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Riding out a recession
When times are tough, the impulse is to cut back. Consumers do so by avoiding ‘luxuries’ and trading down to own-label goods. Businesses do so by looking for opportunities to make savings across the board. However, whilst it may feel like a recession is a good time to cut back on expenses such as marketing and research; we disagree. Not only should you retain your research spend so you can understand consumer behaviour and adjust accordingly, but we believe that investing now in a brand tracker could actually safeguard your brand and help to recession-proof your marketing.
How do consumers behave in a recession?
Consumer behaviour is complex at the best of times and in a cost-of-living crisis, all bets are off. According to the Harvard Business Review, consumers can be allocated to one of four different groups during a recession, based on the attitudes and behaviours they exhibit:
- Slam-On-The-Brakes. These are consumers who have been hard hit by the downturn and need to decrease their spending accordingly. It’s worth noting that this group can be made up of not just low-income consumers but also high-income consumers who simply have more anxiety and caution in their behaviour.
- Pained-But-Patient. This segment tends to be the least affected by unemployment during times of recession. They are often positive about the long-term but more nervous about the short-term effects of recession on their standard of living. If economic news worsens, this group may transition to become Slam-On The-Brakes.
- Comfortably Well-Off. These consumers tend to live frugally and have confidence that they can weather the storm and wait out the downturn. The group reflects those in the top 5% of earners, as well as those with fewer means who are nonetheless financially stable.
- Live-For-Today. These individuals are typically younger consumers with little in the way of responsibilities and liabilities. They tend to delay big purchases but still indulge in consumer electronics and experiences, so as not to miss out on any trends.
All four groups broadly regard the different products and services they consume as one of the following:
- Essentials: items necessary for survival or perceived as central to well-being.
- Treats: indulgences whose immediate purchase is considered justifiable.
- Postponables: needed or desired items whose purchase can be reasonably put off.
- Expendables: unnecessary or unjustifiable
However, each group’s behaviour towards the individual categories is different, and changes further, depending on the economic conditions.
Image Credit: Harvard Business Review – How to Market in a Downturn (hbr.org)
What is a brand tracker anyway?
Brand tracking is the process of monitoring the health and performance of a brand over time. Brand health and performance can be evaluated using a variety of methods including social media listening, analysis of online reviews, qualitative interviews, focus groups, customer service feedback and website analytics. However, for the most effective and flexible way to measure brand health, we recommend a purpose-built, quantitative, longitudinal brand-tracking survey – a brand tracker.
One of the key benefits of a brand tracking agency is that they enable you to tailor its content so that it only focuses on the metrics your brand requires to inform decision-making regarding future marketing strategy, brand positioning, product development, customer service and other brand-related issues.
How does a brand tracker help safeguard my brand?
Consumers don’t react uniformly to a downturn so you need to understand how different elements of your target audience will react to your brand. This is likely to reflect a combination of the following:
- The extent to which they are financially exposed
- Their wider attitude towards spending versus saving
- How they categorise your brand: is it an Essential (hopefully) or an Expendable
The default brand response in a recession is to lower prices, or costs, or both. However, that only addresses Point 1. above. A better response to Point 3., might be a communications campaign that repositions your brand as Essential rather than Expendable, or in the case of Point 2., a bundling offer and communications campaign that illustrates the cost saving to be made, by buying in larger quantities.
Of course, identifying which action(s) to take requires access to suitably insightful data. Not necessarily lots of data, just the right data. And this is where brand tracking comes in. The data provided by a tracker will typically allow responses to key metrics to be analysed according to household income.
These standard tracker metrics are sufficient for brand owners to determine the extent to which recession is impacting:
- Sales
- Market share
- Brand loyalty
- Brand preference and usage
They can also reveal the extent to which perceptions of the brand and its perceived relevance are also being undermined by the economic conditions. Of course, whichever course of action is most appropriate, it still needs to be identified quickly – market conditions change rapidly, and brand owners need to be able to act quickly and appropriately, if they are to minimize the impact of the downturn.
Why is data so important?
During a recession, customer attitudes and behaviours can change quickly, so the ability to access the right customer data at the right time is essential. A brand tracker can act as an early warning system, to identify not just when the downturn is affecting your sales but, more importantly, your core brand equity and future purchase intent. It can also give you a means of evaluating the impact of your marketing strategy versus those of your competitors.
We would argue that the job of protecting the brand is a higher priority than addressing a fall-off in sales because your brand is for the long term. Recessions typically only last 6-15 months, on average, so while drops in sales are painful in the short term, a damaged brand can be terminal.
So, how will a brand tracker recession-proof my brand?
Your brand tracker can monitor all the metrics required to monitor brand health, including awareness, loyalty, intention to purchase, brand values and competitor activity and comparisons. In hard times it is also important to be flexible. At least 80% of your brand metrics should be constant and repeated with each wave. However, your tracker can also include a flexi-section, where individual metrics can be changed on a wave-by-wave basis. This flexibility ensures that your tracker is always able to take full account of changing market conditions and any campaign activity that could influence results.
Brand tracking guides you in directing your marketing investments where they will yield the most success given the economic climate. Whether you need to boost awareness, refine your relevance, or run better campaigns, brand tracking data ensures you don’t dilute your brand message.
By implementing a brand tracker as a lens when the going gets tough, you will become more attuned to how your consumers are reacting to your comms strategy and learn which campaigns and messaging resonates best and performs best with your customers. Perhaps a tracker will reveal which different channels have become more important. Or that advertising that you created before the cost-of-living crisis is likely to appear tone deaf in the current climate. Having a tracker in place will allow you to be proactive as well as reactive and agile to the state of flux in the economy. Measures you may take as a result of insight from your brand tracker could include:
- Creating offers and payment structures to help alleviate the economic pressures
- Delivering more (frequent) empathetic brand communications, reflecting the pressures customers are facing
- The development of longer-lasting strategies to deal with more fundamental changes in customer attitudes and behaviours
- Responding to successful competitor activity with the right initiatives and campaigns
Getting on the front foot with the data will give you an edge over your competitors, who are all vying for the attention of the overwhelmed public – whether they are the Slam-On The-Brakes variety or the Live-For-Today. Your brand wants to be the voice of certainty, security, relatability and grounded reassurance, and you can only do that by getting under the skin of how you consumers are feeling. This can only be discovered through the data obtained from a robust brand tracker that adapts and asks the right questions.
Summary
The recession-proofing power of brand tracking is the best weapon in your market research arsenal because it will provide the data that helps you navigate your way out of an economic downturn. It can help you gain competitive advantage, maintain brand resilience and give your marketing and advertising messaging the nuances and relevance to resonate with your consumers. Ultimately, it is about building trust and ensuring that with what reduced expenditure they have, your brand is one they will invest in and ride out the recession with, to better times ahead.
If you want to speak to our in-house expert regarding all things trackers, contact our Head of Quant Mark Bagnall today, on +44 (0)7825 303 244 or at Mark@brandspeak.co.uk
