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Lindsay Pattison, Chief Client Officer, WPP

Turbulent times call for action by brands

Lindsay Pattison, Chief Client Officer, WPP


When economic indicators are tough, strengthening the value proposition, adding value beyond the product, and building long-term brand equity, are vital says WPP’s Lindsay Pattison

We are in uncharted waters – consumers and businesses alike. The OECD’s Consumer Confidence Index is at all all-time low, and the temptation for us all is to pull in our horns.

But the paradox for brands is that harder economic conditions can present unrivalled opportunities to build deeper and more meaningful connections with consumers, and ultimately help brands grow in the longer term. Even in 1974 – when a previous oil crisis was bearing down on businesses and consumers, and US inflation hit 11% – advertising revenue in the US still grew at 6%, a figure that was below inflation but was not a decline in nominal terms.

Companies who use this time wisely and make the right choices, in the short and long term, will be best prepared for the next growth period.

Three actions for brands

We are seeing three actions – individually or concurrently – being taken by companies who are preparing for the upturn. They are:

1. Strengthening their value proposition

Companies are sharpening their brand’s ‘why’ to make sure it is clear and visible at the moments that matter. Understanding why people buy specific products, especially in the current context, is vital – after all, this may have changed with the onset of the downturn. WPP’s ‘BAV Global Brandscape 2022’ study shows brands with strong value propositions are 91% more loved and 100% more recommended. No wonder Boots who, in collaboration with WPP’s The Pharm, has launched a three-part value campaign to help customers with the cost-of-living crisis.

2. Adding value beyond the product

This requires innovation and boils down to brands asking themselves: what experience, service or value can they offer in addition to their product? Loyalty schemes are the tried and tested formula, but there are other ways of adding value. For example, T-Mobile’s ‘Coverage Beyond’ initiative expands coverage and keeps customers connected beyond their usual expectations. And Mars Petcare is taking a platform, not project, approach to innovation by experimenting with a proposition called ‘MyPerfectFit’, which allows consumers to personalise petfood.

3. Building long-term brand equity

While the tendency is to cut costs in times of constraint, Kantar’s BrandZ data clearly indicates that brands who invest during uncertain times are nine times more likely to recover when the market stabilises than those who don’t. Several of our clients are already doing this. Intel, for example, has launched a brand campaign entitled ‘How Wonderful Is That?’ to reinforce it continued relevancy with consumers.

But before pursuing any of these approaches, companies must, of course, start by understanding the complexities of consumer behaviour.

Consumer behaviour is multi-dimensional

Consumer behaviour – human behaviour generally – is complex. That complexity will likely magnify in a recession.

Recessionary consumer behaviour is not just about spending less. Consumers prioritise their spending when times are tough. Non-discretionary purchases tend to stop first, and brands with weak equity and unclear value propositions lose out to competitors in the face of higher consumer expectations of value.

Of course, consumers may trade down to cheaper alternatives. They may buy more in bulk, and plan better. They may postpone purchases. They may downsize, shift channels, opt out, or even choose different products that meet similar needs. In short, during downturns, consumers aren’t looking to cheapen every aspect of their lives. They prioritise by looking to save money in one place so that they can spend it elsewhere.

Nevertheless, we know the challenges for businesses are very real. A recent survey of CEO and C-suite members conducted by The Conference Board revealed that business leaders are still thinking long term and are continuing to invest for future growth. But over half the boardrooms surveyed are passing down price increases to consumers, and almost the same number are cutting costs.

These actions are clearly critical to weathering the impending storm. But executing these actions alone – without simultaneously reacting and adapting to changing consumer behaviours – could pose huge risks during and beyond recession.

The need to keep generating demand and preference for brands is important. We are seeing companies in the retail sector being particularly proactive. Some are positioning themselves as being on the side of the consumer. Ogilvy’s ‘Be a Smart Cookie’ campaign for Sainsbury is a case in point – it helps customers maintain financial control, shop smarter, and access personalised discounts.

In the end, having a short and long-term mindset – and being optimistic – is what is needed now. Taking additional action alongside any protective measures, such as price increases, is vital to building brand equity so that brands do not risk losing out as consumers re-think where they prioritise their spending.

Lindsay Pattison

WPP

published on

01 January 0001

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