Wednesday, April 29, 2009

Benefits vs. Price: Advertising Strategy in a Recession

In an economic downturn of such weight and impact as this, now being referred to as the “Great Recession” due to our love for branding our own historical periods, how does a mass market, consumer brand react? How does a consumer brand respond to ensure success?

I’ve been paying close attention to various answers to this question over the last few months and I’ve learned there are two distinct camps of response. They are diametrically opposed in process and structure, but they can each be successful in their own right.

The first response for a brand is to spend, spend, spend. When a brand spends during a recession, they do so to take advantage of the lack of spending by their competitors and they attempt to increase market share by hammering home product benefits and values. To spend during a downturn is an aggressive strategy that can result in a stronger recovery once the rest of the economy catches up. There are loads of data and research studies that support the concept of spending during a recession, but what they rarely tell you is that to do it effectively you need a strong creative strategy.

Brands that advertise heavily during times of economic distress need to be sympathetic to consumers and they need to focus attention on product benefits that go beyond the obvious. They need to get into emotional benefits and they need to offer intangible reasons why the brand should be your brand of choice. Some good examples, in my eyes, of brands that are being successful with this right now include Pepsi and Audi. Pepsi’s advertisements are currently ubiquitous, and even though I’m a Coca Cola drinker I enjoy the positive message associated with Pepsi’s ads. Audi is another example of a high end brand that appears to still be spending in order to increase the perception of their brand as a premium. When dollars return and the market starts to go positive, Audi will likely gain market share even further.

Unfortunately, many brands that take this strategy resort to a pure media strategy during these periods and they just turn up the flow of dollars which can result in wear-out for their creative and consumer fatigue. If you’re turning up the media faucet during this period you need to turn up the creative faucet as well. Both Pepsi and Audi seem to be using fresh creative during this period, so they’re certainly on to something!

The opposite strategy is to reduce spending and focus solely on the baseline of your media, but it always appears that when brands take this strategy from a media perspective, they also tend to focus their messaging on price. Selling on price is absolutely a strong strategy during economic hardship for targeting the average consumer because it provides a message which is quickly understood and valued, but price can be a dangerous message because once you drop or focus on price, it can be harder to focus on anything else later.

Price resonates immediately, but it can also shift the attention away from product benefits. The one shining example of where this is not the case is the current Hyundai campaign that offers the “safety net” pricing that ensures you won’t be stuck paying for a new car if you lose your job. Though not obviously a price message, it translates to the concept of Hyundai being a great deal all around. The question is that once we emerge from the recession, can they still go beyond price? Hyundai had been doing a fantastic job of messaging value and changing the image of their brand, can they maintain that in the future? My guess is they can because their message didn’t default directly to price, even though they danced around it without saying it outright. Brands that are focused purely on price are the ones that I would see in trouble.

Overall I guess my opinion is quite obvious; that spending and messaging product benefits sets your brand up for success. What I suggest you do is become your own advertising anthropologist and focus one eye on the messaging you see around you. Identify the advertisers focusing on price and see if this represents a change in strategy (some brands, like Wal-Mart, have always been about price and that’s all you would ever expect). Also try and determine, with your consumer hat on, whether you would believe a product benefit message later from that brand now that they are focused on price (how would you respond if Wal-Mart started selling premium goods?). It’s an interesting exercise and one that will get you thinking.

Let us know your results by telling us on the Spin board!

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