As businesses struggle to recover from what Time Magazine has dubbed “The Decade From Hell,” I would like to share my thoughts with you on what advertising agencies must do to help their clients remain successful in a down economy.
The first step is to understand the behavioral patterns of consumers. Although it’s true that in a downturn consumers reduce their spending, they don’t stop buying. They just buy more carefully. And something called the price/ value equation becomes the prime motivator for both consumer and business to business spending.
The price/ value equation works something like this. Let’s say the product is tires. In a healthy economy, tire safety is huge and may even be the primary selling proposition. (Remember the tire maker that always showed a baby in all its tire ads?) But in a down economy, what would the typical consumer be more likely to buy: A tire that is promoted as being safe, or one that is good for 10,000 more miles than its nearest competitor? Both tires cost about the same. But one will last up to year longer than the other. In a down economy, the typical consumer will throw the baby out with the bath water, and take the extra year’s wear in a heartbeat.
That’s the price/ value equation. And by digging deep enough, one thing we’ve found is that it exists in some way for most brands and products. And with it comes the opportunity for a brand to not only survive a recession but also be successful in one.
In fact, according to a study done by the Harvard Business Review, companies that strengthen their brand promotion during a recession are up to 7 times more likely to emerge stronger and more profitable from a recession than those who don’t.