1. Managing Brands through a Recession Lessons from the early 1990s

2. Introduction This brief study looks at some of the lessons that Through the Loop has learned from studying brand behaviour during the recession of the early 1990s in the UK. This used a systematic analysis of a set of FMCG brands over the early 1990s to identify common success factors and to determine possible strategic implications for brands. The FMCG brands covered several categories and many were considered to be market leaders. Brand behaviour was analysed by corporate and marketing policy as well as competitive pressure.

3. Introduction The context is that this was the second recession within a ten-year timeframe and there had been a profound change in consumer behaviour. The net effect is shown in consumers who are: –conservative –pragmatic –knowledgeable –sophisticated –keenly price-conscious

4. Introduction Brand premiums have to be justified even more than they were in the past. Private label has become a smart choice: –quality alternative not cheap alternative to branded product –private label encroachment into categories which were believed to be branded domains –private label ONLY categories

5. Identified Brand Success Factors The following factors were identified as drivers: Corporate management policy to cope with recession. Innovation (genuine technological innovation, product development inside and outside category). Control over and use of innovative distribution channels. Management of price-value relationship and justification of the brand premium. Communications issues:

6. Identified Brand Success Factors Communications issues: –focus on core values –advertising weight and share of voice –innovative use of media and deriving media efficiencies –development of new target audiences –relationship marketing –powerful promotions –maximising sponsorship opportunities –direct fight on private label –building corporate brands –longevity of agency relationship

7. Context for Hypotheses A number of marketing hypotheses were generated following the individual brand analysis. Successful leader brands are modifying their behaviour not only due to the recession but also due to some of the changes in the marketing environment. For example, –Consumers have changed from risk seeking to risk adverse –Consumers seek genuine and not invented value –Consumers have entered the era of personal choice –The distribution universe has become more complex –The media universe is fragmenting

8. 15 Marketing Hypotheses Hypothesis One Proactive management going into a recession establishes the organisational mind-set for brand rationalisation, it does not always confer market success in its own right. Hypothesis Two Innovation must be built into the process of brand development. Genuine technological innovation is achieved by few, product improvement by many.

9. 15 Marketing Hypotheses Hypothesis Three Transferring brand equity proves to be a lower risk strategy, more brands will seek this route. Credible brand equity is needed for this. Failure carries the risk of diversion of resource and weakening of the main root equity. Hypothesis Four Control over distribution and use of innovative distribution channels will become more critical. With the current pressure on conventional retailing, proactive brands will seek new forms of distribution.

10. 15 Marketing Hypotheses Hypothesis Five Monitoring the brand’s price-value relationship is critical. Careful orchestration of brand premiums is essential and will become more difficult over time. Justification to the consumer will be needed. Hypothesis Six Core value focus used to be achievable with a single strategic execution. Now core values need to re- expressed with greater variety. Continuity of messaging is critical, interpreted through a variety of themes.

11. 15 Marketing Hypotheses Hypothesis Seven Brand territory, the sum of all associations and attributes held as a reference in the consumer’s mind, is flexing as never before. Successful brands are pushing and evolving these boundaries through new communications channels. In this process, corporate brands are becoming more important. Hypothesis Eight Conventional rules about required advertising weight in terms of market share and share of voice have altered. Portfolio management and ROI/SOM have become more important.

12. 15 Marketing Hypotheses Hypothesis Nine Brand boundaries will need to be flexed through a variety of integrated marketing tools. These will include trademark merchandising, PR, sponsorship and direct marketing. These will surround the brand with a more powerful halo. In this process, the corporate brand identity becomes more important as it adds leverage. Hypothesis Ten As brands mature, they will need to rejuvenate the target audience for brand health and they may also need to redefine the target audience.

13. 15 Marketing Hypotheses Hypothesis Eleven Relationship marketing will become a fundamental part of brand communications in a fragmented media environment. Database construction will become a vital part of brand activity. Hypothesis Twelve Powerful promotions can push market momentum but real promotional breakthrough is achieved by few brands. Often these are cross-promotions.

14. 15 Marketing Hypotheses Hypothesis Thirteen The use of sponsorship opportunities surrounds the brand with a larger communications halo. It permits the brand to take a larger share of the consumer’s mind. Hypothesis Fourteen Direct marketing attacks on own label will be muted. Brands will need to define, flex and expand their territory to stay powerful in this challenging marketing environment.

15. 15 Marketing Hypotheses Hypothesis Fifteen Powerful “corporate brand” identities enable brands to be stronger in the marketplace. They will perform and expand number of roles: –maker assurance –corporate credentials –achieving media efficiencies –maximising the us of innovative media opportunities –increasing the territory of the brand in consumers’ minds

16. About This Presentation This is a shortened version of a presentation given by Carol Samms, Managing Director of Through the Loop, to the International Advertising Association in Vienna in January 1996. At the time, Carol Samms was Vice President of Information Services for McCann-Erickson Worldwide and Director of McCann-Erickson Research & Information Consultancy.

17. Brand Positive Brand Positive is part of the ongoing Knowledge Development Programme at Through the Loop designed to understand how successful brands are managed through times of recession or slow economic growth. More details of Brand Positive are available on the Through the Loop Web site: http://www.throughtheloop.com/BrandPositive/