Managing Brands through a Recession Lessons from the early 1990s

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Managing Brandsthrough a RecessionLessons from
the early 1990s
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Introduction

• This brief study looks at some of the lessons
  that Through the Loop has learned from studying
  brand behaviour during the recession of the early
  1990s in the UK.
• This used a systematic analysis of a set of FMCG
  brands over the early 1990s to identify common
  success factors and to determine possible
  strategic implications for brands.
• The FMCG brands covered several categories and
  many were considered to be market leaders.
• Brand behaviour was analysed by corporate and
  marketing policy as well as competitive pressure.

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Introduction

• The context is that this was the second recession
  within a ten-year timeframe and there had been a
  profound change in consumer behaviour.
• The net effect is shown in consumers who are
• conservative
• pragmatic
• knowledgeable
• sophisticated
• keenly price-conscious

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Introduction

• Brand premiums have to be justified even more
  than they were in the past.
• Private label has become a smart choice
• quality alternative not cheap alternative to
  branded product
• private label encroachment into categories which
  were believed to be branded domains
• private label ONLY categories

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Identified Brand Success Factors

• The following factors were identified as drivers
• Corporate management policy to cope with
  recession.
• Innovation (genuine technological innovation,
  product development inside and outside category).
• Control over and use of innovative distribution
  channels.
• Management of price-value relationship and
  justification of the brand premium.
• Communications issues

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Identified Brand Success Factors

• Communications issues
• focus on core values
• advertising weight and share of voice
• innovative use of media and deriving media
  efficiencies
• development of new target audiences
• relationship marketing
• powerful promotions
• maximising sponsorship opportunities
• direct fight on private label
• building corporate brands
• longevity of agency relationship

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Context for Hypotheses

• A number of marketing hypotheses were generated
  following the individual brand analysis.
• Successful leader brands are modifying their
  behaviour not only due to the recession but also
  due to some of the changes in the marketing
  environment. For example,
• Consumers have changed from risk seeking to risk
  adverse
• Consumers seek genuine and not invented value
• Consumers have entered the era of personal choice
• The distribution universe has become more complex
• The media universe is fragmenting

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15 Marketing Hypotheses

• Hypothesis One
• Proactive management going into a recession
  establishes the organisational mind-set for brand
  rationalisation, it does not always confer market
  success in its own right.
• Hypothesis Two
• Innovation must be built into the process of
  brand development. Genuine technological
  innovation is achieved by few, product
  improvement by many.

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15 Marketing Hypotheses

• Hypothesis Three
• Transferring brand equity proves to be a lower
  risk strategy, more brands will seek this route.
  Credible brand equity is needed for this. Failure
  carries the risk of diversion of resource and
  weakening of the main root equity.
• Hypothesis Four
• Control over distribution and use of innovative
  distribution channels will become more critical.
  With the current pressure on conventional
  retailing, proactive brands will seek new forms
  of distribution.

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15 Marketing Hypotheses

• Hypothesis Five
• Monitoring the brands price-value relationship
  is critical. Careful orchestration of brand
  premiums is essential and will become more
  difficult over time. Justification to the
  consumer will be needed.
• Hypothesis Six
• Core value focus used to be achievable with a
  single strategic execution. Now core values need
  to re-expressed with greater variety. Continuity
  of messaging is critical, interpreted through a
  variety of themes.

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15 Marketing Hypotheses

• Hypothesis Seven
• Brand territory, the sum of all associations and
  attributes held as a reference in the consumers
  mind, is flexing as never before. Successful
  brands are pushing and evolving these boundaries
  through new communications channels. In this
  process, corporate brands are becoming more
  important.
• Hypothesis Eight
• Conventional rules about required advertising
  weight in terms of market share and share of
  voice have altered. Portfolio management and
  ROI/SOM have become more important.

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15 Marketing Hypotheses

• Hypothesis Nine
• Brand boundaries will need to be flexed through a
  variety of integrated marketing tools. These will
  include trademark merchandising, PR, sponsorship
  and direct marketing. These will surround the
  brand with a more powerful halo. In this process,
  the corporate brand identity becomes more
  important as it adds leverage.
• Hypothesis Ten
• As brands mature, they will need to rejuvenate
  the target audience for brand health and they may
  also need to redefine the target audience.

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15 Marketing Hypotheses

• Hypothesis Eleven
• Relationship marketing will become a fundamental
  part of brand communications in a fragmented
  media environment. Database construction will
  become a vital part of brand activity.
• Hypothesis Twelve
• Powerful promotions can push market momentum but
  real promotional breakthrough is achieved by few
  brands. Often these are cross-promotions.

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15 Marketing Hypotheses

• Hypothesis Thirteen
• The use of sponsorship opportunities surrounds
  the brand with a larger communications halo. It
  permits the brand to take a larger share of the
  consumers mind.
• Hypothesis Fourteen
• Direct marketing attacks on own label will be
  muted. Brands will need to define, flex and
  expand their territory to stay powerful in this
  challenging marketing environment.

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15 Marketing Hypotheses

• Hypothesis Fifteen
• Powerful corporate brand identities enable
  brands to be stronger in the marketplace. They
  will perform and expand number of roles
• maker assurance
• corporate credentials
• achieving media efficiencies
• maximising the us of innovative media
  opportunities
• increasing the territory of the brand in
  consumers minds

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About This Presentation

• This is a shortened version of a presentation
  given by Carol Samms, Managing Director of
  Through the Loop, to the International
  Advertising Association in Vienna in January
  1996. At the time, Carol Samms was Vice President
  of Information Services for McCann-Erickson
  Worldwide and Director of McCann-Erickson
  Research Information Consultancy.

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Brand Positive

• Brand Positive is part of the ongoing Knowledge
  Development Programme at Through the Loop
  designed to understand how successful brands are
  managed through times of recession or slow
  economic growth.
• More details of Brand Positive are available on
  the Through the Loop Web site
• http//www.throughtheloop.com/BrandPositive/