Brands And Austerity

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How should Brands behave in this age of austerity?

ARE WE IN AN AGE OF AUSTERITY?
BBC News claims that

HOW DOES THE CURRENT ENVIRONMENT AFFECT TODAY’S CONSUMER?
-Who are today’s consumer
-What has their initial response been
-What is their overall response
-What is their predicted response

GENERAL BRAND RESPONSE

EXAMPLES OF FAILED BRAND RESPONSE

IS IT AS SIMPLE AS WHAT THEY DID RIGHT/WRONG?
-There is no general response to the recession

MAKING THE MOST OUT OF AN INTANGIBLE SITUATION
-Brands have the tools and the ability to plan campaigns that strengthen their position in the recession and therefore minimise the negative impact that the recession can create.
-Must look at Brand identity and Consumer psychology not just sales
-Stronger brand identity leads to trust, more indepth relation from the consumer and therefore increase of sales

BRAND IDENTITY AND CONSUMER SENTIMENT
How to understand and capture consumer sentiment?
-Understand the consumer spending strategies in the recession
-Understand your brand archetype and therefore which strategy your brand is likely to attract.
-Centre your campaigns around this

EXAMPLES OF SUCCESSFUL BRAND RESPONSE
-Using this strategy

SO HOW SHOULD BRANDS BEHAVE?
-Brand Archetype + Consumer Strategy = Brand Minimal risk assessment strategy

