The current economic downturn has led to a shift in consumer behaviour. So what does this mean for brand owners and managers? Tim Riches, chief growth officer, Asia Pacific at FutureBrand says now is a good time to put your brand under the microscope...
There is no doubt that during tough economic times customers pay much closer attention to their purchasing choices, turning a high level of scrutiny to the value proposition offered by every brand. The 'established order' will be upset in many categories as a result.
So at FutureBrand, we believe now is a good time to re-assess your brand strategy. We suggest that there are three key questions that can help refine your brand strategy to address the challenges and opportunities of the global financial crisis:
1. Is your current view of customer segmentation still relevant?
Many companies spend lots of time and effort on market analysis and segmentation, distinguishing between types of customers to more accurately target product development and communication. The problem is, many of these segmentation models are based on the customer's mindset when 'times are good' and that mindset has changed as a result of the global economic downturn.
An important task now is to look at how your customers assess value. A simple exercise might be to ask what each customer segment is likely to be trying to do in the current economic climate. Are they:
- trying to be more effective? (i.e. get more for the same money);
- trying to be more efficient? (i.e. get the same for less money); or
- trying to downsize? (i.e. spend less and get less).
This type of analysis specifically addresses the cost-benefit trade-off of your brand, and can offer a simple and actionable way to explore what your customers are currently trying to achieve when shopping in your category. If you know what your customers value, then your brand can respond to this in a positive way.
2. Is your brand compelling in terms of cost?
Cost covers not only the dollar price of your brand but also the cost in terms of the effort required to buy and use, and the risk, say to your customer's self-image. So asking yourself whether your brand offers value in terms of its dollar price, effort and risk can guide you to come up with initiatives that make your brand easier to purchase or use, or ways of decreasing the sense of personal compromise that your customer may feel by trading down to a 'lesser' brand.
To maximise long-term value, brands should look for distinctive ways to address the cost side of the value equation. One example may be aggressively communicating the quality of your brand, ideally by comparing the quality of your brand with its higher priced competitors.
3. Are the benefits of your brand robust?
Now is no time to rest on your laurels. During times of economic uncertainty it is important to scrutinise the benefits your brand is supposed to offer and ask yourself the tough questions. What are you really famous for? Why should customers prefer your brand to others? Are your brand's attributes still relevant and differentiable in today's market? How would customers choose if they were first time customers to your category and had full information about every option?
Although most businesses are facing a lot of pressure as a result of the global financial downturn, it is important not to ignore the fact that consumer decision-making and preferences are shifting. If you're serious about making your brand customer-centric, then putting your brand's value proposition under the microscope isn't just a nice idea, it's mandatory, because let's face it - that's what your customers are doing.
Tim Riches, chief growth officer, Asia Pacific, FutureBrand
Tim Riches is CEO Singapore and chief growth officer Asia Pacific at FutureBrand. FutureBrand helps companies create powerful brands in an ever-changing world. Please send any comments or questions you have in relation to this article to: TRiches@FutureBrand.com