How To Build Brands In A Recession

How to build brands in a recession ... in adversity and prosperity till death set you apart, amen.

Introduction
Picture this situation. You are a very popular person with lots of friends and a very active social life. One day the bank where you have your savings goes to bankruptcy and you lose almost all your money.
To make matters worse, the company your work for was associated with this bank so it is in a crisis too. You fear of losing your job and have to manage your budget.
So you turn to your friends in search of help but suddenly you are not so popular anymore.
They don’t call you as they used too and they are never at home when you call them.
They don’t go out anymore with you and you start wondering if they were really your friends after all.

“ How do you do?”
Most of us would reject this behavior and criticize it at insincere, yet many of us let our brands behave like this.
I believe that while a product is made of tangibles a brand is the relationship between the product and its user. This relationship is built over time and, like marriage, friendship or any kind of serious relationship, it is put to test in adversity.
Recession is an adverse moment for the consumer. Truth it is adverse for brands too. They had their savings in the same bank and are afraid of losing their job, too, so to speak. So, why they act insensibly? We believe it is a problem of misunderstanding and poor communication.
With this in mind we try to find ways to improve the communication during recession in order to avoid the relationship to erode during it.

Times of adversity

I am not in the mood, don’t you understand?
One of the things we learnt is that recession is not just an economic phenomenon. It depends equally if not more, from people’s perception. The psychology of recession is that if people feel they are in recession they will act accordingly.
This doesn’t mean they all will act the same; we know too that recession behavior is complex. They will most probably postpone buying big ticket and unnecessary items. But they still have to eat, wash their hair and buy shoes. And they will still want to treat themselves with little luxuries now and then. In fact consumer spending may even grow during a recession: having postponed big ticket items, some consumers may have more to spend on a weekly basis (1).
However, there is one common denominator: a feeling of uncertainty and an increased importance half price/value .
Recession makes people spend their money with greater care . They look even more for price and value. All things being equal they look for those benefits in products they know and trust, products which they already have a relationship with.
All this changes the mood of people and this in turn affects their shopping modes for products and brands.

I have to do something about it.
People have different shopping modes. One of the effects of the recession mood is a basic change in shopping mode from browsing to scanning.
In normal times people enjoy browsing. Even in the purposeful trip to the supermarket after buying what they need, they like to look around and allow themselves to be tempted by the shelves system. Large buying areas were designed to take advantage of this and make them feel they have everything within reach, that there are no limits and that they are free to choose what they want.
During recession time, people act less impulsively and more rationally, they shop in scanning mode.

Survey facts
51% of women compare the published prices in papers and other publications in search of the best price among supermarkets. It has even become a social occasion: some women meet with their friends and compare supermarket price folders.
Our research revealed consumers tried to control impulse by making a very tight shopping list and by using the folders they receive from the different supermarkets, as a tool to plan their shopping trip.
We also learned that this trip may include more than one supermarket: in their search for economy they may visit two or even three to either look for the brand they want at the best price or look for any well known brand in offer.
Once at the store our accompanied shopping revealed a determined behavior. Using the shopping list as a compass and the folder as a road map (usually marked at home with the special “points of interest”) they walk decidedly from aisle to aisle. They just see the categories they have in their list and are blind to the rest of the offer! They jump from one shelve to the other, effectively, trying not to be tempted.

Survey facts – cont’d
This scanning behavior affects response to special offers and promotions too. It’s not enough to see a special offer sign to act. They have a sense of opportunity, that’s why they stop to examine them in the first place, but they don’t act impulsively. They evaluate thoroughly each offer: Do I really need this? Is it going to satisfy me, my husband or my kids? Am I sure I do not have this product at home? Am I really taking good care of the family budget? In this rational mode for instance, they prefer offers of two products at the price of one rather than three at the price to avoid overstock. They also prefer rewards they can use, useful prizes to dreamed trips or big quantities of money.
As David Ogilvy used to say, the consumer is not a moron , but in crisis times with less money in their wallets, they become really picky .
In a normal situation, this scanning mode produces a feeling of satisfaction of being a clever shopper. But during a recession, this is not something they choose to do. They have to. It’s not emotionally rewarding; on the contrary they feel they are paying too much attention to something they didn’t before.

