Making sure a brand fits a budget is true during good times, too. So, finding the fit during hard times is nothing new. Harder, perhaps, but the same task as always. Forgetting this causes brands to panic under pressure and cheapen the brand instead of simply finding the right fit for the moment.

BrandZ tracked brand value during and after the Great Financial Crisis up through the pandemic and the recent inflationary spike. The brands that maintained equity and value and outperformed all others found a fit without cheapening the brand.

Five lessons learned about success during inflation for name brands.

1. Be Upfront. Consumers know when you’re trying to pull a fast one like shrinking the package without reducing the price. It just makes the brand look cheap. Own up, be straightforward, acknowledge it, and just call it the ‘affordable’ pack or something like that.
2. Emphasize Value, Not Price. Don’t try to out-discount price brands. Promote or drop prices as needed, of course. But remember that price brands compete on price all the time. Not so for name brands. Inflation is home court for price brands. They always win on price. Name brands must stand on their strength of value to win the away game of inflation.
3. Maintain Continuity. Don’t go off-message. Name brands are known for something and that shouldn’t go away just because price is more important. Worse than off-message is no message from dried up ad budgets. One day inflation won’t be a problem, so don’t create the additional problem of forgetting that will linger on long afterwards. Build momentum now for the recovery soon to come.
4. De-risk Purchasing. Don’t make sticking with name brands hard to do. Take the risk out of buying. Offer guarantees and warranties. Step up customer service. Eliminate all hassles and stress points. Use disappointments to re-prove value. Ally with positivity.
5. Double Down On Difference. Every great brand is meaningfully different. But meaning is harder when price is paramount. This shift in the tide is hard to fight, so don’t. Instead, remind people what makes a name brand different and thus more valuable. Make people regret trading down—because when they do, they will come back quickly when the pressure is off.

Contributed to Branding Strategy Insider By: Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar

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Brand-businesses must manage through the current volatility implementing strategies designed for sustainable profitable growth during current and predicted hard times. Action now is essential.

Some marketers believe that hard times are the time for a hard sell, defined as shouting maximized performance or minimized price or both. This is not the way to sell. This is limiting and misleading. In hard times, it is not about selling it is about buying. Unless marketers can generate buyers, there will not be any selling.

No matter how troubled the times, people do not just buy on price and performance alone. People buy on value. It is an everyday truth: the best value wins. Value is a virtue. But brands do not just wake up one day and have perceived brand value. Brand leaders must develop and implement strategies for generating brand value.

Perceived brand value is already necessary for brand consideration and purchase. The goal of every marketer in our turbulent economy is amazing value, staggering value, extraordinary quality at a great price. For marketers to generate buying, the goal must be irresistible trustworthy brand value.

The basic definition of customer value is: value is what you expect to receive, and what you do receive for what you expect to pay and do pay. We all have a mental value equation when we make a purchase. A consumer’s value equation is not math: it is a mindset. It is a mental process of evaluating an offering relative to its costs. However, over the decades, the consumer’s value equation has evolved from product or service for the price.

People assess a brand’s worth based on the total brand experience they receive (functional benefits, emotional and social rewards) relative to the total costs (money, time, and effort). But there is a very important new component to the equation. It is a value multiplier, and that multiplier is trust. Trust is the consumer’s belief that the brand will deliver the experience relative to the costs.

The new mental model of value is total brand experience relative to total experience costs all multiplied by trust. This is today’s new Trustworthy Brand Value equation. And this must be marketers’ focus. Success in troubled times requires creating and implementing a trustworthy brand value strategy right now. This is how to create buying so there is selling. The threat and consequences of our current pandemic and financial distress may change people’s behavior and habits. But, changed behaviors and new habits will not decrease the importance of value. Value does not vanish due to volatility. Trustworthy Brand Value is vital for a brand’s enduring profitable growth.

Trust is the consumer’s evaluation of a future experience with the brand: How confident am I that this brand will deliver this experience for these costs?

If trust in the brand is high, then as a multiplier, the perceived brand value is increased. If trust in the brand is low, then the perceived brand value is decreased. If there is no trust in the brand, if trust in the brand is zero, then it does not matter what the promised brand experience is relative to the costs anything multiplied by zero is zero.

Years of data support the point that credibility or expertise will not matter if there is no trust. Brand trust significantly affects consumer commitment. This influences price tolerance. Brand trust is a critical piece of the decision process. If you want a strong, enduring, loyal relationship with a customer, you must have brand trust. Trust is essential to the calculative process of brand acceptance.

