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5 Important Tips to Protect Your Brand in an Economic Storm

Daily economic news in Canada and around the world is replacing my desire for suspense novels. Every day, we are seeing new financial lows and ominous warning signs to make any brand get nervous. Household indebtedness is an important number to watch because it tells us how much disposable income consumers have to spend on our brands.

 

Canadians are leveraged through the Teeth

Statistics Canada reported that the ratio of household credit-market debt to disposable income rose to its highest level of 163.7%!  Total credit-market debt reached $1.89-trillion in the third quarter another record. Mortgage debt makes up 65% and the other 35% is consumer credit, such as credit cards, car loans, personal loans, etc.  If we assume most of this debt resides with people aged 20 to 65 years of age, the average consumer debt (not including mortgages) is $25,744. The Bank of Canada sounded the alarm that household indebtedness and imbalance on the housing sector are key vulnerabilities to the financial sector. In particular there is a segment of younger households with debt-to-income of 350% or higher!

So what does this all mean for brands? The ultimate outcome is consumers have less disposable income to spend on brands. Decrease spending on brands means decrease profits.

But looking just at the wallet isn’t the only thing we have to be concerned about. We also need to understand what consumers are thinking and feeling. Are they optimistic or pessimistic about their future and money supply? Some economists say consumer expectations concerning economic conditions tend to be a self-fulfilling prophecy. If they expect doom and gloom, the economic conditions worsen because they stop consumption. But in most cases they just follow reality.

A Storm Is a Brewin!

There are a number of possible storms that can trigger a negative change in consumer consumption such as:

  • A recession or economic downturn with loss of employment
  • Physical disaster or state of war
  • Increased interest rates
  • Increased government taxes
  • Hard to borrow money or obtain credit
  • Housing bubble burst
  • Fear and political instability

All or none of these could happen. If I knew, I wouldn’t be writing this article. I would be too busy spending my millions from my last successful financial prediction. If any of these storms appear, brands need to be prepared and take the necessary steps to respond to the market and adjust their brand strategies appropriately.

 

Consumer Mindshift in a Storm

In a time of uncertainty and fear of losing one’s job or investments, consumer purchasing habits will change and in some cases drastically. Most brands have a knee jerk reaction not dissimilar to their customers by cutting costs, including advertising, reducing prices and postponing new investments. Harvard Business Review has analysed historical market downturn data since the 1970s identifing four distinct psychological groups of consumers in hard times:

Slam-on-the-brakes

This is the group that is directly hit with financial pain and reduce all types of spending. It might be futile to go after this group if they truly are strapped for money or credit.

Pained-but-patient

This group tends to be the largest group who aren’t as pessimistic as the slam-on-the brakes but they too economize in all areas. As the bad news gets closer to home they can easily migrate to the slam-on-the-brakes group. Let’s hope it’s not the middle class. MoneySense estimates 60% of Canadians fit in the middle class (based on 2013) and have an average family income between $40K to 125K (a difference of 200% from the lower-middle to the upper-middle).

Comfortably well-off

Like the title describes, these consumers feel secure to ride out the difficult times but are more selective and careful about their purchases, it’s less about their pocket-book but more about image. This group is generally part of the top 5% income bracket.

Live-for-today

This group is less concerned about the downturn (if they are aware of it) and make little changes in their buying habits focusing more on experiences rather than stuff (except technology like smartphones, tablets, etc.). The only way this group’s consumption pattern will change is if they become unemployed. This is the group that has great parties every weekend. I want to be friends with these guys.

Remember, these are just generalizations but can help in setting your brand strategy when the economy gets difficult.

The main issue that brands need to address is price and value if they want to connect with the largest group (pained-but-patient) unless they feel they can survive with the top two groups. WPP, the world’s largest multinational advertising agencies, says in a study that brands need to face the reality of the situation and address customer needs by showing a sense of honesty and care. There are intelligent ways to acknowledge the problem and to reinforce your brands positioning and relationship. Similar to customers, brands must make difficult decisions with limited resources. But most importantly, don’t stop communicating to your customers in some way or fashion.