Am I the only one?
Constantly monitoring the spending and thinking of saving does not give them a feeling of satisfaction, on the contrary, they feel quite miserable and impotent. Actually the survey revealed that 63% of consumers are stressed at the end of the day .
When they go looking for a special offer and don’t find the product in the shelve because of out of stock, instead of feeling frustrated and angry with the supermarket, they feel reassured.
They feel reassured that they are making the right choice and that they are not alone in the crisis, because many people are doing the same thing ( that’s why there are no products ) and the supermarket is really helping ( with an offer that is so good, many people take it ).
It’s so good to know there is somebody to help because in the middle of the crisis they can feel quite lonely.

Relationship in crisis

You don’t look at me anymore
Our research showed that consumers feel some how abandoned by big brands. In a way they feel brands are indifferent to their situation and don’t do anything for them.
Looking at the communication reel from the last year many brands fail to adapt their message to the new mood. Others just don’t say anything: explaining why brands don’t do anything for them, respondents in our research gave the example of a leading brand that had dropped its prices without communicating it.
The sad fact is most leading brands do things for people during a recession but people fail to see them .
Comparing the period of Jan/Nov 2008 with Jan/Nov 2009 prices in supermarkets went down an average 5%. It is true that part of this was caused by the growth of value and own label brands. But it is also true that many national leading brands were forced to drop their prices. Brands struggle every day in a constant war of margins and discounts. But who is taking the credits with consumers? For the most part, supermarkets are.

Somebody to watch over me
During the recession all supermarkets, despite their positioning, base their communication on price and, compared to FMCG categories, increase their ad spending .
All of them publish some kind of price folder which, as we have seen act as an aid to consumers. And they do it more frequently every two weeks instead of just once a month like in the past.
Price festivals multiply one after the other and during the periods of the year when people need extra monetary help (seasons, back to school) they have special offers.
Own label brands keep growing . They offer an affordable alternative to main brands and a better image alternative to B brands. As they grow they modify the perception of value in the consumer.
As a result they appear to be more interested than brands in what people really care about in this mood.

However…
… focusing only on price has its disadvantages too.
Although they appear closer to the consumer, few of them manage to build loyalty with them.
Centering their proposition just on price or communicating price and forgetting other values doesn’t help to build supermarket brands.
As we have seen, people become multi-shopper:
they visit more than one supermarket per shopping trip looking for the price offers in each one.
the proportion of price driven and repertoire consumers for supermarket brands in Romania is much higher than in other categories
In the end, what this tells is that people don’t form new enduring relationships. It is as if after getting divorced from their brands, they can’t find true love again. They only engage in interested relationship with supermarkets.
Loyalty does not result from marriages of convenience.

How to avoid getting to this stage? Here are three actions that brands can take to improve the relationship with their users during adversity.

Relationship therapy

Acknowledge the problem .
It is a common saying that the recognizing the problem is the first step towards the cure.
One way brands respond to the problem of recession is denial : they ignore it and act as if nothing happens. Another way they react is by hiding or escaping .
But there is a third way that can help save the relationship: face the problem, deal with it and do something about it . How?
First, recognize the mood of your users and how it affects the modes they relate with brands. Then, let people know you understand how they feel.
Acknowledge your users are concerned with price and value. Although they may be spending the same or ever more on every day products, they want to feel they are managing the budget responsibly.
There is a concern whether big brands should address the issue of price .
Some marketers tend to think that they don’t have to because it may go against the value of the brand. They believe that price in communication is the territory of value and own label brands. It is indeed since price is the core of these brand’s proposition.
However, in a recession mood, showing concern about price and acting responsibly about it, is a value in itself.
For leading brands having this value in their value set, may help strengthen the relationship with the user or client, while not having it may be interpreted as indifference.
But there are ways and ways you can acknowledge the problem and show you care.

