Brand strategies for an economic downturn

In financial markets as in marketing, perception is often reality. Today, while all economists may not agree that we are officially in a recession, consumers are increasingly pessimistic about the state of the economy and are behaving as though we are in one. As the cost of oil and food continues to climb, and property values continue to plunge, consumers are looking for ways to save and also maximize value when they do spend. For marketers, dropping prices is always an option, but this often does nothing more than undermine margins and brand equity. So, how do we go about 'recession proofing' our brands for the realities of today?

If successful brands are those that generate consideration and loyalty, in good times and bad, all brands would be wise to invest in these qualities during recessions, when consumers are much more selective about what they purchase. The dotcom bust, 9/11, corporate scandals and the war in Iraq all contributed to the recession of 2001–2002 and shook consumer confidence in government, business and other institutions, including brands.

DECLINE IN CONSIDERATION AND LOYALTY

In the late 1990s, consumer confidence was on an upswing, fueled by the dotcom frenzy. Interestingly, we saw in BAV that emotional loyalty, defined as a preference for a certain brand over all others, moved upwards in line with consumer confidence indices. The spike in emotional loyalty during the late 1990s/early 2000s can be attributed to the aspirational quality of many higher-end branded products that were suddenly within reach of a wider range of consumers. But, in 2002, exacerbated by the terrorist attacks of the previous year, emotional loyalty crashed, along with the financial markets. From 2000 to 2002, emotional loyalty and preference as measured in BAV declined by 27% and 20% respectively, whereas the typical change year-on-year is approximately 5%.

SPECIFIC CHALLENGES FOR TODAY

Data from the last recessionary period highlight the importance of value as a basic requirement for consumer brand sustenance. However, as the Detroit car makers can testify, addressing this consumer need simply by dropping prices is no guarantee of long-term prosperity.

Therefore, a wider reframing of value must become at least one part of the equation. Low price alone has not proven to be enough to build a strong brand. We know that now more than ever, it is important for brands to demonstrate leadership, vision and high performance if they are to meet consumer expectations. To attain optimal loyalty and consideration, brands must guide and inspire consumers in their quest to offer more value. The following are five approaches that different brands have employed that have helped them achieve these goals.

1. Highlight the Value Proposition that Enables your Brand to Stand Out

Marketers can change the way consumers think about their brand by reframing their value proposition. During the last recession, luxury brands like BMW and Mercedes achieved growth, at a time when one might assume they would face declining sales. By highlighting their total cost of ownership and offering fixed maintenance costs, they managed to achieve volume growth, as buyers became attuned to value rather than sticker price.

2. Remove Cost while Adding Additional Benefit Appeals

Often, there are opportunities for a brand to remove or reconfigure aspects of its product, but to do it in a way that does not reduce value – or that even increases it. For example, Poland Spring water recently changed its packaging, saving on both cost and materials, while simultaneously creating a leadership proposition that is environmentally appealing.

Source: Admap Magazine

To be continued.

Online Reputation Management – Controlling the Conversation

One of the most difficult aspects of managing an online reputation is managing and controlling how people talk about you or your business online. Those online discussions can often make or break your business communication results. The impact of negative discussions or embarrassing content circulating within social media circles can often be catastrophic to an organizations overall market reach and positive return on investment.

The focus of anyone trying to create consent within a marketplace should be to persuade and not manipulate. After all, the goal of business communication and of reputation establishing media is to create positive and long-term results. How you create these results and subsequently control the conversation will have far-reaching effects on your online reputation.

Western media has taken on a direct sales oriented mannerism and many marketers fall victim in mimicking this approach while trying to establish an online reputation. This approach works for some but for most, it ends up having a very negative impact on controlling conversations, creating consent and return on investment models. The reason for the negative results is that people attempt to manipulate others through presenting information or sales pitches guised as emotional appeals that either are perceived as unfair or are emotionally charged to force consent.

This approach destroys any chance of building goodwill within your target audience. It also affects their willingness to engage or discuss your content in a repetitive or meaningful way. Manipulation creates a violently competitive negotiation environment. The problem with this type of atmosphere is that the people you have induced to be incensed threaten your reputation on a daily basis. Controlling this type of conversation is virtually impossible and most time damaging.