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  • Hello, My name is Remalie Comport and I would like to take this opportunity to thank you for your time today.
  • How should brands behave in this age of austerity? Basically what is the best approach a brand should take in promoting themselves given the current economic environment and consumer’s own anxieties.
  • Firstly, are we in an age of austerity? Looking at the newspaper headlines It is clear that the UK is experiencing a financial downturn… According to Ashley Seager, financial advisor of the Guardian, whilst it is nothing to be too hopeful about yet, the UK is now out of the recession. He states that “The consumer is still weighed down by debt, and unemployment, though seemingly topping out, is still very high. Household finances are also going to get squeezed by a fiscal tightening that will begin some time after the general election.” It appears we may be out of the recession but we’re not clear of the woods yet. The question a brand should ask is not only how does the current economy affect our brand but also how does it affect the way our consumers spend money for our brand?
  • As you can see from Google insight, the so called ‘Voucher code phenomenon’ which is the idea that “our choices and decisions aren't just governed by where we are, it's whether there's a discount as well” appears to be dwindling as we enter the second half of 2010. With the downfall of the searching and downloading of vouchers, but the continual news coverage of economic deficits, consumer behaviour appears to be contradictory to the stereotypical ‘coming out of recession” attitude. It looks like consumers are recovering from the economic situtation financially but have they recovered emotionally? With this in mind do brands actually understand not just their spending habits but the psychology of their consumer’s spending strategy in the current climate?
  • But what do they advertise? There are three typical responses that Brands have when faced with a turbulence such as the recession; Inertia, Lower prices, Cut costs. Inertia, the act of doing nothing – The appeal for a brand is that by doing nothing they are contradicting the norms and therefore stand out from the crowd. Such a passive approach to recessionary pressures is dangerous, for it displays indifference to volatile markets comprising consumers that are more likely to switch to competitors with more attractive offerings or who appear to care more about the current situation. The contraction in demand is significant and sustained in a recession, meaning that for many brands it is simply not possible to wait out the storm. Lower prices - The fear of losing consumer interest drives out battles for lower priced products as the market is evaluated as price conscious and price driven. Lowering prices may be more of a tactic than a strategy because it is often a short-term course of action with price rises following as soon as possible. If it is a knee-jerk reaction as opposed to a long-term strategic response brands make the assumption that their target market are price buyers, which is a dangerous trap to fall into. Cutting costs – In general many brands can be seen to suffer a 1/3 of profit drop with many suffering more than this. For example in the 1991 recession the profits of both Whirlpool and Renault were down by 65% and the profits of NatWest bank fell 71%. When the economy is in a downturn, many company expenditures such as promotional, sales and market research outlays are cut first because they do not show tangible and immediate results, however this retrenchment can be dangerously obvious to the market as it may become apparent in the quality of customer relations. It must be remembered that the customer’s experience with the product must continue to live up to the promise of the brand, the company can not sacrifice its image and identity by cheapening its product. The problem with all these brand responses is that we’ve all become so used to brands offering us the generic recession response: everyone is suffering so it makes sense to focus on price and product and offer us all a better deal. But is this by increasing sales and is it good for the brand? The problem I see with all these responses is that price is the focus but is price the focus for the consumer? As quoted by Jean-Marie Dru “It’s human nature to no longer notice what they know too well. This can be described as an excess of familiarity, which ends up making us blind”
  • There is a clear need for proactive marketing strategies that can be sustained throughout the economic woes and which result in profitable rather than break-even or loss-making outcomes, but what is the right strategy?
  • There is no general response for a brand in dealing with the recession, not everyone is suffering or being effected in the same way and consumers are driven by far more than just rational needs. Each new campaign strategy should Listen to what the consumer needs Understand who you are as a brand Bear in mind the differences in marketing in a good time vs. marketing in a bad
  • Who are today’s consumer or maybe a more appropriate question - What type consumer emerged from the recessional environment? According to a report from Mintel ‘British Lifestyles 2010 – Focusing on the Essentials’. At the beginning of the recession consumers were seen to retreat and focus their expenditure on core essentials such as food and drink, abandoning the spend on non-essential items such as eating out, leisure and alcohol. The consumers that are the most likely to lead the UK consumer goods sector out of recession are currently those that are better able and more willing to spend on non-essential items – also known as the recovery adopters. However their attitude doesn’t seem to have shifted which shows that a focus on value is still key for these consumers in the decision of whether or not to purchase. Overall the consumers of today are in search for ‘Value for money’, they may be in a better economic position now than in 2008 but they’re mindset still screams for the necessity to ‘save’.
