The news of "a significant downward revision of South Africa's economic growth forecast for this year" will be setting off alarm bells in many marketers' minds. With Stats SA reporting that the economy contracted by 0.6% in the first quarter and inflation still on the rise, things are going to be tough for a while. Consumers will be under pressure and business will be responding to decreased spending by cutting costs. Marketing is often first to have its budget cut. And many businesses will respond to the financial pressure by slashing prices to drive up volume or raising prices to make up for lost volume.
Both of these responses can be damaging to the brand.
Brands are important business assets that drive growth. They are the difference between the multi-billion dollar Coca-Cola Company and any old sugary drink, and they are one of the most important determinants of sustainable business success. Undermining brand perception for short term financial savings is misguided.
So how can you argue that your brand shouldn't suffer from an ill-informed cut from above?
- Explain the value in your value proposition. Price is not the only consideration for your customers. Value is a trade-off and price is only one part of the equation. Upper income consumers won't pay a cent more than they have to if they don't see the value in your brand. And low-income consumers will splurge on items if the brand makes them feel good about themselves - something that brands such as Nike and Carvela understand.
- Focus, with the right offer to the right market. Segment your market properly. Show how you are able to redirect budget for more profitable return by prioritising the segments that can grow your business. Make sure you understand which segments are your source of business and which are your source of reputation. Understand the contexts, unmet needs, passions and frustrations of your target audiences so that your marketing can be more insightful and human. Develop targeted offerings and innovate with product and packaging to drive affordability without diluting the brand. For example, Johnny Walker Red helps broaden access to premium whisky. Coca-Cola and SAB use glass bottles in poorer areas, making their products more affordable due to the refunds on bottle returns.
- Adapt your messaging to be more intentional. Make promotional messaging work harder for brand-building by connecting with customer emotions, and make sure that brand communications also include a call-to-action. Don't just tell consumers about a new feature, for example, but find compelling and experiential ways to get them to try it out.
- Link your marketing to topical and relevant events. Current affairs and lifestyle events can provide an effective means of building incremental visibility and awareness for your brand by being part of a context in which consumers are already engaged and participating. Nando's frequently goes viral and builds visibility through social commentary on current affairs - from Eskom black-outs to celebrity love scandals.
Using price as the only mechanism to influence consumer decisions is a mistake. The products and services that aggressively drop prices end up as commodities and struggle to claw their way back to profitability. The brands that raise prices to increase margins end up in a downward spiral of decreasing volumes.
A compelling, meaningful, relevant brand is the surest way to survive tough economic times. It requires deep customer insight, some tough strategic decisions and remarkable creativity, but those marketers who get it right will not only ensure their budgets aren't cut, but will play an important role in growth for the business.