Unless you just fell out of the sky, you are well aware of the current global economic downturn. The cascade of bad news oozes forward like a giant snake of dominoes. It’s a media-fed vortex, sucking everything into it (emotionally if not literally). No one is unaffected and everyone is nervous. Very nervous. But there will be an end to this, and there will be better days ahead. Where will you be when that day comes — picking up the pieces or walking away with the prize?
Most people take cover and wait out a storm, opting for safety. They’ll make their hay while the sun in shining. A brave few see that, with everyone else under cover, there’s lots of room to get things done. Hell, you could even throw in another crop while you’re at it. I’ll call that making hay in a hailstorm.
How’d We Get Here?
Investment advisor, Peter Worsley of TD Waterhouse, calls our current predicament the “perfect storm” of economic bad news: with the collapse of the housing bubble; the collapse of commodities prices worldwide; the biggest selloff on the financial markets since the great depression; and the crisis in the banking system globally, demonstrated by the collapse of the investment banks in the US. Just about every other bank globally suffered from insufficient or low quality reserves plus toxic assets. This is one big financial “owie”.
Spending Versus Saving
Government-fueled economic stimuli can drive the economy to some degree, creating jobs and thus more consumer confidence. That confidence means that those consumers will feel more freedom to spend money. In the New York Times on February 1, writer David Segal said that, though consumer spending got us into this mess, it will also need to get us out out of it. Consumer spending accounts for 70% of the US economy, yet this has all but disappeared as home prices dropped and credit access tightened. There is a paradox at work here. Now that things are tight, we’re all hunkering down and preserving cash, which seems logical. But what the economy needs, more than anything, is for consumers to increase, not decrease, spending.
The new Canadian budget gives us a few hints about what consumers will be buying in the short term, at least. Home improvements, infrastructure as well as other investments in everything from education to improving access to financing for Canadians. That should translate into jobs, disposable income and money to borrow so that they can spend what they need to spend.
Feel the Fear and Do it Anyway
For your company to come out ahead in this recession, you’ll need to “feel the fear and do it anyway”. Those everyday consumers are a fundamental driver of our economy. They are still going to buy things. They’re just going to think differently about what they do buy. And while they’re doing that thinking, your company needs to show up.
Canadian businesses stand to benefit from this loosening of the federal purse strings which, it is posited, will loosen those of consumers. The challenge for Canadian businesses is to ensure that they’re not shuttered up against a storm when consumers are looking for places to spend money. Brand communication needs to continue, albeit with a different tone than that of the last decade.
People will be spending more on what is necessary and on what makes sense rather than on the kinds of luxury items. But consumers still need personal treats to get them through the gloom. Just like the recessions of the 1930s, 70s and 90s, it is expected that the motion picture and alcohol industries will do well. Anything from a latte to a bottle of wine and, if my take on guys is right, a 65″ TV (with full HD 1080p resolution, enhanced black level and new ultra-thin design, Mega Dynamic Contrast Ratio in excess of 1,000,000:1…) …but I digress. My point is that people will still want “stuff‚” and they’ll buy what they trust, what they know and what they see as necessary, either physically or emotionally. They’ll also buy beauty and style — every time.
Paying it Forward
But there is another factor driving consumer decision-makin these days, and it’s “doing good”. The statistics are inescapable.
The most recent Edelman Good Purpose Global Study says that 70% of Canadians would remain loyal to a brand in a recession if it supports a good cause ‚ even if it isn’t the cheapest brand available. I smell opportunity. Are you doing anything to make a difference in your community or in the world at large? And don’t even think about green washing. Be innovative, find a cause you believe in and get behind it. Make it an intrinsic part of your brand. Pay it forward.
Build Value and Trust
Where we once talked more openly about the ”emotional attributes” of a product or service, consumers will be mindful of the value that they are purchasing rather than only the succor of self-gratification. That value usually doesn’t translate to the lowest price. What they buy may feel like a more “necessary”, carefully considered and long-lasting purchase. Or it may be a product from a company who treats their customers better — who’s products are more innovative or beautiful — that makes that purchase a more compelling idea.
This recession may be the return of the “trusted” brand rather than the “brand of the moment”. Trust is a pivotal issue in the world today. There is less and less that we feel we can trust. We encourage building trust in your products and services. We also argue for rewarding that trust by delivering on promises. That will put your company out ahead of the pack as the economy returns to health. It means choosing a genuinely inspiring message and getting it out there. Use good writing and good design. Don’t be afraid to use humour. But don’t turtle, not now.
Making Hay - Coming Out Ahead
According to Terry O’Reilly, on his CBC Radio program, The Age of Persuasion, even though Toyota’s gas efficient cars were selling as fast as they could make them, in 1973 when the recession hit, the company kept up their advertising and marketing when, rationally, they could have coasted. But by 1976 when the clouds parted, they had surpassed both Honda and Volkswagen. They maintained their top-of-mind positioning and sling-shotted past their competition.
O’Reilly also cited advertising icon David Ogilvy, who studied advertising during that same recession and found that those who maintained their advertising during that time also maintained their mindshare. They did much better than those who cut their spending, especially in the years following the recession.
In branding, and brand communications, we are recommending refocussing on your core strengths and selling what you do well, with a fresh approach that emphasizes the benefits to the consumer. We also recommend finding a way to pay things forward, even if it seems a bit counter-intuitive right now. You need to be seen. Make sure that your branding and packaging are exceptional. Others will be afraid to take these steps, so you’ll have more space to move around and to command market share. Think about what you can do to speak to the consumers you need to keep you moving. Do it for your company — heck, do it for Canada!