Marketing in Uncertain Times
In times of economic uncertainty, marketers tend to shift their focus from long-term strategy to short-term sales. However, lessons from recent recessions provide powerful arguments for maintaining a longer-term view, even in the face of pressure to cut advertising in favor of promotions. Marketers who resist this pressure and use their budgets effectively and creatively will find that their brands emerge from the tough times in good competitive shape.
By Millward Brown
While most parts of the world have been officially out of recession since the summer of 2009, the economic recovery in most Western countries has not been strong. The current uncertainty about the economic climate, especially the speculation that we may experience a double-dip recession, is making both consumers and marketers nervous. During the 2008 downturn, there were regular reports of consumers struggling with their finances. For example, twothirds of Australians reported that their spending habits were affected by the financial climate, with four in ten reporting that they spent less on staples. (And technically, Australia was not even in recession.) In the United States, spending on credit cards increased markedly in areas of high unemployment, and fewer consumers reported paying their credit card bills in full every month.
During times such as these, in the face of pressure on people’s budgets, many marketers choose to meet profit targets by using promotions to maximize short-term sales while cutting investment in long-term build-branding activities.
The Importance of a Strong Brand
While the reaction to cut investment in seemingly nonessential activity is understandable, it doesn’t bode well for brands in the long term. Our analysis (see chart below) shows that as a group, the strongest brands—those in the BrandZ Top 100—have outperformed the S&P 500 since the recovery began.
Conversely, brands that were already weak going into the recession tended to suffer disproportionately.
A powerful example is the retailer Woolworths. Though the chain went out of business in the United States in 1997, it was still conducting business in the UK during the first decade of this century. However, its brand equity pyramid had shrunken considerably from 2001 to 2008, and Woolworths failed to survive the recession, closing its doors in 2009.
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