  • In 2010 little has changed despite the economic recovery. Adults who cut back last year are continuing to do so today. Consumers are still focused on saving money and limiting their expenditure. As mentioned earlier if they do spend it’s not about price necessarily it’s about value and gaining value for money. Many consumers seem unwilling to commit to spending heavily on big ticket items like cars but are more open to the idea of holidays. if these big ticket items are bought it is often out of a feeling of necessity. Therefore buying expensive products like designer clothes is not frivolous if these products offer high quality, durability and a sense of personal fulfillment: It’s actually financially and emotionally prudent.
  • There are 6 core consumer strategies that have been identified to have emerged from the consumer attitudes to the current environment.
  • Fight and Exploit – You’re looking for something extremely cheap that allows you to exploit the recession; if you can beat the odds by taking advantage of a 50% off, you feel like you’ve got one over on the situation. Compete and Triumph – You’re seeking enduring value; quality remains the most important thing, so it’s not about deals but something that is going to last over time. Strategise and Plan – You want to make a smart choice and so take a long-term focus; initial cost value my be lower but long term value is higher Retreat and Defend – You have to see it as saving money; you like to feel a company is sacrificing something so even small discounts are OK but you would prefer your loyalty rewarded. Collaborate and Accept – You’re not going to buy it because it’s cheap you’re happy to get a discount on something that really demonstrates its practical value Avoid and Indulge – Ideally you’re looking for something for nothing; it might be the chance to win something but mostly it is a fun experience that gives you a moment to indulge.
  • A consumer may embrace several of these responses at different times. For example - one may strategise and plan when replacing a big ticket item like a car or booking a holiday being wary of deals and taking more time when deciding, the same consumer may take a collaborate and accept strategy to food shopping making small cutbacks across a whole range. There may be less eating out but when this same consumer decides to eat out they may take the compete and triumph strategy with a value judgment made on the best restaurant around and then sticking with that rather than looking around. Brands need to be aware of the 6 emerging consumer recession strategies because if they understand this they can understand what value may mean to their consumer and can further analyse what makes a consumer connect with their brand in the current situation. All of these strategies have led to a dramatic increase in customers reading and sharing reviews, such as Tripadvisor, to further analyse their own definition of value. If a brand can be seen to connect and understand and even reciprocate to a consumers present needs then the consumer and brand relationship will improve vastly as it is based on trust and a deeper understanding of the other. To do this brands need to know their consumer; not just their spending habits but their emotional sentimentality as well. To do this they they need a platform to work off – they need a strong brand identity.
  • In an interview Crispin Reed talks about how to protect your brand during a recession: “ I think first and foremost, a strong brand is one that has a clearly defined story to tell and everything emanates from there” he goes on to discuss Nike; it is all about irreverence justified and they take that in everything they do – expressed in the line “just do it” from particular designs to the sports people they advertise with. It all roots back to a central story and central thought…the first thing I would advise is try to continue to increase the brand” He is not the only brand expert to have expressed a similar thought. Steve Jobs suggests that Brands need to behave as their identity suggests as he states at the launch of Apple’s Think Different campain “A lot of things have changed, but values and core values, those things shouldn’t change. The thing’s that Apple believed in, at it’s core, are the same things that Apple really stands for today.”
  • Understanding your brand story is understanding your brand archetype. Strong brands understand the language of the brand archetype and in doing so can establish where their brand fits in. To establish a strong brand identity is to provide a focus from which to emotionally engage the consumer. Every day we interact with archetypes upon a subconscious level, this can be found in films, celebrity gossip and we may even play on the idea of ourselves as archetypes depending on the present situation. The reason we seek out the recognition of these archetypes is for our self fulfillment as we try to gain a deeper emotional connection with the world.