Respond sensibly
How can you incorporate the price message into the brand message without affecting the brand? Can you use it to your advantage to make the relationship stronger?
It is not an easy subject. Once you recognize the need of talking about it, you better do it right. You’ve decided to face the situation... but what and how to say?
There seem to be three main strategies to address the issue of price/value:
1) communicate performance to justify price,
2) communicate special discount as opportunity, and
3) communicate price reduction to reinforce brand proposition.
We explored how people respond to each of these strategies and what is the impact on the brand. Each approach has its pros and cons; the suitability depends on the type of category, the type of brand and the proportion of each type of consumer (loyal, repertoire and price driven) your brand has. Let’s see:

“ Because I’m worth it” – communicate performance to justify price.
The strategy is not to lower your price and communicate that your brand is worth it because it performs better or gives up more. In a time of uncertainty to give way and quality reassurance can be very powerful.
However, this works better in those categories where performance is a real concern for the consumer and there is an image that low price brands may not perform as well as leading brands. There is performance risk and you only remind the consumer about it.
Diapers category has a very concrete risk: if they don’t absorb enough, they don’t last enough and your baby gets wet. Being the leader in terms of perception Pampers strategy was to reinforce that even when they cost more, they absorb more and last longer. So in the end, they end up costing less.
“ With other diapers you spend a lot because they don’t last much. Now spend less and maintain your baby comfortable for longer. Pampers baby stretch.”

The message reinforced perception of Pampers’ quality and at the same time showed the brand was concerned about what is going on in people’s life because it was talking about savings.
This strategy works better with loyal consumers since it provides reassurance and reinforces their belief in the brand. It is giving positive reinforcement of their behavior. But for repertoire and price driven consumers it doesn’t give them new arguments to use the brand.

“ Wow, look at this opportunity” – communicate special discounts
Discounts are nothing new . The trick is communicating them as a response to the situation . In scanning mode people are constantly looking for opportunities to save and make their budget last longer.
Take for instance the case of beer in Brazil for instance: they offer discounts of 30% and six cans at the price of four. Taking advantage of the proximity of elections the campaign communicates the discounts as political messages against privileges.
One of the outdoor posters said, “Brahma is not making promises. It is telling you what it is going to do. –30%. The pack of 2 large cans at an incredible price”.
And sales showed that impact was very positive. Besides the economic benefit of the discount, it was perceived as an effort of the brand to adapt to the situation.
It’s a little twinkle, a little help consumers are waiting for. In fact, a survey showed that 35% of consumers wait for these kind of special discounts before buying a brand.
However, In categories where people may see a risk of quality suffering because of the discount (i.e. milk), it has to be clearly perceived as a temporary adaptation of the brand without casting shadows over product quality or performance.
This strategy works better with “repertoire” consumers since it gives them an extra reason to pick your brand from the repertoire.

“ Hey pal, I’m doing this for you”
Communicate price reduction to reinforce brand proposition.
The strategy is to communicate the price reduction in such a way that not only shows your brand is close to the consumer but also reinforces your main benefit.
It is potentially the most rewarding strategy in terms of relationship building but also the most challenging: you have to find a meaningful link between price and the main benefit of your brand.
It works better with leading brands, probably because it is the kind of message only a leader can deliver. Here are three examples from 1999:
The impact of this kind of message is very positive showing the brand knows the people and adapts to the reality. It also conveys a sense of honesty and care. Users enjoy a moment of recognition.
This strategy is very strong with loyal users since it reinforces the brand proposition. But also works with repertoire and price driven users since it gives them a hard reason to try or use the brand.
Brand Brand proposition Brand proposition + price reduction McDonald’s Have a good time We reduced the prices of our combos. We know it is not going to change your life, but at least you will enjoy a good time. Coca Cola Always Coca Cola A six pack at a special price so you can enjoy the real taste all week. Skip washing powder Top technology Incorporating high technology we managed to reduce prices 20%.

In short…
… there are different strategies to deal with the issue of price and value in the communication of a brand during a recession.
To decide which strategy to use you should consider
what sort of brand you have (category leader or challenger),
what proportion of each type of user your brand has (loyal, repertoire and price driven),
whether there are perceived performance risks in the category which you can address with your brand and
whether your brand proposition can be connected to the price reduction in a meaningful way.
But it is not just what you say but also what you do at every point of contact between the brand and its user that builds the relationship.