Here are seven marketing actions for navigating in troubled times:

1. Do not confuse price and value. Many marketers continue to use these terms interchangeably. Price is what marketers charge. Trustworthy Brand Value is what customers perceive an offer to be worth. A sign of troubled marketing is defining value as merely low price. Do not reference a particular brand as a “value brand.” Each brand must be a value brand. Each brand is valued for different reasons. Price is important. However, a brand’s worth depends on a lot more than price. Value can happen at any price point. Value is in the eye of the customer: every customer is value conscious.

2. Maintain relative price. Do not increase price in the hopes of making up for lost sales. Avoid this losing strategy that sacrifices long-term value creation. Do not focus on deals: deals destroy brand loyalty. Deals increase price elasticity. Right now, many consumer brands such as Gatorade and Doritos have raised price significantly. At some point, consumers may no longer see the value in paying over $4 for a bag of Doritos. On the other hand, mobile phone service carriers are providing deals that basically give the customer a new phone for free. According to The Wall Street Journal’s analysis of pricing, the trade-ins for old or damaged phones offer up to a $1000 discount. Same with TV’s. NPD Group indicates that 71% of TVs sold from January through April 2022 were sold at discount.

3. Make sure that your brand’s perceived value is seen as a fair value for the promised experience. Marketers do not determine fair value. Customers do. Marketers set price. Consumers decide fair value: is this brand a fair value relative to competitive alternatives that I am considering? As The Wall Street Journal points out, many consumers are buying whole chickens at $1.56 per pound rather than spend $4.26 per pound for boneless, skinless chicken breasts. These consumers find the price of pre-cut, pre-skinned chicken breasts a poor value relative to cutting the chicken themselves.

4. Focus on maintaining and maximizing Trustworthy Brand Value not merely messaging. Do not allow marketing to focus solely on how to best communicate with customers, when to communicate with customers and across which devices. Brand management is much more than brand messaging. Creating and strengthening Trustworthy Brand Value is the goal of the business, not just finding the perfect messaging and media.

5. Create and implement a Plan to Win. A Plan to Win aligns the entire enterprise around creating and strengthening Trustworthy Brand Value. A Plan to Win puts the brand’s purpose, its promise, its five must-do actions (people, product, place, price, promotion) and its brand performance metrics on a single page. A Plan to Win is a brand-business roadmap for aligning all business units around the same goals, actions, and measures. Create cross-functional teams. Trustworthy Brand Value is not just for marketers. Finance, legal, sales, HR, IT and all other functions have a role to play.

6. Maintain or increase product/service quality. Cutting quality to reduce costs is wrong. Data show there is better return on investment performance after bad times if a brand maintains quality. Value added is an advantage. A strong value-added business is the best defense in troubled times. A recent article stated that hotels are increasing room rates while not increasing the service experience. This is not the way market during adversity.

7. Defend the profitable business that you already have. It is risky to focus on new products at the expense of beloved, existing brands. Focus on the business you do have before focusing on the business you do not have. Love the customers who already love your brand.

The time to guard against a recession is before the recession starts. Troubled times are trouble: but trouble for some does not mean the trouble for everyone. Do not just accept trouble; create trouble for others. Build and nurture your brands because your brands are your consumer protection. Your brands are a trust assurance policy for the consumer. “Troubled times” is not the threat; troubled marketing thinking is the threat.

Contributed to Branding Strategy Insider by: Larry Light, Author of The Paradox Planet: Creating Brand Experiences For The Age Of I

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Nevertheless, whether the times are good or bad there are always opportunities for a well-prepared business and there is ample evidence that economic downturns can actually be opportunities for future growth and competitive advantage. There are things that businesses should do on an on-going basis to realize new opportunities, but they are particularly important in times of economic hardship.

First, a business should examine its cash flow to assure that it has adequate funding for its operations. This examination should include a careful analysis of the sources of cash and identification of the potential vulnerability of these sources, e.g., a very big customer on whom the firm depends for a substantial portion of its business or customers whose business is highly dependent on the state of the economy. If there is vulnerability in the future, even if the business is currently doing well, it might be a good time to secure a line of credit that could be used if there is a disruption of cash flow. Diversifying the customer base to reduce dependency on one customer or a small number of customers is wise. Developing a customer base in which customers differ in their responses to good and bad economic times can also reduce vulnerability.

Second, a firm should look carefully at its expenditures and eliminate those that are not clearly linked to the generation of cash flow. This is certainly the first place to look when seeking cost reductions, but it is good practice even in the best of times. Expenditures that are not related to the production of cash flow are better spent developing current and future business. A key question to ask for every activity is how it contributes to cash flow in the short or longer term.

