Mr. Milton was working in a multinational company as an executive. He would always buy Nokia mobile phone when a new model was launched by Nokia. There were two reasons behind it: he loves technology and was loyal to Nokia. For some months he has not changed his mobile phone and in the meanwhile, he has lost his job due to the worldwide recession. Most of the companies are now cutting cost for survival in the competitive world and to overcome the negative influence of recession. The example portrays how the recession affects consumer behavior as well as brand choice. This article will discuss the negative impacts of the recession on a company and what recession-proof marketing and branding strategies it can take to ascertain consumer loyalty and success in the industry.
So, how recession affect consumer behavior and their choice of the brand while purchasing something? The answer is very simple: if you don’t have enough money then how would you buy the desired product?
During the recession, business growth usually declines. You see, most countries are interdependent on some other countries. Due to rises in the price of raw materials, most of the companies tend to increase the price of their products, reduce quality, decrease their promotional activities, concise their media scheduling and so on. So, being a victim of the recession, a loyal consumer may cease to be loyal afterward because of the product’s poor quality and high price.
We know brand loyal consumers are not price-sensitive but there is a benchmark of loyalty versus price sensitiveness. On top of that, during the recession, most of the companies reduce their promotional activities that fail in attracting new customers and cannot influence the loyal or latent loyal customers to buy their products.
Taking it as an opportunity, other competitor brands, who are already offering similar or little less quality product for a lower price, succeed. So, the consumers move to those substitute brands that have been serving as second or third brand choice for the consumer.
Most of the companies are way behind on this concept. Some multi-national companies doing great with the help of their parent brand. But most of the local companies or national companies don’t give much care about branding. But branding is the most important part of a product’s success.
Modern consumers are very knowledgeable because they buy the product when the perceived risk is low and they lower their perceived risk by getting information from different sources or through the cognitive process, which can be negative or positive. Consumers never compromise with quality. They are simply becoming more astute about the price they are prepared to pay for quality.
At the time of recession when people perceive risk is high to buy a product, branding can help them to buy the product because branding can ensure the quality. Brands can use this period of insecurity to make assurances of quality as well as other reassuring signs that help the consumer to go through uneasy purchases with greater confidence. The moral support that is provided by a brand at this time could go a long way towards building enduring bonds with the consumer.
Many new products come in the market every day making it difficult for consumers to choose the right one. On the other hand, the arrival of so many products also put the emphasis back on the need to be different. The company may face some big blue shark in the ocean but you have to do something different with your product for it to survive.
Bangladesh is a developing country and according to the World Bank, our per capita income is $520. Thus it’s very difficult for low-income people to purchase the original branded product. In a recent ranking of top 100 brands, Nokia lost 20% brand value from the previous year while Black Barry gained 100% brand value from the previous year. And one very specific reason behind it is branding.
On January 20, 2008, the editorial in The New York Time entitled “The Rear Price of Fakes” indicates that 7% of the world’s goods are fake”. Businesses that often avoid acknowledging the fake trade for fear of damaging their brand should be more open with consumers about how to tell the difference between real and unreal.
In Bangladesh, we have already seen how Chinese product spread out in the market, where some are totally counterfeit. This is especially true about mobile phones and electronics goods. People can get very stylish phone with minimum cost with available options. While counterfeit products have been a long-enduring problem globally, a weak economy further forms the flame of the fake brand market. Asia – particularly, China is the center of the brand counterfeiting black market. In 2007 during the first quarter, Japan seized 330,000 items from their country where 46% of those products came from China.
A telephone survey was done in 2006 on 1600 consumers in the USA. The participants were from Hong Kong, China, UAE, and Serbia. When they were asked the question “Is there anything wrong in buying counterfeits”. 69% USA participants responded ‘No’, UAE 53%, Serbia 41%, Hong Kong and China 25%. Again when they were asked, “If they had actually purchased counterfeit brand by knowing it?” – 57% respondents of USA said YES.
If that is the picture of one of the most developed countries, then what about Bangladesh? We always try to get more with the lowest price with very little concern about the quality. We don’t think beyond it. Why the ‘me too’ brand succeed in the market. The survey data are not particularly encouraging for international high-end brands in a down economy. Match the availability of brand fakes with the fact that many consumers think there’s nothing wrong with purchasing them.
So, not just at the periods of recession, but for the whole time, a company needs branding for their product. If a brand stands beside the consumer with products available with affordable price and desirable quality then it is obvious that consumer will be loyal to that brand, which will eventually help the brand during the tough time of competition as well as when the economic turmoil will be gone.
Recession-proof marketing and branding strategies
Most of the companies try to overcome recession by using different strategies. The recession-proof marketing strategy is basic but it totally depends on the market situation and position of a company in the market.
1. Closely connect the companies R&D with the marketing department.
2. Don’t do any experimental advertising. Only do the marketing which is accessible and actionable.
3. Try to keep the present customer rather try to get a new customer.
4. Show the present customer experience directly which help retain the present customer.
5. Increase the company’s strategic alliances and joint venture efforts, because these arrangements cost no money, but help increase customers.
6. Always make an offer in advertising. If you are going to spend money on marketing, give the customer a great offer to contact the company.
7. Do BTL activities for the potential consumer.
8. If there is a chance of doing internet marketing then do it. Because sometimes, it is less expensive and convenient for most customers to buy products online.
9. Don’t forget about your niche marketer. They may be your big challenger.