Show you care in every contact
The brand is the totality of what the consumer experiences. It is the people’s experience of the brand in all its manifestations at every point of contact that creates the relationship.
During a recession we found out that people buy in scanning mode. This creates both a threat and an opportunity for brands in terms of points of contact.
A threat because if you are not in their shopping list chances are they will try to avoid looking at you not to get tempted.
An opportunity because if they see an in store sign with an offer, they will surely stop and evaluate it. It is not for sure that they will take it. They will read attentively the offer, check if they really need it and if they do, they will consider buying it.
What this shows is that if the message talks about what interests them in that moment, they pay an extra amount of attention .
Therefore with the right message in the packaging or on the point of sale signage, there is an opportunity:
to make contact and have their undivided attention,
to transform the point of sale into a point of branding.

You own the brand, own the communication!
We found that few brands were taking advantage of this . Most of the special offers and signs at the stores were from the supermarket and not from the brands. And the women interviewed reacted to this with comments like “you see, they are always giving offers with the products I use, they really care about me”.
But retailers just limit this price communication to that. Only price. They don’t know about your brand needs and your consumer insights. You do. So, why not take advantage of that and begin building value in the supermarket? You are already lowering your price, you had a big fight and torture struggle with the retailer to see at what price was your product going to be offered on the shelves. It’s time to capitalize this unavoidable low, it’s time to profit the suffering. It’s time to break this silent suffering and tell your consumer who is really the good guy in this movie. The brands are. You are!
Recession provides an opportunity to make a strong contact with people in scanning mode at the point of sale . To show that you too are concerned about value and budget through your pack or POP material, in the very moment of truth, in the moment where they have to make their budget last.

The lesson of Coca Cola
Take the example of Coca-Cola in the 1999 crisis - it was one of the few brands that really took advantage of this. Their strategy was to:
Clearly brand all the price signage in the section.
Calculate the price and the savings for you. They know consumers in scanning mode look for these things and don’t like to do the calculation. So all the multi-packs display the price of the pack, the price per unit and the savings.
Provide you a reason why: in the multi-pack of the six 1.5 liter packs, they label it “make sure you will have enough Coke for all week”
This not only eases the decision process for the consumer in scanning mode but also makes them feel good about their behavior in a time of crisis: “I am being a good mother and a good family budget manager.” This, in turns, enhances the relationship with the brand.
Although it was complemented by a TVC, the main communication was at the supermarkets. Because they know that when people are in a recession mood the supermarket is a key point of contact, a moment of truth for the brand-user relationship.
So they make sure that in that moment their brand is the one who is helping the consumer to decide, the brand is the one who is whispering advantages to the consumer, the brand is taking the credits.

Summary
Brands are the relationship that products form with their users. All relationships are put to test during adversity and recession is one of those moments for the product–user relationship.
During recession brands do things for their customers that they don’t notice. Consumers feel brands don’t do anything for them and supermarkets are more concerned with what interests them: price.
As a result the brand-users relationship suffers.
To avoid this relationship conflict brands should improve they way they communicate with their users during a recession. There are three things they can do to achieve this:
First, acknowledge the situation . Address the subject of price/value as a way to let the user know you understand her situation. In a time of crisis, showing concern and acting responsibly about price is a value that leading brands should embrace.
Second, respond sensibly . There are different ways you can address the issue of price in the communication of the brand. The most potentially rewarding in terms of the relationship is to use the price to reinforce your brand essence. The cases of McDonald’s and Coca Cola provide good examples of this.
Third, show you care in every contact . A brand is built every time the user gets in touch with the product. During a recession, the point of sale is a key point of contact, one of those moments of truth for the brand-user relationship. It is the moment where the user feels more alone trying to make the budget last longer. Delivering the right message in that moment through your pack or in store material is a great opportunity to catch her undivided attention and reinforce the relationship, an opportunity to transform the point of sale into a point of branding.
In times of adversity, the problems in a relationship can be solved if you maintain a good communication. Understanding this and helping people in times of adversity is a universal way to gain their affection.

Thank you

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How To Build Brands In A Recession

by mariusvetrici on Nov 07, 2009

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How To Build Brands In A Recession — Presentation Transcript