The resolution to this problem is to create a participant group within your target audience of creatively conservative and loosely guided members. The only effective process to accomplish this goal is to employ a persuasion-based campaign. The difference between a manipulative campaign and a persuasive campaign is symbolically holistic. Manipulation employs tactics that force a participant to act through emotionally charged and fear based tactics. Persuasion based campaigns employ a mutual benefit based model that affects both sided positively and creates good will over time. Persuasion causes people to act because of relational connections at both logic and emotional levels. Persuasion leverages opportunity and complimentary benefits.

Using persuasion to control conversations and create consent over time is far more effective measured over long-term return on investment models and easily employed within indirect marketing campaigns. Indirect marketing leverages the benefits and opportunities presented to an audience without the need to commit or be responsible. Messages embedded into indirect marketing presentations allow you to effectively groom and control conversations without the propensity of manipulation and possible destruction of good will.

Join the Conversation

Followers of Joseph Jaffe’s blog and podcast ‘Jaffe Juice’ - www.jaffejuice.com - will be familiar with his unorthodox approach to marketing, also encompassed in crayon, the marketing company of which he is president and founder.

Join the Conversation develops the arguments initiated in Jaffe’s best-selling book Life After the 30-Second Spot, and explores the changing ways consumers give and receive information, which is in turn creating new possibilities for marketers to engage with potential and existing customers.

Jaffe’s insights are targeted at marketers but would arguably have relevance to any business unit. The author clearly hopes to inspire brands to capitalize on what he believes to be the untapped opportunities which lie outside the traditional approaches to communications associated with advertising and PR.

Citing The Cluetrain Manifesto, the marketing tome which posits that all markets are human to human conversations, Jaffe claims current marketing techniques continue to communicate in a one-sided, one-to-many fashion in spite of the opportunities provided by the internet to create far more personal, two way dialogues.

As he puts it: “if engagement is an active state we strive for our consumers to exhibit, then we need to do likewise”.

Jaffe discusses the marketing implications of growing numbers of what he calls ‘prosumers’. These are the producers of content such as blogs who are also consumers, and likely to be part of ‘generation i’ - namely, those involved in the social side of media.

Such individuals, in Jaffe’s view, are rewriting the rules of persuasion - ‘production is the new consumption’. Bloggers who are also consumers are extracting power from and imposing influence upon their communities, and building on like-mindedness and trust.

Control has switched from the marketer to the consumer, who can increasingly avoid unsolicited promotional messages and as a consequence ‘missed opportunities are conversations not capitalized on’.

This backdrop is identified by the author firstly as an opportunity to build connections, such as the support, exposure and encouragement embodied in Weight Watchers.

Source: WARC

Herd: how to change mass behaviour by harnessing our true nature

Mark Earls has been acclaimed as “one of the advertising scene’s foremost contrarians”. He has held seniorpositions at Ogilvy and St Luke’s, and his first book, Welcome to the Creative Age, was widely-read and discussed.

His latest, Herd, challenges some popular theories about targeting and influencing mass behavior and is likely to be most relevant to planners, strategists and indeed anyone interested in motivating groups.

The key premise of the book is that “We are a we-species who do individually what we do largely because of each other”.

People think they act as individuals mainly because their memories are unreliable. In fact, they do not behave in a rational manner, especially when it comes to purchase decisions.

Earls however contends that “We are not a collection of discrete, idiosyncratic individuals but a herd animal acting under the influence of others. We are the super social ape”.

In the book’s theory of Herd Marketing, there are seven principles: Interaction, Influence, Us-talk, Just Believe, (Re-)lighting the fire, Cocreating and Letting go.

Some of the key tenets of this system are:

• The views of individuals are unreliable so marketers should not focus on them alone. Instead, they should understand how consumers interact and remember that consumer to consumer communications is the key.
• Theories of the “most valuable customers” are wrong. Rather, marketers must seek out the most influential customers.
• Communication is behavior and needs to be recognized as such. Word of mouth can be a company’s most powerful sales tool.
• Successful companies are built on sound, authentic founding beliefs about which they are passionate. These beliefs are expressed in all forms of communication and apparent at any consumer/staff touch point. Because consumers find these types of companies more interesting they are more prepared to engage with them.

Source: WARC

Predictably Irrational

Dan Ariely is not your average economist. A professor at the Massachusetts Institute of Technology (MIT), Ariely is a populariser of behavioral economics - a field attempting to explain people’s often irrational decision-making processes and wider social trends by reference to psychology experiments.

Several practitioners of this school of thinking - including Ariely - have rising profiles as social commentators in the US media.

With its particular focus on how individuals’ behavior can be influenced and manipulated by pricing policy and by the expectations created for a product or service, Predictably Irrational has a general relevance to marketers.

