| April 06, 2020
No one knows what the next few months will bring. Right now, much of what we once took for granted seems uncertain. But whatever happens in the months ahead, there will come a time of improved stability and recovery to a new normal. And because brands are built over the long-term, marketers will need to plan for when people can once again travel, shop and congregate without fear.
Here in the U.S., as in many countries, the need to limit the spread of COVID-19 has resulted in an unprecedented contraction of day-to-day life: restaurants and bars are shut, airline schedules are decimated, and ski slopes empty of people. The economic ramifications will be significant, with the shock traveling out from the immediately affected industries to influence others as people are forced to curtail spending.
But people still want to eat out, they still want to travel, and they will still want to go skiing (well, some of them anyway). The question is; will an enforced absence mean that their behaviour and brand allegiances change? Will they eat out more or less? Will they miss the casual dining chain that went bust and which one will they want to choose instead? Even if not impacted more dramatically, many brands will have curtailed spending on media, but now is not the time to ignore what your customers are thinking, feeling and doing. Rather, it is time to assess what is changing and think about how to position your brand for a swift recovery.
Tough times force consumers to reappraise their purchasing priorities and brand choices. Do they really need to buy a new car, eat out or take the plane? Do they really believe they are getting value from that premium brand, or would a cheaper one do just as well? Just because disposable income is constrained does not mean that people automatically opt for the cheap brand, most people will still want to be assured that they are getting good value for money.
This was actually the problem facing the hard discounter Aldi during the Great Recession. In 2008, Aldi had a small share in the UK grocery market and lacked meaning for many UK shoppers. Aldi had to convince UK shoppers that low prices did not mean poor quality and needed to build its emotional appeal. The brand’s “Like Brands. Only Cheaper.” sought to make a direct comparison with big name brands in a direct but humorous way. The campaign is still running and perceptions that Aldi is worth more than it costs are now higher than for Tesco.
While the impact differs by category (as noted, some have benefited from tough times), consumers typically employ four strategies to stretch their dollars: reduce, stop, defer and trade down. Understanding the interaction between consumer mindset and likely behaviour will be important to regaining brand growth when things recover. Marketers need to know the answers to these three questions:
- How many people have really adopted a more frugal mindset and decided to do without?
- What proportion of people who were forced to trade down were unhappy with their new choice?
- What percentage can be won back?
At the very least, marketers need to think about how they can maintain confidence in the brand, why is it worth more than the competition? Many consumers will either stop buying the category or will trade down to a different brand with whom they are not happy. Rather than wait, a smart move is to remind those people that that your brand is still the best solution to their needs.
In 2008 dish-washing brand Fairy Liquid in the UK had not grown for 10 years, and had a 52 percent value market share, a price premium of 66 percent compared to store brands and was already bought by 60 percent of UK households. Rather than go on the defensive, the brand focused in on what made Fairy meaningfully different. The combination of past messaging from advertising, a focus on value not price and the brand’s long heritage were distilled into the phrase “enduring care”. Increased media spend behind the new campaign and content that evoked the brand’s strong heritage helped increase average annual sales value as measured by Kantar Worldpanel grew by 40 percent.
When the world is in turmoil and uncertainty rules, making hasty or ill-judged decisions about why people buy can be detrimental. Knowing what your potential customers think, feel and do will help inform the right decisions to help your brand, if not thrive, then recover as quickly as possible. Cutting marketing and media spend might seem like the obvious choice, but many brands might actually do better to change strategy and invest for the future. But what do you think? Please share your thoughts.