 

5 Tips to Manage an Economic Storm

Here are some possible tips for your brand to get customers to pull out their wallets, debit cards and credit cards during economic challenging times:

 

Create Added Value

Justify price – demonstrate superior performance and value, product comparison, and testimonials, are some examples.

Add features and services – free support & servicing, check-ups, extra quantity, extended warranties, free shipping or setup, and choice of colours, are some examples.

Economy sizes – buy more, get more – you are positioning savings, retaining sales and not sacrificing value. This is the Costco model of buying bulk.

Do it yourself – The Ikea model. The perception that you have to assemble it means you will be saving money – or just creating more pain at home – “what do you do with all the extra bolts and screws they give you or should there be extra?!”

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The Screaming Deals

Create urgency that this is the best-time to be buying your brand. Pull out all the starbursts, yell and scream – “We have a deal for you!” Art directors will cringe at the thought of this but it does work. Everything from price discounts, promotional and special offers, contests and giveaways. Remember, all you are doing here is renting customer loyalty in the short-term but it will help keep the cash flowing.

ford employee pricing

Reduce Risk & Barriers

Show that you brand cares and understands the situation customers are facing in difficult financial times. Provide alternative payment options – nothing down, don’t pay until next year, zero percent interest payments, free financing, no-credit-check, job loss protect, etc.

hyundai offer

New Innovations and Technology

Make consumers forget about the bad times and create excitement towards a new product with never seen features or never experienced benefits. For many brands this might be difficult to accomplish in a short-time frame. But you can adjust your brand to have new efficiencies or reduce costs. Reduced costs can be accomplished many ways such as production efficiencies, cheaper ingredients, smaller package size, single servings, and slimmed-down basic version with no bells or whistles. So if you can’t wow your customer into buying your products, then reach out with an offer they can’t refuse. Chances are they will end-up buying the more expensive version but the less-expensive version got them through the door.

There have been many new products successfully launched during difficult financial times such as Rice Krispies, Plymouth and the iPod.

ipod

A Beacon in the Storm

The smart brands not only weather the storm but they continue to strengthen their brand relationships. Remember that your best customers can be your best backer during difficult times. With the help of social media they can quickly be mobilized to get your brand message out – from a simple customer referral program to getting “likes” for a new product. Always talk about the value your brand brings –the rational and psychological. Tap into the concepts of small indulgence, sharing and helping. Do random acts of kindness like Starbucks did with #TweetACoffee campaign where people were encouraged to buy a friend a coffee using twitter, or Coca-Cola’s #WishUponACoke campaign in Dubai where they fulfilled wishes for immigrant workers who left home for a job.

 

Weathering the Storm

John Hayes, American Express CMO said at the American Marketing Association’s MPlanet 2009 conference “Consumers are more likely than ever to award their hard earned dollar to those brands that provide the greatest value, build the strongest relationship and connect in the most meaningful way.”

Keep an eye on the economic weather and have a plan ready if a storm should hit. Remember as you scrutinize your customers to determine if they can pay, they too will be watching your brand on how it also handles tough times.

 

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The Power of a Brand

How to extract value from nothing.

Years ago in my economic classes I learnt that supply and demand determined the price/value of most products especially commodities. If this is true, why is bottled water more expensive than gasoline? This is the power of branding.

 

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Transparency Market Research estimates that the global market for bottled water was worth about $157.3 US billion in 2013. In North America more bottled water is sold compared to milk or beer in terms of volume. Canadean research estimated that the global bottled water volumes would reach 233 billion litres in 2015. With all of Canada’s fresh water, Canada only produces less than one percent of the world’s bottled water of around 2.29 billion litres. However, US remains the fastest growing bottled water market outside Asia mainly due to customers becoming more health conscious shifting away from sugary carbonated soft drinks.

