The ongoing impact of the economic downturn is the stuff of nightmares for many people, but for marketers, it is an opportunity to differentiate their brands from the competition.
Promotion and pricing strategies are key to maintaining consumer spending in a recession, but jumping on a price-cutting bandwagon can lead to severe financial loss. Experts claim a better approach is to focus on building brand loyalty and trust in an otherwise volatile environment.
Package design is also likely to play an important role, especially in supermarkets, where shoppers are scouring the aisles for value. Half the battle is won if consumers see something new.
Andrew Knowles, chief executive at JKR and a speaker at the upcoming conference on marketing during the credit crunch, says brands can maintain value by being unique. He emphasises the link between higher price and perceived uniqueness, saying that a brand can charge a premium price if they offer something consumers believe to be truly different.
However, during the credit crunch brands have to work harder to justify that premium price, argues Knowles. 'Brands have to maximise the reward of buying their brand and minimise penalties like time and price,' he says.
'In a crowded supermarket, brands have to provide a short-cut decision which is largely habitual. Unique brands will sidestep the price penalty and reinforce the rewards of their brand. Design can create a desire on an emotional level that is immune to competitive response.'
As consumers begin to scrutinise the uniqueness a brand offers, so flimsy strategies will disintegrate.
'In terms of luxury products, people will start checking what exactly it is that makes something luxurious. In the cosmetics industry, for example, a lot of the price goes on the packaging of the product. As a result the ingredients aren't as good,' says Sarah McCartney, head of brand publications at cosmetics company Lush.
The banking industry crisis is an indicator that the downturn is here to stay, but it is impossible to know how long it will last. Brands must address price costs now to offer long-term value.
The unique angle
No customer wants to feel as if they are buying cheap, but at the same time they will be closely watching their expenditure. 'Brands that will do well are those that haven't been taking advantage in the past. They give a genuine good service, produce good quality products and have built up brand loyalty,' says McCartney.
Brands must innovate, renovate and assimilate to take initiatives that create perceived uniqueness - even the smallest edge can help a brand carve out its niche. JKR discovered that consumers will pay more for Stella Artois in a chalice glass, for example, as the glass reassures customers of the brand's value and justifies the premium price.
It is crucial for ethically driven companies such as Lush to maintain their reputation of commitment to their causes, for the benefit of loyal customers as well as consumers seeking a responsible brand.
A recent display in its Regent Street branch illustrated the retailer's desire to do this. A former employee, now a performance artist, hung herself from hooks to demonstrate the horrors of shark-hunting and promote the sale of Lush's shark fin-shaped soap. Proceeds from sales of the soap were donated to the Sea Shepherd Conservation Society.
'The shark-fishing industry is disgraceful, and simply allows people to show off and say they can afford a 拢50 bowl of soup,' says McCartney. 'The performance was a protest which raised money and as long as we continue to make enough money as a business, we're going to support these things.'
Brands must be prepared to put up a fight, using all the design and promotional weapons in their armoury. The recession worries many, but it will come to an end. It is the brands that remain positive that will not only survive, but reap the rewards.
EVENT DETAILS
Fighting the Credit Crunch by Driving Brand Value through Consumer-enticing Promotions, Value-added Activities and Retail-focused Pricing
Date: 18 November
Venue: Jury's, Great Russell Street, London
Speakers include: Giles Brook, commercial director, Innocent; Lucy Gleeson, business insight and strategy manager, McDonald's; Sarah McCartney, head of brand publications, Lush; Wilfred Emmanuel-Jones, chief executive, The Black Farmer; Tom Fishburne, head of marketing, method; Andrew Knowles, chief executive, JKR; Deborah Robinson, director of food retail marketing, The Co-operative Group; Simon Maclean, category strategy controller, Mars Snackfood UK
- For information, call Haymarket Conferences on 020 8267 4011 or visit www.creditcrunchmarketing.com.