Let’s be honest: 2022 is probably winning the crisis bingo, with the climate crisis, the ongoing COVID-19 pandemic, war in Ukraine, global supply chain disruptions and inflation all contributing to an increasingly volatile outlook. This leads business and brand owners into uncharted territory. How can they navigate these headwinds and bring their brand out successfully on the other side?
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It’s not only the pandemic that’s heavily affecting the purchasing behaviour of consumers. The current war in Ukraine, supply chain disruption and inflation have all contributed to the reduced purchasing power of private households and restricted private consumption. Customers are more hesitant with bigger purchases and much more conscious about their spending. Let’s face it, there have been better times for marketers.
Even though times are undeniably tough right now, there is also a silver lining for brand managers and owners. A strong and resilient brand with high brand equity experiences significantly more stability in challenging times.
In fact, Kantar’s Brand Z report shows that the value of the top 100 brands rose by 5.9% in 2020 despite the impact of the COVID-19 pandemic, an unparalleled crisis at the time. These 100 brands – including the likes of Amazon, Apple, Alibaba and Microsoft – also outperformed the market in those times, including the S&P 500 and MSCI World Index. In the face of constant uncertainty, these are the brands that still invested in long-term marketing and therefore managed to avoid the worst impact. It’s similar to today: the impact of the current situation has also affected every business regardless of size or location, but a sustained investment in marketing will help all types of companies navigate these turbulent waters.
Let’s get to the nitty-gritty: to provide some guidance in light of the current circumstances, here are five tips on how to secure and grow your brand even in the most challenging times:
1. Do not cut your marketing budget, but shift wisely
It might feel counterintuitive to sustain your investments and marketing budget when the future seems unpredictable but going dark during periods of uncertainty is a tactic that rarely works. Even if tough short-term budget cuts promise financial relief, the long-term effects are more severe. Cutting back on ad spends results not only in a loss of share of voice — which itself translates into a loss in market share — but also in decreased share of mind. It’s clear that longer off-air periods do not remain unnoticed by the public.
A good example showcasing this is McDonald’s in the US during the 1990/91 recession. McDonald’s decided to cut down on its advertising budget and reduce promotions, resulting in a sales decline of 28%. In the meantime, competitors Taco Bell and Pizza Hut took advantage of the void, with Taco Bell increasing their sales by 40% and Pizza Hut by a staggering 61%.
What seems to be a necessary survival tactic during a crisis can actually erode your brand’s health over time. After all, building up brand awareness and consideration is much more costly and time-consuming than maintaining a stable level.
What you should do instead is to invest in the future strategically. Shifting your budget wisely and including an agility buffer in your planning can be key to leveraging your potential. If running expensive media such as TV or DOOH is not an option, switch to more affordable channels like programmatic display or audio ads. This will remind customers of your brand and secure awareness levels. If you do not want to lose relevance, you must stay present in the active memory of your audience by being present in many different contextual situations.
Additionally, these periods can also be a chance to break through the clutter — when everyone goes silent it is your opportunity to be loud and take advantage. Advertisers can for instance benefit from cost per mille (CPM) drops on premium publishers’ inventory and buy ads via DSP, where prices have decreased by at least 5% since the crisis started earlier this year. This enables marketers to buy premium inventory at an affordable price range and access customers with the right message, being seen and maintaining or even increasing a brand’s share of voice.
2. Act upon your purpose & values
We all know actions speak louder than words. Turbulent times are a good opportunity to bring your brand identity to life for internal and external stakeholders through real and tangible behaviour.
Aligning your actions with your brand purpose and values has two powerful functions. Firstly, it keeps your strategic goals in sight and provides guidance for decision making on all levels. Meanwhile it also improves relationships with your customers and even employees.
Bringing meaningful benefits to people and actively developing social actions according to your brand’s values pays off in terms of value creation. People see the impact your brand has in their life, feeling both comforted and safe. This makes their emotional ties with the brand even stronger and increases loyalty. So, one of the main crisis management strategies for brands now is answering the question: how can you generate positive impact?
Looking back at the pandemic we see that strong brands chose to put their employees and customers above profits. Armani, Inditex, Dyson, LVMH and Seat among others converted their plants to produce masks or ventilators, and in some cases offered their logistic assets to help the government transport medical supplies when most needed. These are the types of actions that illustrate a brand using their brand purpose in an actionable way.