In many emerging markets, the scarcity of clean water makes bottled water a necessary staple rather than a value-added refreshment beverage like juice or soda. In North America the water in your tap is generally the same stuff you buy in the bottle. The big difference is that tap water is constantly tested to ensure they follow the drinking water quality guidelines. Bottle water doesn’t have the same stringent guidelines but does have the overall requirement of not containing “poisonous or harmful substances”. Let’s hope that the big brands follow some type of quality control.

Clean drinkable water is generally available everywhere throughout North America where the bottled water companies’ need to position their brands based on quality (healthy choice) and convenience (portable and handy). From this foundation the category gets complex with pricing strategies, water source and lifestyle attributes.

Magician duo Penn & Teller in their show Bullshit did a spoof on bottled water in a fine dining restaurant in Southern California to prove the general public can’t tell the difference between tap water and $4 a litre bottled water.

 


ABC’s Good Morning America conducted a blind tasting experiment in 2001 where they sampled branded bottle water such as Poland Spring, O-2, Evian and the popular New York City tap water. The results shouldn’t surprise you – NYC tap water beat them all.

If the bottled water is general the same thing as in tap water the real difference is the brand. Tap water is a commodity with no brand. It comes from any unmarked tap – hot or cold. You take the same thing, build a formidable brand image and you can extract a premium from consumers – by the litre (or ounce) at a time. Here is the secret on how to create brand value from nothing:

Emotional Connection

Byron Sharp, professor of marketing science at the University of South Australia and author of How Brands Grow, says growing a brand is based on “physical and mental availability” suggesting most brand purchase decisions are made with the emotional brain so keep it simple to help trigger instinctual responses.

Ammar Mian writer at SocialRank says the emotional tipping point for bottle water occurred back in the early 1980’s when Perrier launched its ‘Earth’s First Soft Drink’ campaign. This campaign embraced the belief that their sparkling water comes from the purity of nature, straight from mother-earth. This emotional connection resonated with consumers who were becoming more health-conscious and wanted an alternative to soft drinks. Other premium bottle water brands jumped onto the branding wagon touting the image of purity, youthfulness, healthy and earthliness. Water can’t get any better than this unless you turn it into alcohol. Here’s more on Emotional Branding.

 

Convenience and Easy Access

The brand must be easy to buy – when and where you want it – ideally everywhere. Not unlike tap water. Remember the days of drinking fountains? We though they were convenient – if we could find one. But it was like drinking from a water hose – only one quick sip if there was a line-up. Perhaps the biggest development in the bottle water industry growth has been the mass distribution systems that are dominated by the same companies that have covered the world with sugar water like Coca-Cola (who has such popular brands as Dasani and Glacéau smartwater), Nestle (who has all the water champs such as Perrier, Pure Life, S. Pellegrino, Deer Park and Poland Spring) and PepsiCo ( with Aquafina). Where is Evian in the distribution mix you ask? In 2002, Evian signed a distribution agreement with Coca-Cola Co., Inc. which ended in 2014. Then Evian found new wings with distribution partner Red Bull. And Fiji Water? Dr Pepper Snapple Group website states that they distribute Fiji Water in various territories.

Fame and Attention

Getting people to pay for water where its widely available, safe and free is hard work and takes a great deal of money to build a distinctive brand. It doesn’t hurt to have a big bank account to ensure the advertising messages get noticed and the brand stays top-of-mind. Back in 2003 (based on an article in The New York Times) TNS Media Intelligence/CMR estimated Aquafina spent $24.6 million on media and Dasani spent $18.8 million on media, while Evian spent only $800,000. Ten years later, Evian is still spending around a million in measured media annually according to Kantar Media and over the years have lost market share to the more aggressive competitors, sitting in 3rd place behind Fiji Water and Smartwater. Eric O’Toole, president-GM at Danone Waters North America (parent company to Evian), contributes the brand stabilization in recent years, in part, to the launch of the Baby & Me advertising effort. Great creative never hurts if you can’t afford to advertise year-round. See more on Creativity.