  • An example I found in the book “The Hero and The outlaw building extraordinary brands through the power of archetypes” is of an archetypal story that continues to fascinate globally; the story of the public life of Princess Diana – The girl marries Prince Charming, but does not live happily ever after so she becomes a great lover of humanity, motivating human kind to show it’s love for her. Archetypes provide the missing link between consumer motivation and product sales. If brands were to harness this sentiment in their brand identity the consumer is not just gaining a product but gaining a deeper sense of meaning and therefore gaining emotional fulfillment when interacting with the brand. (Bring in Brand archetype + consumer strategy poster) If you have a strong brand identity and understand your consumer mentality when interacting with the brand you can take the consumer recession strategies to a deeper and more effective level. If you align your archetypal brand with the correct consumer recession strategy you can guarantee further brand building and a deeper connection with your consumer. Consumers want to make the most of the recession therefore brands need to understand their archetype to understand which consumer strategy would respond most effectively to their brand identity. Knowing this enables brands to strategise their campaigns with a focus on consumer strategy to encourage a positive response. A stronger brand identity should therefore increase sales. With a more focused idea of who you are and who you should be targeting, gaining invaluable insight becomes easier which leads to a more effective marketing strategy approach.
  • Virgin is a clear rebel brand and their recession response has been successful as they clearly understand that their consumers are happy to fight the current situation and look to exploit a good deal. They’ve also included a website where their consumers can vent their frustration share tips, get info on money saving ideas and generally how to get one above the situation.
  • During the recession Ryanair has beaten the odds especially as profits in the airline industry have seen a clear drop in sales, they increased their marketing in a similar method to that of Coca-Cola's marketing strategy for the1980s recession which revolved around "connection planning," that was "consumer-centric," "media neutral" and "goes across all touch points.” as quoted from Maarten L. Albarda , Coca-Cola's director of media and communication innovation. This approach also lead Coca Cola to not only survive but profit from the economic climate. Ryanair is a helper brand as it portrays this need to help achieve people value for money when travelling. In their recession strategy they’ve recognised that they must overtly demonstrate the brand’s practical value to consumers who they recognise buy for value and not just because it’s cheap. Ryanair’s approach is to keep them in the consumers vision and in every marketing campaign they have strengthened the idea of the helper brand encouraging consumers to fly with them as they provide value to the consumer by charging only for what the consumer uses and no extra . This can be seen in their latest strategy which imposes a levy for online check in, Ryanair claims that the charges will save the company about £44 million a year which, it said, will be used to further reduce fares, providing consumers with even further value for money.
  • John Smith’s, the UK’s number one ale brand, is offering drinkers in pubs and clubs the opportunity to own a share in a racehorse, as part of an integrated marketing campaign aimed at getting the most out of its Grand National sponsorship. The promotion will be highly interactive. All ‘Smithy owners’ will have the opportunity to vote online on key decisions on his progress. They will also receive regular updates on Smithy’s progress and be able to read about Smithy’s No Nonsense views on the website. Furthermore, all owners will have the chance to meet Smithy at races and at his stables throughout the campaign. Through their ‘No Nonsense campaigns” John Smith’s is an Entertainer brand who has recognised that their consumers are likely to take the Avoid and Indulge strategy. By allowing a share in a racehorse John Smith’s can be seen as offering the consumer a chance to win something for nothing which is highly attractive to an Avoid and Indulge consumer as experience of the product is what is valuable especially if it allows for a moment of indulgence.
  • But bear in mind the key strategy differences of marketing in a bad time as opposed to a good. While the principles of marketing remain more or less the same, it is the practice of marketing that changes in a recession. With this sales focus, marketing takes on a much more reactive (as opposed to proactive) role in a recession. The approach of the brand archetype requires a long-term focus strategy as it involves seeking opportunities and investing in the future instead of the short term strategy of the “quick win” which tends to be price related, such as a pile it high, sell it cheap approach. This long term approach is to help the company maintain and win market share. It will prove to be profitable for a brand looking to achieve sustainable profits and maintaining or strengthening brand health.
  • By strategising in a more targeted way towards consumers as well as bearing in mind that the practical approach will be different than when marketing in a good time will achieve campaigns that are proved to be more effective as well as simultaneously building and strengthening brand identities. In turn this provides a minimal risk assessment strategy that brands could follow which should protect their brand in the current climate and may even increase sales as consumers attach more meaning to the brand, helping them prosper despite marketing in this possible age of austerity.
  • And finally “Do not fear the inevitable change”…I leave you with a quote from Jean-Marie Dru “Today we no longer judge brands simply by the products they make or the services they propose but by the way they behave. Brands need to know how to take initiatives…and how to reinvent themselves” but also remembering to sustain their core identity.
  • Thank you for your time and please feel free to ask any questions you may have.
  • Brands And Austerity

