No two recessions are the same.
The 2008 recession was a financial and demand shock from direct hits to consumer confidence, which significantly decreased demand for goods and services. Experts predict the impending 2020 downturn to be a demand as well as supply-side shock, caused by critical value chain components breaking down.
To survive and thrive in a COVID-19-induced downturn, brands should explore strategies to address not just demand but supply as well. Recessions weed out weak brands and strengthen strong ones, creating opportunities to take advantage of new market conditions, like the adoption of new technologies and business models.
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Here are eight actions companies can take to protect their brands during the current recession:
1. Focus on the core: kill resource-consuming ‘dwarf products and services’
Growing core business is the most effective technique to survive and thrive during tougher times and in longer term planning. In most cases, a brand’s core business is both the most profitable, and the one where the brand has the most authority.
Culling of “dwarf” products and services is also desirable. Cute but small new products often distract attention and resources from a brand’s core business.
Samsung did just that during the last recession, divesting and streamlining non-core businesses whilst placing a new strategic focus on its core – fast-growing digital products and devices. It also invested heavily in R&D while competitors aggressively cut costs in that area, helping to position it as a leading innovation company with the birth of the Samsung Galaxy.
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2. Sharpen brand positioning: ensure distinctive balance of functional ‘sausage’ and emotional ‘sizzle’
Recessions inevitably come with a clutter of price-cutting messages. To cut through the threat of cheaper competition, brands need a razor-sharp positioning (the space they occupy in hearts and minds) based on a portrait of their customers’ needs and behaviours.
During recessions these needs are increasingly based on perceived value. A distinctive positioning needs a balance of product and service benefit and delivery, which capture the value of the purchase and motional benefit, personality or purpose, which makes the brand more memorable and distinctive.
3. Cut costs, not corners: provide less of what people don’t need and more of what they do
Brands that thrive in downturns tend to have the financial muscle to keep investing and growing as others pull back. This means creatively cutting costs, without cutting corners.
In today’s context, real customer value is about being fair and helpful to customers as they try to navigate a challenging personal and professional landscape. For hotels or airlines, this means honouring bookings with refunds or vouchers that allow customers to rebook for a later date, which is what Singapore Airlines is offering despite slashing 96% of its capacity.
Actions like these help to retain existing customers and generate lasting goodwill.
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4. Deliver meaningful value: focus on overall value, not just price
As every recession in history has demonstrated, consumers pay much more attention to price when times are hard. However, recessions with supply-side shocks could also mean price increases down the line, as customers benefit less from economies of scale.
Arriving at the right price point therefore becomes even more critical. Rise above a key price-point and consumers will switch; price too low and you impact much-needed cash flow, not to mention brand image down the road.
Companies and brands are delivering meaningful value currently by helping people find some form of solace in an uncomfortable “new normal.”
How brands behave now will likely determine if customers choose to stay, or not.
5. Boost physical availability (on e-shelf too): innovate around changes in customer behaviour
The SARS outbreak of 2003 is often credited with the boom of ecommerce in China, accelerating the rise of companies like Alibaba. Alibaba’s B2B e-commerce business thrived after foreign businessmen cancelled trips to China and began registering on its platform.
Being attentive and mindful of such changes are key to a brand’s ability to respond and be readily available and accessible when customers have a need, whether online or offline. Locally in the North East during C-19 lockdown, we have seen food service companies pivot from delivering to hotels and restaurants to deliver direct to the consumer using their existing products, infrastructure and new ecommerce platforms.
6. Every bit of the brand must ‘sell’: extra hardworking assets
Every bit of the brand – including its packaging, website, social media pages, retail experience, and even customer service staff – can be used to actively encourage existing users to use more.
In one of its more famous ‘packvertising’ campaigns, Share-a-Coke, featured limited edition personalised bottles which encourage consumers to find bottles with names that hold personal meaning to them, share them with friends and family, then tweet about their experiences using the hashtag #ShareaCoke.
While COVID-19 has placed packaging under scrutiny as a material that might transmit the virus, packvertising is here to stay, although in the short term we may see a dramatic rise in single-use packaging.
7. Have courage to cut through: generate thoughtful ‘PR-able’ ideas, not self-serving stunts
Cautious and conservative budgeting means recessions are the time to create ‘PR-able’ marketing ideas – brave ideas that generate free publicity and maximise budget impact. In today’s climate however, those ideas are better off being considerate and helpful, than self-serving and stunty.
Barbour, for instance, turned its production lines to help solve the shortage of PPE equipment in the NHS: not just the right thing to do, it was brave as well and likely to be remembered in years to come.
8. Share the pain: reassure with empathetic words and solutions
During recession, brands need to get closer than ever to customers in order to maintain and strengthen their bond. An obvious way to do this is by pro-actively helping people through the hard times, reassuring them and showing you understand and care.
This becomes even more important in today’s context as lives and livelihoods around the world are impacted in unprecedented ways.
So what are the takeaways ?
To survive and thrive in a COVID-19-induced downturn, brands should explore strategies to address not just demand but supply as well.
They should focus on growing the core business and ensure they have crystal clear positioning that offers meaningful value to customers. Brands should be creative about adding new value to customers while innovating around changes in customer behaviour.
Brands should sweat all of their assets hard – making all parts of the brand ‘sell’ from packaging to experience and PR-able ideas.
Ben Quigley is CEO of Newcastle-based marketing services group, Everything Different.