3. Provide safety and comfort when future is uncertain
Both marketers and consumers are feeling the strain right now, with feelings of anxiety, stress and pressure prevalent due to the crisis. Especially in these times a sense of certainty is more important than ever — and this is where consumer-facing brands have a chance to connect and build meaningful relationships. Alleviating the feelings of anxiety and pressure by well-defined services and brand experience measures is key for customers whose tolerance for stress and irritations, no matter how trivial, are reaching breaking point.
The diversity of measures can range from extended warranties like Porsche provided to its customers during COVID-19 to gift cards and vouchers without an expiration date as from the likes of Virgin Experiences and Tinggly. Another flagship example during the last lockdown comes from Burger King. The company provided two free kids meals a day to families in the US who were dependent on school lunches to feed their children and could not access them any more with schools closed.
Nevertheless, the biggest anxiety driver comes undoubtedly from omnipresent financial distress. This puts additional pressure on customers who need to manage their day-to-day cost of living and potentially face liquidity issues. For brands who truly care for their customers and communities the offer of agile payment solutions is a responsibility and a measure that will amplify trust. Telco, for example, did not cancel contracts or impose late-payment fees on its customers who were experiencing financial hardship during the pandemic.
Establishing emotional closeness via caring for your customers, while translating the values of your brand into real action, is key to building brand equity. When customers experience multiple times the inherent values that a brand stands for, psychological stability is established — something that provides a feeling of security and comfort and makes them more likely to continue choosing this brand.
4. Innovation and creativity are key drivers of growth
The ability to think out of the box supports your business throughout all your growth stages, but especially given the current circumstances striking a new path is more essential than ever.
Brands usually exist as a given choice set in consumer minds. This set remains more or less the same unless another brand is able to disrupt the thought processes with a substantial innovation or a memorable marketing campaign. This is the place where unconventional thinking comes into play.
By analysing and identifying arising needs in the given context, new products, services and means of communications can be developed that differentiate the brand in the long run — making a virtue from a necessity. But it’s not only creativity that matters here. What’s also important is the timing. Acting fast is crucial, as brands want to get ahead of the competition.
A good example of creativity and relatability is how Oatly’s creative department transformed into the Department of Distraction Services as an answer to the cabin fever, boredom and need for distraction many people faced during the COVID-19 lockdown. Oatly demonstrated that it cared about its customers by launching an omnichannel campaign involving a series of video tutorials on how to reuse oat milk boxes in an entertaining, distracting and amusing way.
5. Do not burn your image through drastic price reductions
Especially during a recession and a period of inflation the topic of price becomes one of the major decision drivers for consumer brand choice and purchasing behaviour.
A 2022 consumer sentiment survey from McKinsey & Company showed that 64% of respondents stated they had tried out a new shopping behaviour recently. And there’s no doubt that many were influenced by price when making these decisions: with 41% switching to more affordable private label brands and 43% shopping frequently at a discounter recently.
What might feel like a general risk to all brands is most relevant for mid-price products with low emotional involvement like grocery goods and other essentials. Particularly in these categories price-conscious consumers switch from premium brands to private labels easily but the solid performance of brands like Levi’s and Nike demonstrates that many shoppers are still willing to pay higher prices for premium goods.
So, what does this change in consumer behaviour mean for brands? First of all, it underlines the importance of refraining from blind actionism. Damaging your brand’s image with discount battles and short-term oriented price reduction campaigns will erode your brand’s positioning as well as its equity. Only with a strong foundation can a brand consider making drastic changes in price. In fact, brands with sufficient brand equity can even increase their prices without turning off customers or forcing retailers to concede to concessions like not stocking copycats or rivals.
For example, brands like Levi’s were able to implement a price increase of 10% without any negative impact on consumer demand. Price elasticity comes with brand equity – and brand equity comes only by solidifying a brand’s positioning.
We are living in turbulent times, but every crisis also bears the potential for change and growth. Just look back at the previous periods of inflation during the 1970s and 1980s. These two decades are considered by many to be the golden age of advertising, with many exciting product launches and consumers enthusiastic and open to new messages moving away from the beaten path. Let’s not forget the likes of the Walkman and the first PC were launched in these decades! See any similarities with today? Despite the current headwinds, let’s make the 2020s the new age of strong and authentic brands.