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10/12/2011 by

How Brands Can Counter Attack The Recession

Since the beginning of the great recession consumers have started to buy less, also known as a buying down behaviour. In these dark times brands struggle to survive.

Consumers spend less when the economy is taking a dip, well that’s pretty much a given. Especially fast moving consumer good brands are taking a hit. Their main concern is how to stay strong and get through the recession.

Yesterday comScore aired a webinar addressing this buy down trend. They analysed the buying down behaviour of consumers. This behaviour of consumers isn’t just as simple as it seems. The phenomenon goes paired with the recession and has great impact on brand loyalty in the fast moving consumer goods sector. ComScore identified the stages of the buying down behaviour:

  • Consumers buy the brand they want most
  • Consumers switch to brands on sale
  • Consumers convert to less expensive alternatives; lower priced tier

Buying down is the act of switching purchases to less-preferred brands to save money. These can be brands on sale, lower tiered brands or private label/store brands. This trend is more likely to happen to Consumer Packed Goods (CPG) as alternative products are easily found. The pricepoint also plays an important role in this purchasing process.

The research from comScore showed two key findings in 2011:

  • Only 43% consumers buy the brand they want most
  • Private labels are capturing a sizeable portion of the switch to ‘less expensive brands’

So how can brands combat this buying down behaviour?

The old days

In an economical downfall it’s only natural brands need to adjust their budgets accordingly. The advertising buget is most likely to be cut down as well. However this isn’t the best strategy to follow. Why is this the case?

Let’s take the example of Reebok. Back in the 1980’s Reebok dominated the athletic footwear. Later during the recession in 1990 Reebok took a very conservative approach by cutting down costs in advertising. Nike entered the recession as a much smaller company but advertisend aggressively.

After the recession Nike’s profits were nine times greater than before, while Reebok suffered a decrease in profits & loss of market share. Apparently after a recession there’s a bounce back – consumers will start buying their most preferred brand again.

So CMOs please take note that during a recession the marketing budget shouldn’t be cut down drastically, because in the long run customers will still think about your brand even after the recession.

Adding value

Does that mean throwing more advertisements will automatically gain more consumers? No, definitely not in the digital age. Spamming consumers won’t do any good.  These days brands should think about adding value for their customers and gaining their trust to build brand loyalty.

So my dear CMO: think about adding value for your consumers, claim your own domain and integrate your brand through their daily lives. Other brands are already doing this (Red Bull – Extreme Sports, Nike – Running).

What do you think brands should do to fight off the recession? Sound off in the comments below!

Source: comScore




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