The recession for brands is just beginning

It was let slip on 24th January that we would be facing a May 6th general Election and this will surely change everything, whoever gets into power.

I don’t want to be a doom and gloom merchant by any stretch of the imagination as recessions have traditionally been a superb opportunity for well managed businesses to establish a wider market share and trade through, without their weakened competitors who fall by the wayside as economic casualties.

According to Credit Action, the average owed by every UK adult is £30,226 (including mortgages), which is 133% of average earnings.

There is also the small matter of how much has been loaned on our behalf to bail out the poxy bank, which runs into the hundreds of £billions and the £200 billion that has been spent quantitative easing.

Well, from May onwards, we’re having to start paying for it through higher taxes and lower public spending, so I believe we will be facing our most austere era for many generations.

My own family had a very successful soft drinks business based in the South east that was the main supplier through the war years. When the country emerged from war in 1945 it was seen as the drab/austere choice that had almost been forced on them for the last six years and people walked away in their droves eventually leading to it’s collapse in the 60’s.

So what does all this mean for brands?

It’s entirely what you make of it!

1. It’s a chance to grab market share

By offering great value, better quality products that people care about. This is far more than just offering the cheapest price for a poor product as it is my opinion that in really tough times, people buy far fewer cheap products, they buy ones that they think will last and dispose of the discretionary purchases.

How good can you make your product for the money, not how cheap can you get away with making it?

2. It implies that online price checking will become vital

We are in the perfect economic market, where we can all check the price against anyone else out there. If the product is identical, why does it matter where you get it from – as long as you can trust them.

3. The weak will leave the market

In the design market, there are now loads of ‘design firms’ with no designers. They have a front person (suit) who then subcontracts the work to whoever is available. Yes it saves money, but it is a sure way to introduce inconsistencies and slowly undermine brand equity.

4. It is the time to reinvent constantly

Like the Lyle’s example above, I guess my Grandad stopped innovating and let his company slowly die. People became bored, because the product became boring to them. A brand has to constantly evolve and introduce new touches, tweaks and ideas or people will have excuses to flirt with their peers.

5. Don’t just cut costs, cut the right costs

In this great article from Accenture, they point out that Companies that did really well in the last recession did not just cut costs — they cut the right costs. They diverted resources to activities that actually created value.

So that’s it.

Like I wrote last year when Woolworths waddled pathetically into financial obscurity through lack of effort and like any good Cub Scout would advise.

Be prepared.

The Tiger brand is well and truly tanked

Not one to kick a man when he’s down but some of the numbers that surround Tiger Woods’ sponsorship deals are starting to reach the public domain. So lets look at a few of them and see which ones have a chance of surviving.

1. Gatorade

The Pepsi owned gatorade brand is one of the biggest at with a multi year $100m deal. Gatorade is a drink that aims to promote sports, concentration and clean success. The drink they have created is Gatorade Tiger, which you can see here.

Gatorade Tiger - Put a Tiger in your tank next time you need to perform!

I would imagine, if it’s selling they’ll keep it in their line up anyway and one thing he isn’t short of is coverage at the moment, despite his being in total hiding for over two weeks now.

They announced on Wednesday last that they would be withdrawing it, but that this was nothing to do with his personal problems. It’s a bit of a coincidence though isn’t it.

The long term damage for Gatorade’s brand is to be established but with Pepsi, they will distance themselves very fact if they need to.

2. Accenture

These are the people that just escaped from the corporate clutches of Arthur Andersen that was brought down by the Enron scandal. They have it in their interest to both act and appear to be as clean as clean in a brand sense. Any sniff of a scandal will see them running for the hills.

They have just removed the Woods image that has been on rotation on their front page of their website. Oops.

3. Gillette

Thierry Henry is allowed to cheat and put France through to the World cup finals and deprive Ireland from their chance to progress and yet he still seems to be acceptable to the brand.

But infidelity runs deeper and hits harder. We become a prudy bunch in the uK and the US even more so, so Gillette may well drop him altogether.

Or will they?

When Thierry had his affair with celebrity make-up artist, Sadie Hewlett, they didn’t drop him then, so maybe Tiger will survive.

Gillette's Roger,  Thierry and Tiger - a really wholesome bunch of gents
Gillette's Roger, Thierry and Tiger - a really wholesome bunch of gents

I guess all eyes are on Roger Federer now to keep his end up (so to speak) and to see if they can make it a full house of cheats. Gillette hve aid they will be cutting back the role that Tiger plays in their promotional material.

4. Nike

Nike is obviously one of the names he’s most closely associated with and he appears to still be at least listed on their site.

It’s hard to say how high profile he was on this site before, but he’s now only listed under their athletes and even then he is last on the list. There are no other pictures of him on the front pages of the site at all.

That sounds expensive.

5. EA Sports

Tiger Woods golf for the Wii, is one of the only computer games I have ever played and I loved it. Its worth over $60m as a brand and I don’t believe this will take one tiny hint of damage. Maybe they’ll push him on the deal next time they renegotiate, but who else have they got in the game that is anywhere near as high profile?

6. Summary

There’s obviously others like Swiss watch maker TAG Heuer and AT&T who all help with his $100m a year sponsorship income, but for me, after this does down a little, most if not all will stick by him as a brand spokesperson if he continues to be good for their business.

He needs to realign his own brand a little. He can’t really claim the moral high ground anymore and he will struggle massively with some mainstream family brands, but if he adjusts his position to be a little more ‘laddy’ and works the media a little, he can possibly recover his status.

David Beckham did it by concentrating on being good at what he does and by being photographed everywhere with his kids, looking like he’s having fun.

Hot off the press

It’s just been announced that Accenture will be withdrawing from the deal with Tiger, stating that he is no longer the right representative for their brand. It looks like they are being as sensitive about any potential bad press as I thought they maybe. There will now be others following. Expect Gatorade to go more public pretty soon.