 


The soft drink industry is notorious for using celebrity endorsers to help push their sugary drinks (check out a partial list of famous celebrities and soft drink brands). It’s not surprising that the bottle water brands use the same branding tool to build credibility and gain the coolness factor. Evian has used Maria Sharapova, the young and popular tennis champion, while the elite Fiji Water has uses the former James Bond star Pierce Brosnan. Glacéau smartwater has used actress Jennifer Aniston to create a buzz around their relatively new brand.

A Memorable Story

Great brands always come with a great brand story. Many bottle water brands have great stories that would put National Geographic to shame. My favorite is the Fiji story or as some say the Fiji myth. Fiji Water, natural artesian water bottled at the source in Viti Levu (Fiji islands), is a leading premium bottled water in the United States and one of the fastest-growing brands worldwide. Here is their story of the world’s finest water and it should be for the price of $3.50 – 4.00 per litre (3 times the price of gasoline). For more on Storytelling.

 

Stunning Design

Water has no distinct taste, no unique colour, no smell and all water feels wet – physical there is no difference from one glass of water to another, so packaging is king. If nothing else is going to sell you, it must be the memorable packaging, beyond the great stories and celebrities who would never drink it if it didn’t look good.

Packaging can help define a brand experience. Do you remember the first iPhone, iPad or iPod you unwrapped from its packaging? The simplistic and beautifully designed box with everything in its own place – clean and white. A perfect brand fit.

 

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Since 2008 Evian has been working with some of the world’s most prestigious designers to create a limited edition bottle each year. Evian has worked with such creative artists such as Diane von Furstenberg, Paul Smith, Christian Lacroix, Jean-Paul Gaultier, Elie Saab, KENZO and most recently with Alexander Wang (2016 limited edition bottle). Former zone director for the Middle East & Indian Ocean for Evian, Elias Fayad explains the limited edition concept: “Our water is untouched by man and perfected by nature, so we attempt to give the bottle an artistic expression.” In a September 9, 2015 press release from Evian, they explain each collaboration as “a renewed celebration of purity and playfulness and a reinterpretation of evian’s spirit through art and design.” I have to remind myself that we are talking about a simple natural resource that can be found anywhere on the planet (except currently in California) – simple water.

Dreams or Nightmares in a Bottle

Water is living proof that anything can be branded and can be elevated from no value to high value with sufficient investments. It is through the brand investments and the dreams the brand image creates that help achieve the value. In essence, consumers are buying dreams in a bottle. Dreams to be on a pristine tropical island or a youthful energetic baby once again. Stories of spiritual purity, blissful health and a fountain of youth – the water of life. Potentially over $200 US billion worth.

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But there is a dark side to this story. While dreams are created and value generated from the replenishing resource, there is a social cost. Today Wikipedia lists over 144 bottled water brands, and from the statistics, the market continues to grow. The Pacific Institute, which conducts research on water use and conservation, has estimated that bottled water is up to 2,000 times more energy-intensive than tap water. It is estimated that in 2006, U.S. bottle water consumption used the energy equivalent of 17 million barrels of oil and produced over 2.5 million tons of carbon dioxide – in one year. There’s also the worry that we are shifting water consumption from one region to another, creating an imbalance with consequences to our planet and to our future consumers.

Just because we can create formidable brands to extract more value, it doesn’t mean we should. As marketing and brand experts, it’s important we use our craft wisely. We have the ability to create formidable brands and extract value to support business growth. But if we aren’t able to balance the benefit for the consumer, society and environment, we need to consider how we’re using our power of branding.

 

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9 Future Trends That Will Define Brands

Brands need to be ready today to address future trends. In some cases, they may be too late. This article examines trends that will force brands to change or be lost forever. Change will bring uncertainty and risk. Those brands that anticipate change will have a greater chance to succeed than those who try to wait it out. There will also be great opportunities for new innovative brands to leap-frog the dinosaurs and introduce new virtual products. But successful brands will need to keep ahead on all fronts, from product development, to delivery and servicing, with the goal of always reducing the time from start to finish. Why is Amazon so focused on the product delivery? Instant gratification is their ultimate goal.

