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.

Branding in a recession

Few of us can be in any doubt that times are tough for most sectors of business and all of us will have to adjust our business models to survive and maybe even thrive.

Having started our own business in a recession, we know all about how to trade in these times. There are two key choices:

1. You hide and panic and hope it gets better

2. You stride out confidently knowing it is as bad or worse for your peers and take the opportunity to grab their market share.

Too many businesses drift into receivership by quietly fading away with a whimper, but the best of us use it to adapt and possibly expand and help redefine what we do to make it far easier for our customers to connect with our businesses.

Only if you truly connect with your customers will they continue to trade with you.

There are three ways that we believe we act as customers.

1. Customers want real value.
This does not mean a cheap price, but a sensible price for a good quality product. We would say that it is more likely that people will buy fewer higher quality staples than lots of cheap poor quality products.

So with clothing it would be the likes of Primark who would see a negative effect as they are so dependent on high volumes. Those who concentrate on really looking after their customers and listening and acting on what they want, such as John Lewis and Next will almost certainly do very well in the long run.

They can even offer value ranges for those who wish to trade down without totally compromising on quality.

2. Customers are nervous about commitment.
Again, what this means to us is that the answer is NOT huge great lead times for when you have to pay for things. An ad on TV yesterday was claiming that you paid nothing until 2010 and then took interest free credit. That is just ludicrous and I’m sure it will not be what people want when they are nervous about what their future holds.

Make yourself easy to buy from and offer sensible value and your customers will remain loyal.

3. Customers only trust those they know.
If you have bought from someone before and you know they did a great job or provided a great product, it is more likely you will come back to them as a customer.

Therefore, use PR and advertising to show potential customers other satisfied customers and be loyal to them. Don’t go offering massive incentives to new customers and neglect the ones you have. It is far, far more sensible to build a business based on the ones you have already than always chasing after the next new exciting one on the horizon.

In summary, you have to be clearly differentiated in a way that is not just different for the sake of it but that offers a real and desired point of difference. This point of difference may be as simple as being consistently better in service than others (which is in itself harder to achieve than it sounds) – but whatever it is, you need to tell everyone about it in everything you do.

The days of mass branding are over. We do not want to be the same as everyone else, even if we do buy the same brands.

Branding is not rocket science, it is not just good design, it is a collaboration of clearly thought through common sense delivered through exceptional customer service and a product or service that matches and makes people feel good about their decision.

Treating every single customer as though they are important and valued individuals will ensure your business will not just survive, it will thrive and grow in this recession.

You can see this release on Pressbox by clicking here