When economic pressures are building, most marketers get the dreaded instruction to cut their marketing spend. This however is a double-edged sword and here are some thoughts on why.
Brands, very much like good investments, should be treated with consistency and a long term view. By withdrawing spend or neglecting your brand when a period of economic pressure arrives, you might free up some much needed money for cash flow. The investment you would have made to get your brand top of mind with consumers, might be plugged into a different area of the business, potentially driving a more competitive price point or help carry the load of operational costs. This might achieve the desired results over a short term, but should never be deemed a sustainable approach over a longer period of time. Consumers don’t stop spending, they just spend differently.
When a time of economic pressure eases and turns into a positive cycle the following could happen: the lower price that was driven down in an unsustainable manner, now needs to be raised, creating a product or brand that falls out of favour with some consumers. In any case, those consumers who are loyal to the lowest price, are not really loyal to any brand. In a worst case scenario, a lot of communication was halted due to budget cuts and now you need to re-engage with consumers, who have seemingly forgotten your brand. This means that whatever momentum you had built up, is now lost and needs to be rebuilt to capitalise on better market conditions. This leads to a heavy increase in media spend, perhaps more than you were ever spending, to help your brand catch up to the competition.
Now, let’s reverse your position. Hypothetically, you remained invested in your brand, even through budget cuts you managed to produce communication that has kept your brand alive in the consumers’ minds. Many loyal consumers, in better economic conditions, remain loyal, and perhaps your brand, by sticking to its guns, has now grown in favour. The momentum you had before the downturn has grown and you are overtaking the competition who’s decided to completely pull their marketing activity. You didn’t adjust your price point drastically and consumers might be preferring your product over the more expensive competition. In fact, they might be buying more of your product. Brands that behave consistently, no matter the market conditions, build trust with consumers. Consumers buy brands they trust.
The above-mentioned scenarios might be over-simplified, but the essence holds true. In hard times, keep investing in your brand. The dividends it will yield when the tide turns, will surpass your expectation. It also requires a brand owner to stop considering marketing as an expense, but rather an investment. Changing your view to seeing marketing as an investment might also lead you to ask whether your investment is in the right hands. Your agency should be playing an integral part in managing and helping your brand thrive in a downturn with effective and thought-provoking creative solutions.
Brands should be protected, even in tough economic climates, because damage to your brand is always evident in the bottom-line. In any market condition, you never want to be caught making due with an inferior product, service or brand. Don’t go swimming naked.