Almost without exception, the most exclusive brands are slashing prices to keep their turnover ticking. What would previously have been unthinkable (is happening), you can now purchase handbags, scarves, clothing and shoes at discounts ranging as high as 50%. Hotel rooms in the best district in town can now be had (at) 30% less and so can cars, hi-fi (hi-fidelity electronics), cosmetics and washing machines.
Is this the end of brands as we know them? Or could brand owners be simply reacting to the economic crisis in a knee-jerk, wrong way?
Emotional connections: Lindstrom says studies show that it takes seven years for a brand to recover its value once it has been discounted.
Studies show that it takes seven years for a brand to recover its value once it’s been discounted. If you’ve seen the Louis Vuitton you bought two years ago now on offer at half the price, will you ever consider buying another at full price? Seven years! Market cycles are a fact of life—what goes up must come down.
The world economy will eventually recover, even if it takes a few years. Perhaps it’s necessary to take time out and consider another path. It may be time to consider a strategy where you don’t cannibalize your brand, rather you offer added value.
Take, for example, the Louis Vuitton bag. Instead of discounting it, you could throw in a Louis Vuitton key ring. Call it a special collector’s item. If you love the brand, I’m sure you’ll want one of these key rings too.
Don’t be afraid of pushing the practical side. Did you know that in the past few months, Willie’s, the basic Canadian boot, has increased its sales by 70%. Seventy per cent! The company has promoted the practical aspects of the brand. Willie’s isn’t the flavour of the month. The brand’s been around forever, but a pair of Willie’s boots is considered an investment rather than an expense. They’re useful and robust, and consumers love that they’re good value for money.
What practical features does your brand offer? Can I turn your bag inside out, reveal a different colour and have it perform another function? One good for work, another good for evening wear? Two bags for the price of one?
Recently, Campbell’s (Campbell Soup Co.) announced a strategic partnership with Kraft Foods Inc. They offered a can of Campbell’s soup along with a Kraft salad dressing at a 20% discount. Both brands advertised the offer and consumers lapped it up. Campbell’s is among the few producers experiencing an increase in share price.
A while back, I visited a chicken farm in Saudi Arabia. The air conditioner was faulty and the desert temperatures were soaring beyond normal. The owner turned to me, asking if I’d noticed anything unusual about the chickens. Without waiting for an answer, he pointed out that his chickens were under stress. I was baffled. How on earth did he know that? He advised me to watch them carefully and explained that they kept repeating their movements.
He used the word “ritual” to describe their behaviour. They pecked twice before pecking at the corn and then performed two small rotations before they dipped their heads to drink.
Well, we humans don’t act that differently when we are uncertain or anxious. The more financial pressure we’re under, the more superstitious and ritualized our behaviour becomes.
As such, brands should develop, own and celebrate their rituals with their customer base. In hard economic times, we learn that the past is infinitely more appealing. We long for the good old days when the world seemed a more certain place.
In the same way, brands should celebrate their past. It’s comforting for consumers to know their brand of choice is rock solid—it’s been around for years. It gives them security. Rituals and reminiscences about the good old days lead to feelings of security. No wonder Louis Vuitton features movie actors Sean Connery and Catherine Deneuve in a 1930s setting.
This might seem outrageous, but the recession that we’re currently experiencing may very well be the best opportunity you’ll have to capture a serious chunk of the market—and at rock-bottom prices to boot.
As every business goes about cutting its marketing budget, slashing development costs and sticking its head underground, experience shows that those who take a chance doing the opposite will emerge on the other side of the recession with the brand fresh in the consumers’ mind.
A brand is, first and foremost, an investment. So why jeopardize the many years and millions of dollars spent building emotional connections with your customers? Now is the time to show the world that your brand is a survivor and when Noah is calling, you’ll make it on to the ark. There are only a few places left.
Martin Lindstrom is a globally renowned marketing expert and author of BRANDchild and BRANDsense. His articles can be read onMartinlindstrom.com