1 | Managing your brand in a recession 25th March 2009

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Managing your brand in a recession

25th March 2009

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Philip Stevenson

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Changing consumer demand

Losers and Winners (or the relatively unscathed)

Tips in a downturn

Today

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Financial crisis

Energy crisis

Raw materials crisis

Food crisis

Consumer confidence crisis

*

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“In a crises, you can downsize, right size, focus and outsource, but, you can't fire the brand.”Anonymous

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“Instead, brands need to become more effective and efficient, in order to not only survive, but win”Interbrand

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Your weapon?

Brand.

Why?

It drives choice.

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Influencing choice through customer perceptions = Economic value

Brand Positioning

Touchpoints

Brand Perception

Decision Criteria

BehaviourSales & Profit

impact

Economic Value

A clear and

compelling brand

positioning…

…consistently

brought to life

through everything

you say and do…

…Raising awareness of

your differentiation and

emotional relevance…

…making the

case for your

brand over other

alternatives ,

influencing choice…

…which leads to price

premiums,

loyalty and advocacy…

…this increased

demand leads to

financial benefits…

…that creates brand

and shareholder

value…

If managed correctly brand can drive long term economic value

BGB Portfolio MSCI World S&P 500

Annual Average Return 4.73% 0.05% -0.92%

Standard Deviation 14.76% 18.02% 15.36%

Sharpe Ratio 0.07 0.00 -0.06

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Back to the real world for a minute

Same flavourHigher priceMore preferred

Excellent coffeeUnbranded

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…but that behaviour is now changing

Similar flavourLower priceNo less preferred

Same flavourHigher priceMore preferred

+14%+1,000 outlets

-50%-1,000 outlets

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Losers and Winners (or the relatively unscathed)

Actions in a downturn

Today

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Shopper’s world is in turmoil

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Spending patterns are shifting

Delay Household durables (e.g., electronics, appliances, and furniture)

Stop Travel (e.g. airlines, resorts, casinos, holiday companies)

Reduce Personal durables (e.g. clothing)Indulgences (e.g. premium coffee)

Leisure services (e.g. Dining out, salon treatments)

Switch Household cleaning products Groceries

(Booz & Company September 2008: 1,000 households )

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Brands that have fostered a sense of allegiance with their consumers are more likely to withstand an economic downturn.

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Losers and Winners (and the relatively unscathed)

Tips in a downturn

Today

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Worst effected

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Worst effected

Luxury goods

Home furnishings

Personal care

Electronics

Holidays

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Less effected

CDS spread < 50

• Hershey

• Nestle

• Coca-Cola

• Kellogg's

• McDonalds

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Winners

Bird's custard +20%

Fray Bentos +41%

Vimto +11%

Board games +200%.

(Source: Guardian March 2009: Figures relate to Asda sales)

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Winners

Where can you get a lobster for a fiver?

The answer is Lidl.

Mary Morgan, Corporate Lawyer, Clapham

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Point of View on changing consumer demand

Losers and Winners (and the relatively unscathed)

Tips in a downturn

Today

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1) Know your consumers

Source: “Reacting to Recession” M&C Saatchi July 2008

Crash Dieters

Treaters

Scrimpers

Abstainers

Justifiers

Clothcutters

Ostriches

Vultures

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2) Adapt to the value equation

Value = Price

Attributes + other costs

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3) Don’t abandon long term strategy

1981-1987

155% growth$1.4 bnReebok #1

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3) Don’t abandon long term strategy

1990 - Trebled marketing investment

1991900% profit increase$3 bnNike #1

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4) Create and communicate differentiation

Be engaging

Reinforce differentiation

Build value back into the brand

Don’t price it out

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5) Build value in, don’t price it out

Build value proposition from the core brand proposition

Manage the balance between Quality and Value

Drive value from the heart of the brand.

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6) Make it personal

Less personal = Less loyal

Customers need to identify with the brand

Become indispensible

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7) Defend against own label

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Differentiate on a visceral level

Leverage the brand personality

Elevate from a rational decision

Focus on tangible POD

Resist making price dominant message

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8) Know your retailer – ‘partnership’

How does my brand help your brand?

What journey do shoppers of my brand take through your store?

How can my brand help drive value based on your brand proposition?

Give ideas for customising your promotions in our category in this time

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So, to conclude…

Thank you

Documents

1 | Managing your brand in a recession 25th March 2009