    1. 1. Graduate Presentation
    2. 2. How Should Brands Behave in an Age of Austerity? “ It was the best of times, it was the worst of times” – Charles Dickens (1859) A Tale of Two Cities.
    3. 3. Are we in an age of austerity? <ul><li>Governments across Europe are forcing through tough austerity measures to tackle huge budget deficits. </li></ul><ul><li>23 June 2010 </li></ul><ul><li>Double-dip recession 'more likely' as UK faces two years of house price pain. </li></ul><ul><li>15 Sept 2010 </li></ul><ul><li>IMF warns of the 'human cost' of public spending cuts. </li></ul><ul><li>13 Sept 2010 </li></ul>
    4. 4. But what about now? Google Insight “ Our choices and decisions aren’t just governed by where we are, it’s whether there’s a discount as well” Michelle Strutton Senior FMCG Analyst, Feb 2010
    5. 5. 1991 Recession advert aimed at Brand behaviour
    6. 6. General Brand Response 1. Inertia 3. Cut Costs 2. Lower prices “ The customer’s experience with the product must continue to live up to the promise of the brand, the company must not sacrifice its image and identity by cheapening its product.” Charan 2009 p.56 found in Effective marketing strategies for a recession B2B International journal
    7. 7. What is the Recession Strategy?
    8. 8. <ul><li>Listen to what the consumer needs </li></ul><ul><li>Understand who you are as a brand </li></ul><ul><li>Bear in mind that marketing in a bad time is different to marketing in a good time. </li></ul><ul><li>Do not fear the inevitable change: </li></ul><ul><li>“ the great [brand] leaders of the last twenty years have known how to tame change” Jean Marie Dru </li></ul>Unfortunately there is no general recession brand strategy But each new campaign strategy should:
    9. 9. Next warns of higher clothes prices but sees no double dip recession as profits jump Understanding - Who are today’s consumer? Discretionary spending takes a hit “ Spending less on eating out, me and my friends have dinner parties instead because everyone agrees its luxury we cant afford right now. We’ll only eat out if there is a really really good deal on” 16-24 yr old ABC1 female Portfolio approach: Cutting a bit of everything “ Rather than cut back on one specific item I would more likely cut a little from each budget…This allows you to do all the things you are used to doing and you don’t miss out on things you enjoy” 35-44 yr old C2DE male Travel may be the exception “ Only a one-off expensive holiday” Over-55 yr old ABC1 male Listen to what the consumer needs:
    10. 10. The change of spending priorities “ We should be driven by tomorrow’s people” Jean-Marie Dru
    11. 11. The 6 identified Consumer Recession Strategies
    12. 12. <ul><li>Roz Calder during a TNS study has identified 6 core recession strategies that have been adopted by today’s consumers </li></ul><ul><li>Fight and Exploit </li></ul><ul><li>Compete and Triumph </li></ul><ul><li>Strategise and Plan </li></ul><ul><li>Retreat and Defend </li></ul><ul><li>Collaborate and Accept </li></ul><ul><li>Avoid and Indulge </li></ul>
    13. 13. Multi modal consumer <ul><li>A consumer may embrace several of these responses at different times and across different categories. </li></ul><ul><li>Understanding this consumer psychology will enable a brand to understand what connects their brand to their consumer </li></ul>
    14. 14. Brands need a strong <ul><li>“ I think, first and foremost, a strong brand is one that has a clearly defined story to tell and everything emanates from there” Crispin Reed - MD Brandhouse </li></ul><ul><li>Brands need to behave as their identity suggests </li></ul><ul><li>“ A lot of things have changed, but values and core values, those things shouldn’t change. The thing’s that Apple believed in, at it’s core, are the same things that Apple really stands for today.” </li></ul><ul><li>Steve Jobs – Co founder and CEO Apple </li></ul>Understand who you are as a brand:
    15. 15. REBEL EXPLORER HERO RULER CREATOR SAGE CAREGIVER LOVER MAGICIAN TRIBAL MEMBER ENTERTAINER INNOCENT
    16. 16. “ Archetypes provide the missing link between consumer motivation and product sales”
    17. 17. Blog: Web article: Examples of brands aligning their archetype with their most responsive consumer strategy
    18. 18. “ Ryanair to charge for online check in” (May 2009) http://customerlistening.typepad.com/customer_listening/2009/04/pg-and-cocacola-keep-spending-up-despite-recession.html
    19. 19. All ‘Smithy owners’ will have the opportunity to vote online on key decisions on his progress, for example on the meets he should race at (in consultation with his trainer). “ Why Smithy will be National hero.. he's the people's horse” (31/10/2009) Also read about Smithy’s No Nonsense views at www.johnsmiths.co.uk/smithy
    20. 20. Also bear in mind key differences when marketing in a Bad time vs marketing in a Good time: “ Effective Marketing strategies for a recession” (2009)
    21. 21. Summary Strong Brand Archetype Aligned Consumer Recession Strategy Practical marketing awareness Minimal Risk Assessment Strategy for a Brand + +
    22. 22. “ Today we no longer judge brands simply by the products they make or the services they propose but by the way they behave. Brands need to know how to take initiatives…and how to reinvent themselves”
    23. 23. References <ul><li>Publications: </li></ul><ul><li>B2B International (2009), Effective Marketing Strategies for a recession , B2B International Ltd </li></ul><ul><li>Charan, R, (2009), Leadership in the Era of economic uncertainty , McGraw Hill </li></ul><ul><li>Dru, J, (2007), How disruption brought disorder , Palgrave Macmillan </li></ul><ul><li>Mark, M & Pearson, C, (2001), The Hero and the Outlaw, Building extraordinary brands through the power of archetypes , McGraw Hill </li></ul><ul><li>Articles: </li></ul><ul><li>Data monitor, UK Consumer Insight 2010: Waitrose Food , September 2010 </li></ul><ul><li>Brandhouse, Protecting your brand during a recession, May 2009 </li></ul><ul><li>TNS Consumer, What is a real recession resonse? , 4 th July 2009 </li></ul><ul><li>Mintel, British Lifestyles 2010 – focusing on the essentials </li></ul><ul><li>Mintel, British Lifestyles 2010, Market forecasts to 2015 </li></ul><ul><li>Strategy Business, The new consumer frugality, 15 March 2010 </li></ul>

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