It is likely to of most interest to those involved in influence planning, pricing, comparative advertising campaigns and neuromarketing.

In this book Ariely details several case studies.

1. Comparative price advertising: An Economist promotion is analyzed to illustrate the common experience of consumers comparing price offers.

2. The power of free: Further to the free pricing experiments described above, Ariely makes a case for the implications of “free” offers in the real world.

3. The power of expectations: A student was invited to sample two beers and enjoy a free glass of the one they preferred. One was Budweiser and the other - labeled MIT Brew - was Budweiser laced with balsamic vinegar. He chose the second.

4. Overcoming consumer procrastination: To test theories of procrastination, Ariely gave students different deadlines for handing in their papers.

5. The collective influence on decision-making: Does the fact restaurant diners order out loud and in sequence affect the menu choices individuals make? If so, does this ritual enforce conformity or non-conformity? To investigate these questions, Ariely and colleagues conducted experiments in a bar.

Ariely uses these experiments to restate the book’s general point:

“According to the assumptions of standard economics, all human decisions are rational and informed, motivated by an accurate concept of the worth of all goods and services and the amount of happiness (utility) all decisions are likely to produce….

“Behavioural economists, on the other hand, believe that people are susceptible to irrelevant influences from their immediate environment, irrelevant emotions, shortsightedness, and other forms of irrationality…If we all make systematic mistakes in our decisions, then why not develop new strategies, tools and methods to help us make better decisions?”

Takeaway points:

• Consumers often act in ways which are irrational, systematic and predictable
• The values attached to products and services can be heavily distorted by the context in which things are valued, the presence of other individuals or the absence of directly comparable products
• FREE is not just another price, but a different and irrational motivator of consumer behavior
• Even small-scale empirical data can be used to overturn long-held assumptions
• Expectations, including those created by brand marketing, can persuade people to hold irrational views, and make irrational choices, often against their own self-interest.

Source: WARC

Dynamics of the Downturn

Price comparison, category switching and “social” online shopping could all increase in the downturn as consumers reappraise routine behavior and choices.

This theme connected the four presentations at the Future Foundation “Changing Lives” event in December 2008 which looked through a recession-tinged lens at prospects for the UK economy, consumer attitudes, technology take-up and eco-consumption.

Millions of Britons will probably sail untroubled through the downturn in terms of their personal wealth, according to this analysis. However a prevailing slump “mindset” - we were told a recession can be “psychologically national even if it is economically marginal” - will encourage most groups to re-evaluate their habits to some degree and will force brands to respond, especially on pricing.

In the UK specifically, recent recessions have tended to be shorter and less damaging than those from previous decades. And average UK household disposable income continued to rise during the recessions of the 1980s and 1990s.

Nevertheless, the key elements in determining the UK consumer’s state of mind in this context are the health of the property and labor markets. Serious, long-term declines in both could give this downturn a different shape to its predecessors.

Above all, recession will mean “an insistent and potentially rewarding invitation to consumers to reconsider everything they do/buy/desire”.

This will result in a fiercer scrutiny by consumers of all claims, and declining tolerance for unsatisfactory experiences. “Where decline is already under way."

Adspend prospects in Europe, the US and Japan

Several key European markets are predicted to weather the advertising recession better than the US or Japan, according to the latest European Advertising & Media Forecast, published by WARC.

The internet and outdoor (except in Japan) are both well placed to ride out the storm.

Overall, ad spending levels appear most stable in the Eurozone-12, with a flat forecast for 2009, at current prices, following on from expected negligible growth in the region in 2008.

In real terms (accounting for inflation), the situation is already far worse than is at first apparent in some markets. Spending is set to drop by 7% in Spain, following a predicted slump of just under 12% in 2008, and by 2.4% in France.

UK advertising revenues are also due to drop by 6.5% year-on-year for 2009 in real terms.

Marketing spend will also post a 1% decline in the US at current prices, and will be down by 2.5% in real terms, following an estimated fall of 4.6% over the course of 2008.

In terms of media, online will continue its upward trajectory across all markets, albeit at slower levels than previously forecast.

Growth will be highest in the Eurozone-12, at 20% year-on-year at current prices, while the medium will expand around 15% in the US and Japan, compared with just 9% in the UK.

It is possible that the current downturn will accelerate changes in the media mix, most notably the rise in advertisers’ use of digital screen media of all kinds, which were already underway before many economies hit the buffers.