Why invest in brand during economic downturn?

A lot has changed since the last recession in 2008… TikTok was just the noise a clock made, iPhones were barely a year old, and Barack Obama was just about to begin his historic term as US President.

Today there is widespread concern of recession, and customers are already feeling the pinch due to the escalating cost of living crisis.

So during times of financial uncertainty, when companies are most likely to cut marketing budgets, should brands continue to invest in their brand? The key question is actually what harm could not investing have?

In this week’s blog, Consumer Insight Director, John McBride explores what we can learn by looking back at the brands that were successful during the last economic downturn.

couple shopping for groceries

Why investing in brand matters  

History has demonstrated to us that those brands which continue to invest during a recession will reap the reward once the economy recovers.

As Coca-Cola came out of the recession in 2010 with record UK sales of £1bn, Sanjay Guha, president of Coca-Cola Great Britain and Ireland said “Coca-Cola has a long history. It has taught us that recessions, no matter how deep, do pass and it is crucial to keep investing both in marketing and to prepare for the recovery.”

As soon as the recession hit, instead of pausing their marketing, Coca-Cola invested in an entirely new campaign that better reflected the public’s emotional and mental state. The “Open Happiness” campaign recognised that ‘even with the difficulties and stress of modern-day life there still are opportunities, every day, to find a moment to recognize life’s simple pleasures’.

On the flip side, in a case study from Kantar, a leading UK beverage brand with a stable market share decided to go dark for a year in region B while continuing to invest in region A. One of the effects of this choice during the recession was that market share declined by 2 percentage points in region B where no investment was made, while it remained stable in region A.


Exploring tactical opportunities 

Your customer’s needs and attitudes may change rapidly during a recession so this is an opportunity to get to know them anew. Understand their changing needs, listen to their requirements, and offer them value in ways that they appreciate. Think pack sizes, pricing mechanics and making decisions easy for the consumers.

It’s also worth considering how you engage with your customer during this time. When Starbucks were hit by the economic slowdown in 2008 they re-focused their efforts on their customer by launching a new website ‘My Starbucks Idea’. By inviting their customers to share their ideas, they both fuelled customer loyalty while getting insight into customer demand.

As a result they survived the recession and built a reputation for being customer-centric, even as consumers cut back on daily expenses like coffee and snacks.


Long-term brand building

Your brand is the gateway connection with your customers – especially during uncertain times. Don’t be afraid to use emotional advertising, demonstrating humanity and warmth.

For example, the recently launched McDonalds advert doesn’t lead with price, encouraging us to grab a 99p cheeseburger. Instead the advert embodies the brand experience with warmth, humour and positivity. They are actively investing in long-term brand building, without even including a shot of a restaurant or their food.


Work with your customers

Helping your customers through the crisis is vital in building customer loyalty. In her recent blog ‘Building brand loyalty during turbulent times’, Incite’s Stine Peterson explored Hybrid Segmentation as a data-led approach to customer loyalty.

During the height of the covid-19 pandemic brands such as banks and mobile service providers were waiving late fees to ease financial concerns, whilst gym brands and yoga studios were offering free or low-fee online classes helping those stuck at home during lockdown.

Companies that lead with empathy and genuinely address customer needs can strengthen relationships with emotional connection, therefore developing long-term brand loyalty.

Building a brand is a timeless challenge, but recessions are cyclical.  Use the opportunity to take a long term strategic view of your brand and do what you can to protect marketing budgets. Continuing to invest in your brand will pay dividends down the road.

At Incite, we work with our clients to understand their consumers and identify opportunities for growth even in difficult financial periods.

We can help your brand make the right decisions to guide you through the uncertain times ahead. If you have a business challenge to throw at us, please do get in touch.