Wednesday, March 30, 2011

Do Brands Suffer in a Recession?

Actually, no.  Recessions rarely have a direct impact on the strength of a brand. 

A brand’s strength is measured in its ability to maintain its identity in the eye of the consumer and how uniquely it delivers on its promise.  That is different than how much product gets sold. Certainly a business can suffer from slower sales due to consumers choosing not to purchase as many things, or even to purchase only at the lowest price, but a brand is measured in its strength of persuasion and loyalty.

Brands suffer when what they stand for is lost – usually to a competitor who is doing a better job of delivering on the promise. 

Here is an example.  A recent article on the beer industry shows that Coors Light beer is vying to take the #1 spot of beer sales away from Bud Light, which has seen its share decline for a couple of years.  While the market is declining –3% per year, Coors Light is seeing sales increases.  Bud Light is a well loved brand but has become somewhat interchangeable with others and has lost some its bond with its user.  Beer are measured by their consumer as to taste and how they fit in with lifestyle and friendships.  Coors Light has turned up the innovation (labels show when they are icy cold), and continued to hammer home with strong ad campaigns.

But these gains and losses in this category have little to do with a recession. A recession may cause consumers to act differently, usually by, more closely,  watching what they buy.  But the brand that stays relevant and tied to the consumer, in the end, will win.

3 comments:

Jim Matorin said...

I understand your POV, but being in the food business we witness a surge in private label in a recession. On the restaurant side there is no brand loyalty, consumers tend to follow the bargains. Millennials are also acting frugal in all categories thus not exhibiting brand loyalty. Recessions definitely present a challenge for brand marketers.

Bob Clark said...

Jim - you make a good point about private label competition and less loyalty when times are bad. The recession has hurt many categories Some brands still need to look in the mirror to see if their offering and differentiation is as strong as needed in tough times

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