Economic turmoil is creating brand turmoil

The top brands are more likely to lose their top position in this economy than in “normal” times.

The economic disruption is creating an upheaval that threatens to overturn many brands.

This is the story told in BAV research conducted by the good folks at BrandAsset Consulting — Ed Lebar and Anne Rivers — and presented to the NYAMA last spring.

Before the recession 78% of brands in a leadership position were still in that position one year later.  Not a whole lot of movement there.

Now, that has dropped down to 71%.

The chances of a Niche brand to move into a mass market leadership position has just gotten worse.  And niche brands are even more likely to slip than before.

Brands in Motion

 

These changes have come about for a combination of reasons.  Some reasons are external, outside the control of any one company.  For instance, the downturn has changed people’s values and purchasing patterns.  Other reasons are internally driven.  For instance a company may have cut too far back in their marketing as a response to the downturn.  Or they may have seen this as an opportunity to increase their marketing and launch new innovations.

A picture-perfect example is Hyundai in 2009.  At the very start of the year, during the Superbowl, they introduced their buyers’ assurance program.  While the overall car category tanked, Hyundai ended with strong increases in sales and market share.

From this we can draw two conclusions:  1.  The economic turmoil creates a situation where consumers are more receptive to trying something different.  2. Companies seeking to move up have a greater opportunity during times of economic turmoil.

So why don’t more companies reach for those opportunities during bad times?  Sometimes they can’t due to a lack of resources.  Sometimes they can’t due to risk aversion.  Sometimes they can’t due to internal pressures where any increase in marketing spend is seen as taking away dollars from some other part of the organization.

It is also a case where the brand managers of a leading brand have a difficult business case to make.  “We can reduce the risk of losing market leadership by investing more, now” doesn’t grip you by the shirt collar and scream.  Look at the logic — do nothing extraordinary and you still have a 71% chance of being the leader next year.  But if you spend more during the downturn, people look at you and say — “What, are you crazy?  You were the leader before and you are still the leader now.  What was the benefit of that extra spending?”  Avoiding the downside isn’t always so intuitive.

 

 

 

 

 

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