Marketing in a recession

Brands should beware of adopting a one-size-fits-all approach to marketing in a recession, according to research by TNS, and should focus on the values their customers trust.

It is often tricky for marketers to work out how best to talk to consumers during a recession. Should they talk about the product quality, the longevity of the brand or simply the price?

New research from TNS warns that many companies are dropping their well-established values and distinctive marketing styles in favour of reactive promotions. This technique may result in some brands losing the very elements that make them valuable to people.

Guy Kemplay, UK head of segmentation and positioning at TNS, says the company was keen to find out if directly addressing the recession in marketing communications even made a difference to consumers.

He adds that a quarter of those surveyed by TNS are sick of brands saying the same thing about price cutting, and don’t want a “one-size-fits-all” message for the current crisis.

The TNS data suggests that how companies market themselves to consumers – and whether or not they should mention the recession – is affected by several issues, including the price point of the brand, the company’s business sector and how emotionally attached consumers are to that particular sector.

Brands with a premium price point are most important to customers, according to the TNS data. Indeed, 30% report being strongly attached to upmarket brands, 24% are strongly attached to mainstream brands and just 18% are strongly attached to low-cost brands. Indeed, a quarter of respondents claim to be “strongly unattached” to low-cost brands.

As a result, those businesses selling themselves on a premium proposition must never change their message about product values. Any upmarket business suddenly altering its promotions during a recession to focus on cost will merely confuse consumers, rather than establish the brand as good value.

Kemplay argues: “If you are a premium brand, people would start to question you if you started talking about price – it’s about making brand messaging relevant.”

However, the data suggests that those companies selling low-cost goods should empathise with consumers about the cost of living and make sure their marketing addresses this.

The business sector in which a company operates also makes a difference. For example, even though supermarkets sell lots of low-priced goods, TNS data suggests it’s not important to include recessionary marketing to engage with consumers for FMCG brands that sit within those retailers.

For premium brands, it is more important to push messages about being global, as consumers attached to such brands say the international status of the business is important to them.

For lower-cost products, it is more important that consumers see the brand as “modern”. This makes a difference to how consumers perceive such brands.

The level of consumer attachment in different sector categories is also important. Consumers are most attached to FMCG food and drink brands. TNS says this is because this sector is most successful in building strong relationships with the consumer.

More than a third (39%) say they are strongly attached to a food and drink brand. This compares to 31% who are strongly attached to home electronics brands, 24% who are strongly attached to automotive brands and 20% who are strongly attached to a mobile phone provider. 

Kemplay points out that the most comparable sectors in this survey are the FMCG and financial industries because both sets of brands are so widely used by both genders and across the demographics.

Yet while 39% are strongly attached to the FMCG products they use, just 16% say they are strongly attached to financial brands, which indicates a poor customer relationship between this sector and consumers.

When comparing pan-European and local brands, 26% are more attached to home-grown brands compared to 19% who are more attached to pan-European brands. So domestic brands might do well to push their national status.

With these areas in mind, Kemplay says brands must promote themselves in the correct way. For example, a premium brand like Marks & Spencer food should not be talking about rock-bottom prices but it can emphasise its good value in comparison to other upmarket experiences.

He cites the M&S “£10 dine in for two” promotion as a positive move by the retailer. “That’s done well not because it’s cheap at an absolute cost, but because it’s relatively good value compared to going out to a restaurant,” he claims.

For low-cost brands, pushing the price is an absolute must. Along with a message about being modern, cheaper items are one set of brands that can really benefit from being seen to react to the recession. “When we looked at all the low-cost brands, value, cost and price were integral to them,” he says. “Those recession messages became important and I think it’s because these brands live or die by their value platform.”

There is some industry specific advice for retail brands, Kemplay says that the data suggests that companies should emphasise their socially responsible values and understand that people’s needs change in a recession.

Financial services brands also need to understand that people’s needs change during a recession by emphasising their ability to be helpful in tough times. Consumers who feel attached to financial services brands are keen to see companies market themselves in a way that inspires confidence.

Home electronics businesses should emphasise their global nature. Those companies which appear both international and modern are able to generate the most user attachment.

Mobile phone brands also need to create marketing campaigns about modernity. Consumers who are attached to these brands say they want to see providers that are constantly changing and surprising them.

One statistic that will put fear into the heart of marketers, however, is just how ambivalent consumers are about brand survival – 36% say that if some brands and products don’t survive, well, that’s just life. However, 33% did say they would be really disappointed if some of their favourite brands didn’t survive the recession.

It’s clear that businesses cannot take a one-size-fits-all approach to marketing in a recession. The strategy companies should take is dictated not only by their price point and business sector, but also how much consumers feel attached to their type of business.

While consumers expect recessionary messaging to be communicated by low-cost products and financial services providers, brands in other sectors should aim to establish a reputation for quality and consistency instead of just slashing prices.

TNS findings at a glance

  • In general, consumers are more concerned about the recession than war and terrorism.
  • The cost of living and personal financial security are causing high levels of concern; 60% and 63% worry a lot or often about these issues, respectively.
  • Although 44% of people report a drop of disposable income due to the recession,
  • 40% say they are earning more money.
  • Spending on groceries and travel remains largely unaffected.
  • Consumers have reported the biggest drop in spending overall in the area of out-of-home entertainment (57%), while 52% are spending a lot less on in-home entertainment.

The frontline

WE ASK MARKETERS ON THE FRONTLINE WHETHER OUR ‘TRENDS’ RESEARCH MATCHES THEIR EXPERIENCE ON THE GROUND

Patrick Cairns, Managing director, Plum Baby

During uncertain times like these, consumers want things that they can depend on. Brands can play an important role in this environment, if they can demonstrate real tangible value and quality – rather than just a low price.

Plum has grown by 50% over the past year, not by cutting prices or by being flash and grand. We have done it by focusing on delivering the best possible quality food for babies. We don’t compromise because we don’t think that mums want to.

We focus on direct communication with consumers, meeting them face-to-face and via the internet, using social networking and database marketing. We think this works well as mums are a highly engaged and well-informed target group, looking for us to be ‘on the level’ with information and access to what we are doing as a brand. 

Simon Ewart, Manager, consumer communications, General Motors UK

Customers inevitably look to brands that reassure them when times are tough. We feel it is essential to behave consistently and to continue to communicate brand messages as strongly in the tough times as we did when times were good.

To that end, we have resisted any temptation to focus more on price-led communications. We have remained consistent in the proportion of our spend focused on value messages.

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