Third, a business should examine its customer base with the goals of identifying its most profitable customers and additional products or services the business might sell to these existing customers. Such an analysis might also reveal customers who are so costly to serve that the firm might wish to shed them. Selling more things to existing customers, capturing more “share-of-wallet,” is also a very efficient way to grow market share, increase revenue, and improve cash flow.

Fourth, a business should continue to market and, if possible, even increase its marketing efforts. Advertising and marketing are important signals to customers that a business is viable and will be around in the future. There is also an opportunity to capture greater market share from competitors who have reduced their marketing activities, which is common in a difficult economic environment. There is ample research that demonstrates that firms that continue to market through an economic downturn tend to emerge from the downturn with a sustainable advantage relative to firms that hunker down.

Finally, when other firms in an industry go out of business and disappear there is an opportunity to add to the customer base of the business. Customers who were doing business with a now failed business are likely to be looking for a new supplier. The development of strategies specifically focused on attracting such customers can be a powerful and efficient way to increase sales and market share.

The well–prepared business recognizes and prepares for opportunities that arise regardless of whether the economic climate is good or bad. An important part of such preparation is recognition that continued marketing spending and activities are important in economic downturns. This is the opposite of what most firms do. Most firms reduce spending in economic downturns and return to “normal” expenditures in good times. The firm that takes the road less traveled is likely to emerge a winner.

Contributed to Branding Strategy Insider by: Dr. David Stewart, President’s Professor of Marketing and Business Law, Loyola Marymount University, past editor of the Journal of Marketing and Author, Financial Dimensions Of Marketing Decisions.

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“Culture Is The Mark A Job Leaves On People” ~ Nathalie Gordon

Over at Campaign Live, Nathalie Gordon asks the question “What is workplace culture?” Her piece draws on informal social media research and gives any number of examples of the accessories to culture that are fun to read about: beer-filled fridges and creative collaboration spaces, but then she hits on the important points, saying, “Culture is the mark a job leaves on people. It’s what people say about where they work when they leave at night. And when they leave for other companies. It’s the way that where they work makes them feel. And the type of person it turns them into. It’s letting the people who work with you breathe. Explore. Develop. Live. And just generally caring about who they are and where they are going. It’s caring that they are happy but also that they are not… Culture is asking difficult questions and listening to the answers. Really listening. And sometimes being uncomfortable with what you hear.”

We haven’t had a recession in a time of heightened social media scrutiny. Back in 2008, outrage and offense were not the norm. The world was a different place. We can expect the next recession to put brands under a spotlight in the way they compensate executives, how their employees are impacted, and changes that happen through the supply chain.

Pay Cuts Instead Of Layoffs

I believe that how brands treat their employees will be the most important piece of this upcoming recession puzzle for brands to sort out. And this is because a vast majority of workers (at least in the US) are living paycheck to paycheck. Depending on which study you read, the number is usually more than 50% and closer to 75%.

Go back about 10 years and there are some interesting examples of brands that pursued a strategy of pay cuts versus layoffs. Casino mogul Steve Wynn announced salaries workers earning $150,000 or more would see a 15% drop in pay, those making less would see 10%, and hourly workers would be reduced from 40 to 32 hours. Commenting on his decision at the time, Wynn said, “We don’t want anybody on unemployment here, or without insurance.”

Mitchell Lee Marks, a professor at San Francisco State University says, “Initially, this sounds really good to people because we’re all chipping in. It’s almost like in World War II when housewives bought organ meat instead of steaks and chops to save meat for the boys. There’s a sense of camaraderie and loyalty. But what if you don’t win the war? Then why did we do that?”

The key to this lies in transparency. When the recession hits, step up your internal corporate communications and encourage employee engagement. Realize that a pay cut for top executives might mean a reduction in vacations whereas line workers might be living on a budget where every last cent is allocated. If you do have to enact pay cuts to save jobs, take a lesson from Acco Brands, who established an emergency loan program for employees when they had to drop pay by 47% for six weeks.

Most of all – start preparing now. Brainstorm events and triggers and get a rough idea for how your brand will respond. Because how you respond will matter to employees, customers, the market and certainly your brand’s future.

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How we cope with recessions also tends to reflect our pack mentality, sometimes to the detriment of brands. A good example of this is the B2B sector, particularly the high-tech sector, where I racked up many of my branding and marketing scars, a well-lit stage for observing herd thinking and its outcomes.