 

As Howard Schultz, CEO of Starbucks Coffee Company said in the book The Future of Brands: 25 Visions, “One of the great things about the future is that there are no rules…you don’t have to take the road that has been travelled before.” Or better yet, as Dr. Emmett Brown in the movie Back to the Future said “where we’re going, we don’t need roads.”

 

Brands must anticipate how they fit within the future so here are nine trends to keep an eye-on:

 

1. The Digital World of Oneness

 

Smartphones have allowed consumers the power and freedom to literally have the entire world at their fingertips. Brands have to understand digital technologies that bridge the real and virtual worlds to provide smart digital services through the physical things they make. “Really strong brands are the ones which have done all my thinking for me,” says Marieke van der Werf co-founder of New Moon agency.

 

New super brands like Uber and Airbnb have brought together many individual solutions and presented them seamlessly as one big brand solution. More and more brands will either become boutique or super brands.

 

Caroline Slootweg, past Director of Digital Marketing and New Media at Unilever says “Digital has reminded us that we can, and should, play a bigger role in consumers’ lives.” Through digital technology, brands will find and help you before you realize you need help. It’s about building the algorithms, programs and sensors to create digital intelligence that can anticipate customer’s needs. But remember, digital is only the tool to help brands become more engaged with their customers. It must always be on the customers’ terms or they will quickly unsubscribe.

 

2. Global Culture, Locally Delivered

 

A brand culture starts from within the walls of where the brand is cultivated. The most successful ones in the future will be those that have the best people – from the front-line employees, to the scientists, to the marketers and everything in between. Strong brands have a strong sense of empathy between its employees and its customers.

 

While some brands will depart from the traditional retail environment to work directly with their customers, others will become more localized and play a bigger part in customer’s communities. Brands will become more sensitive to their customer’s special needs by customizing the brand experience with neighborhood-specific merchandise and tailored environments. McDonald has deviated from the standards to customize the in-store experience to match the community environment and they have also adjusted their menu according. For example, in Atlantic Canada where lobster is part of the culture, they have a lobster sandwich on the menu. The cookie-cutter brand will no longer exist in the future.

 

3. Share of Mind

 

It wasn’t too long ago that there were only a handful of communication channels. Today, we would be lucky to deal with a handful of just social channels. We are living in a very complex world of multichannels and omnichannels that seem to be changing quickly. David Sealey, a blogger on Smart Insights and head of digital consulting at CACI, estimates there are over 120 different channels (you can check out his channel list). Today, if you want to reach teens you need to be on Snapchat (not yet on Sealey’s list), not Facebook. In less than four years Snapchat has amassed a global following that sends over 700 million photos and videos per day. The landscape of media channels isn’t just growing with new channels but it’s also changing rapidly. You will need an entry and exit strategy as channels attract or repel specific target audiences.

 

 

The goal isn’t being on every possible channel but being where you need to be to build your brand’s share of mind. The most sustainable solution is to grow a pair of wings and build your own channel, like Red Bull.

 

4. Data Connectivity

 

Having data doesn’t seem to be the problem. Brands have access to all types of data including social, loyalty, transactional, CRM, demographic, weather, satellite, product, and other sources. The trick is deriving a conclusion that can create actions to enhance success; otherwise it’s just all head hurting. The wining brands will be those that successfully convert and mine the data to build stronger customer relationships.

 

New technologies, neuromarketing and continuous connectivity will allow brands to seriously provide personalization that has yet to be seen. The future will develop better analytical tools and mix unrelated data to make new predictions and products. Human behaviour is 90% driven by emotions and motivations that operate below our consciousness; but what if we were able to start collecting data at this level through neuromarketing techniques such as biometrics, facial decoding, and eye-tracking. All technologies currently available.

 

5. Boomers – Cashing Out

 

We will continue to see a consumer marketing shift towards the developing nations over the next decade, but more profoundly is a massive global population that is quickly aging. The United Nations projects that the total population of people older than 65 will double to 1 billion over the next 20 years. Accenture Life Sciences forecasts that the consumer healthcare market, valued at $502 billion in 2013, will rise to $737 billion within five years.
So how can brands meet the needs of this demanding consumer-base? For many years the boomers had total control over marketing to themselves. We will see a proliferation of consumer products that will cater to their needs and wants from health-care products and services, entertainment, travel, food and housing. They will be totally obsessed with their personnel health and fitness. They will be focusing on their grandchildren and assessing their legacy as they look at their footprint on the world. Will they all become environmentalists?

