Giving ‘Brand’ the Time of Day in Recessionary Economic Times
Much has been publicized recently on effective recessionary marketing – and rightfully so. Although there are conflicting opinions around the merits of marketing investment (or spending – depending on who you ask), industry leaders agree that all companies/brands want to emerge from this recession in a stronger competitive position.
The question facing us all is how. With ‘brand’ building getting a cold shoulder in these challenging economic times, below we discuss efficient brand innovation opportunities and the dangers (as well as alternatives) to price-cutting.
The recession will give organizations an opportunity to innovate and gain competitive advantage.
Marketers agree: marketing return on investment (MROI) is especially critical in today’s recessionary economic times. Knowing this, the question becomes what is the optimal mix of short and long-term marketing initiatives to maximize MROI?
Recessionary times or not, customer-focused organizations drive decision making with consumer need/insight. Once market insights are mined, strategies can be developed and put in-place delivering value for customers. Although this is the ideal marketing process, shrinking budgets and manpower to execute these initiatives is forcing many marketing professionals to delay long-term branding initiatives.
Recessionary economic times give companies the opportunity to innovate and try new programs. For example, Virgin Mobile mined customer insights around the recession and built a ‘screw you recession’ campaign that not only connects, but engages consumers by having them share day-to-day money saving tips
It is interesting to note how many companies are taking this opportunity to build customer interaction and connection through dialogue about innovation and economic challenges.
Price-cutting in recessionary economic times can have disastrous effects on brand equity.
In-line with marketers needs to deliver short-term business results, an immediate option for marketers is to reduce price to boost short-term revenues and reduce inventories. Although this looks good on the balance sheet, the long-term impact of price-cutting can be detrimental to years of brand equity building investment.
Starbucks recently added packs of instant coffee to its menu of choices, for $2.95 consumers can enjoy three cups of instant Starbucks coffee (~$1 a cup) a far cry from the $1.60 that can be charged for a cup of drip.
Starbucks has positioned itself as being the finest purveyor of coffee in the world, although this lower price point may drive new traffic in the short-term, it may be detriment to their brand with long-term customers – customers that will drive profitability once we come out of the recession.
In a recent Strategy Magazine article, Ken Wong, Associate Professor of business and marketing strategy at Queen’s University, states that although price is important, companies can find other ways to offer customers additional value by increasing their ‘quality’ of offering. For example, offering better financing for vehicles (just as GE financed refrigerator purchases in the Great Depression) or providing free gas (both money saving offerings) to car buyers will boost customer ‘benefit’, thus enhancing the value proposition
Does anyone have any other examples of marketing tactics, either value adding or detrimental to the brand?