Recessions have an enormous ability to shuffle the market deck, and the brand chessboard coming out of a recession often looks quite different from the board before it. During the two most recent major recessionary periods – the 2000 downturn and the 2008 Great Recession – those B2B brands that chose to follow given wisdom were more likely to come out of the recession at a disadvantage while those who saw the brand potential of a recession tended to come out in a much stronger position.

Well Funded Brands Emerge As Winners

No one will argue that recessions are bad for sales and revenue, and the general thinking in B2B is to choke back spending on sales and tactical marketing, lower prices to encourage buying and pour everything into product development.

What often happens, though, is that at the same time, investment in the brand stops too, resulting in a low presence in the market. As well, pricing cuts and unclear positioning compound the problem, and the brand is in a much weaker position when the sun finally comes out.

Therein lies the potential advantage. Recessions cause marketplaces to go quiet, an opportunity for forward-thinking brands to invest in building awareness, telling stories, communicating unique value, and gaining greater reputation.

Recessions are also often long, and buyers are a forgetful bunch. Over the three to five years that a recession and recovery can take, the brands that are consistently present are top-of-mind when the economy rights itself.

As brands today eye the horizon for storm clouds, they should take stock of their current brand and marketing, and assess their opportunity to leverage a downturn by maintaining investment at a minimum or increasing investment at best.

 Successful Innovation Requires Awareness

Convention in B2B generally — and high-tech specifically — holds that during a recession, investment should be directed to engineering and product development.

The high-tech sector feels a significantly greater degree of pain during economic downturns for two reasons. First, it’s a B2B model and so feels the downstream pain of consumer loss of confidence to a much greater degree than do B2C markets. Think of it as an iceberg, with consumer firms the top 10% that you can see and the B2B firms the 90% hidden but keeping those consumer firms floating and upright.

Second, much of the value in many B2B firms is in its intellectual property, and so it seems to makes sense to increase value by investing in product development.

The downside is that even in presumably cold and logical B2B markets, those brands that are top of mind after the recession are those that have a distinct market advantage over those that peeled back on brand awareness and marketing. So, while conventional firms that spent only on product development have new IP as the economy recovers, those firms that also spent on brand building have market attention.

Now is the time for B2B firms to develop a balanced strategy for investment should the economy flounder. While continued product development is important, it should not be at the expense of brand awareness. Companies with high brand awareness and something to sell are far more likely to have a winning formula for market success later, while those with innovative new IP are more likely to be their acquisition targets.

The Recession Opportunity For B2B Brands

The tendency to cut back or even eliminate marketing during a recession is highly indicative of how marketing is viewed as a tactical overhead expense in B2B companies. It’s no surprise that those companies that straddle B2C and B2B – for example, many computer and electronics brands – dominate in their product categories in the B2B world. Even companies that are largely B2B but use the B2C brand playbook – for example, Hootsuite or HubSpot – dominate.

Sadly, though, for most B2B companies, marketing is about tradeshow booths, collateral and maybe some lead gen. Marketers need to up their strategic game and prove their value as revenue and profit generators, measurably demonstrating how marketing and brand investment drives customer acquisition.

A recession is a good time to take stock and plan for greater strategic value delivery:

1. Great talent is more available during a recession. Use this time as an opportunity to let go of the deadwood and bring in fresh thinking.
2. Look at the data you’re collecting and how you can take greater advantage of it by turning it into market and customer insights, and ultimately revenue and profit. It’s a great time also to talk to your customers and really understand what compels.
3. Tighten your positioning. Take stock of the space that your brand occupies in the landscape and determine whether your unique value proposition is the one that will best drive success when the economy recovers.
4. Develop a rock-solid measurement strategy. Marketing is often viewed as second-class in B2B because marketers do a poor job of measuring impact and ROI.
5. Review your content strategy and delivery mechanisms. Informative content is vital to B2B buying processes, and yet the B2B market is remarkably poor at it. This is a great time to break out with a “pay attention!” content approach as firms use the quiet time to do research.
6. Sit down with sales and rebuild your lead-to-profit cycle. From awareness to lead to close to profitable loyalty, this cycle connects the investment in marketing to a long-term profitable customer.

Although nobody likes a recession, they can be a welcome time of quiet that presents opportunity to companies that plan ahead with a strategy to build more brand awareness, balance investment across marketing and product development, and re-tool marketing to be more strategic and valuable as the economy recovers.

Contributed to Branding Strategy Insider by: Corien Kershey, Ph.D., Founder, Brand Clarity

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