 

There will be a great financial burden placed on the rest of society to support them with government services as they become dependent on medical and social support. Robotic technologies will be a growing industry in helping solve some of the healthcare and assistance issues. It will be important for brands to understand their role and how they continue to communicate to this target group – a group who will become disengaged and more isolated from the fast and changing world that they no longer control.

 6. Millennials – In the Cash

 

There has been more written about this generation than any other generation before them. But the fact is they will eventually be running the world. Like every generation, they will come with a different set of values. So far their entire life has been dependent on technology and connectivity 24/7. Every minute of their lives has been capture digitally via video, photo, audio and text. Transparency and constant engagement is their life. Brands need to find means to fulfill this desire in a genuine and authentic way. The need for good content will continue to be in great demand. Brands will need to find ways to collaborate and co-create content with customers and other brands to fill the ever-growing content pipeline.

 

 

7. Technology – On Steroids

 

Technology is getting smarter and smaller. Cash registers will be replaced with cloud-based point of sale systems if retail still exists. Brand transactions will happen everywhere and nowhere. Malls will be converted to entertainment centres for customers to test-run new technologies and physically and virtually interact with their favourite brands. Augmented reality will allow customer to try out products in a controlled-brand experience environment. 3-D printing will allow some brands to bypass the retail and production system and distribution model or provide customized solutions on-site. Brands will be alive with digital messaging that will communicate with other internet of things electronics including wearables, vehicles and homes. Personalization will be capable throughout the brand life-cycle with the consumer. Brands will communicate with other brands to provide seamless and enhanced experiences. Brands will never sleep. Every brand will be equipped within or attached with a smart device to ensure maximized brand functionality and always learning from the specific customer experience to continue to increase performance.

 

8. Traditional Advertising Gone

It’s not a question of ‘if’ but when will traditional media end. Old-style, one-size-fits-all, mass advertising will be dead. Not only will the classic media channels disappear (print, radio and TV – as we know it today) but the advertising formats of a 30 second commercial or print ad will be gone forever; replaced instead, by dynamic, insightful, personalized digital communications that will build and support a customer’s brand relationship. Brands will live within the content and are currently creating it, like Netflix. Word-of-mouth will continue to be replaced by word-of-digital via social, online reviews and customer created brand content.

 

9. Population Growth

 

The United Nations predicts the world population will reach 9 billion around 2050 that is an increase of around 2 billion more consumers. The majority of these new consumers will be in less developed regions, except for the USA which is expected to increase by 31% to 400 million people. These new consumers will put enormous pressures on all the worlds’ global consumption of food, water, natural resources and non-reusable energy sources. A side effect will be human-generated greenhouse gases. Brands will need to provide ‘greener’ solutions to help save the world. Brands will be required to take the high-road on sustainability and resist the quick buck approach. In 2010 Unilever introduced their Sustainable Living Plan to decouple the company’s growth from its environmental footprint. Along with the parent company, their thousand-plus brands also include a social purpose to their brand positioning. That’s thinking Uni-versal.

 

The Future is Now

 

If you think you are late, you are. But the second best time to plant a tree is today. If you think you are ahead of the game, make sure you are in the right game. The brands that survive will assimilate closer to our lives in ways we don’t yet understand. Technology will elevate, destroy and create new brands. But remember, it will still be people who will control, develop and invest in brands. And it will be people who still experience brands. So far, people don’t change too quickly – just every generation or so. As Keith Weed, Chief Marketing and Communications Officer of Unilever says “It used to be that big eats small. But now it’s a world where fast eats slow. What’s important is that we get to the future first.”

 

But as Doc. Brown said in Back to the Future, “Your future hasn’t been written yet. No one’s has. So make the best of it.”