Consumer confidence is down. Prices are up. Credit is tight. Losses are mounting.
In the current soft economy, it’s easy to succumb to fears about your own business. Yet it’s important in times like these to keep sight of your most important asset: your brand. If you do not consider your business a brand, you may be faced with an even greater problem than the economy.
Many companies cut marketing and advertising budgets as a reaction to tighter consumer spending. But in the long run, this can harm your brand equity—what your company means to the market. Remember, out of (the consumer’s) sight, out of (the consumer’s) mind.
The jewelry industry is consolidating. Consumers increasingly want strong brands, and many brand-savvy marketers are entering the business. By weakening your marketing and advertising, you’re leaving the kitchen because it got too hot. When things get easier, it will be hard to regain your stature in the new landscape, because stronger or newer players will have taken your spot. The market will be moving on while you stand still.
Conversely, if your competitors decrease their marketing, you’ll have a chance to gain their share. If you’re old enough to have lived through other downturns and recessions, you know they don’t last forever. Your challenge is to maintain the growth of your brand in the interim.
In developing our agency’s strategic perspective for clients, we have found market leaders who continued to develop and maintain their brands, even in bad times.
In 2000, the U.S. economy had begun softening as a result of the dot-com bust. The 9/11 terrorist attacks pushed it into recession, with Gross Domestic Product going negative for three consecutive quarters. Full recovery didn’t take place until 2003.
In reviewing annual reports from the period, we found two market leaders worth noting. These publicly held companies bucked conventional wisdom by maintaining their marketing spend, sticking with their long-range vision, and abiding by their fundamental commitments to long-term success.
Tiffany & Company is consistently ranked by consumers as among the top jewelry brands in the world. It turns out that Tiffany did not curtail its marketing spend at all during the 2001 recession, and the company’s sales (including U.S. sales) not only rose during that time but also have doubled since.
Tiffany has an affluent clientele, but a large part of its business is aspirational and geared toward middle-income consumers. Because it’s a public company answering to shareholders (and analysts), it might have been expected to cut expenses. But its chairman, Michael J. Kowalski, took a different tack: “Despite short-term macroeconomic challenges, we will continue to pursue those established and time-tested growth strategies that have been the foundation of our long-term success,” Kowalski said. “Tiffany is about things that last. And that perspective is perhaps more important today than at any time in our history.”
Coach is another brand that’s among the most successful in the world. Its U.S. marketing budget did not decrease during the 2001 recession. From 2000 to 2007, its sales rose 370 percent, and its stock price rose 616 percent.
As an “accessible” luxury brand, Coach could have cut back spending as a precaution against lower discretionary budgets among its consumer base. But, as its 2002 annual report explained, the “power of presentation and marketing were critical factors in driving sales this year.” Those sales increased 20 percent.
Recessions are typically times of industry consolidation. Call it survival of the fittest brands. During robust times, there’s room for almost all comers, but when the pie is shrinking, remaining consumers gravitate to the better players. With that in mind, here are some key questions to ask yourself: How are you positioned in your business fundamentals to withstand the downturn? What is the value of your offering? How efficient is your operation? How loyal is your customer base? What’s your level of ingenuity? Do you have access to capital? How strong are your determination and fortitude?
Even if business is good for you right now, you should be attending to and fortifying these marketing fundamentals:
Promote your relevance to the lives of your customers. When economic times are tough, most people have other things on their mind than patronizing your business. That is, unless you make them realize through marketing that you are indeed relevant, through feast or famine.
Leverage and strengthen your relationships with existing customers. Marketing costs go down when you market to current customers. Now is the time to check in with them to find out how you can better serve their needs. Keep up with them, but, again, make sure you approach them with products and services that are relevant to their needs.
Make shopping with you a compelling experience. Regardless of the economy, people today are so starved for time and their lives are so hectic that your business should be an oasis, a relief, or a joy ride compared with the alternatives. People will gladly pay—or at least come to see you—to have some fun and make life better. And when they’re having fun, they often loosen up their wallets. But when the purse strings get tight, they’re not going to suffer a boring, run-of-the-mill visit to patronize you.
Make buying from you easy. Today’s consumers cherish convenience and time-saving, stress-free results. To meet or exceed their expectations requires customized service (see No. 2). Make every customer feel that you care about them more than anyone else. Get them exactly what they want, when they want it, where they want it, and how they want it.
Maintain your vitality. There is an old retail adage: “If business is slow, paint the store.” A recession is the perfect time to make improvements in your business and continue to market yourself. Industry analyst Ken Gassman reported at the end of March that Tiffany chairman Michael J. Kowalski viewed the current economic environment as an opportunity to open additional stores (by taking advantage of real estate deals), accelerate development of new jewelry designs, introduce new collections, and increase catalog circulation to drive more consumers to the Tiffany Web site. Again, it’s investing in the business for the long term. In the process, you attract new consumers and business.
Someone once said, “When you’re going through Hell, you’d better keep going.” Recessions don’t last forever. Take this time as an opportunity to move closer to your customers and make improvements to your business. Most of all, continually build your brand awareness and equity through marketing. If you do, you may find that when the economy picks up again, your new strengths will have placed you at the top of your game, and perhaps in a whole new league.