in order. We’ll be happy to help you update your brand, clarifying which customer drivers you are targeting, how you deliver on these and what makes you better or different relative to your competition. When you have that down you are all set to go.
Rune Korstadhagen
Director brand strategy
rune.korstadhagen@grow.eu
[1] Peter Field, January 2, 2021 ”Advertising in Recession – Long, Short or Dark”
[2] Peter Field, 2020 ”Advertising in a Downturn Revisited”
[3] Peter Field, January 2, 2021 ”Advertising in Recession – Long, Short or Dark” & IPA cases 2008 recession.
[4] Mark Ritson, 17 Feb 2022 “An ethnography of pricing: How and why marketers should put up prices”
[5] Harvard Business Review August 14, 2020 “Don’t Cut Your Marketing Budget in a Recession”
