Adapting Your Brand

What if you have a good brand name, but other factors force you to be creative with your marketing and advertising?

You adapt as explained in this story from the Hartford Courant:

WHAT’S IN A NAME?

Brands Adjust Marketing Strategies For Recession Mind-Set

By ANNE M. HAMILTON

Special to The Courant

February 22, 2009

With layoffs on the rise and stock markets headed down, we know that buyers are spending less. What that means for brand loyalty is a crucial question that's still unfolding for purveyors of consumer goods and services.

Will shoppers stick to their old habits and remain loyal to their favorite brand items, such as a Starbucks latte or jeans from the Gap?

Or will they carpool to a dollar store to snap up store-brand cookies and purchase "pre-worn" clothes from Goodwill?

"It's not an easy question," said Akshay Rao, director of the Institute for Research in Marketing at the Carlson School of Management at the University of Minnesota. "People become more price-conscious, but will trade down only so much at a time."

If people are used to eating out twice a month, for example, they will switch first to buying food at an upscale grocery. "It's not steak to meatloaf overnight," Rao said.

The demand for — and purchase of — expensive treats, such as a Starbucks grande and a $25 lipstick, will probably remain constant. "Will people purchase indulgences more because life is bleak?" Rao asked. "That's the theory."

One thing is clear: In every segment of the economy, manufacturers and marketers are scrambling to do whatever they can to retain brand loyalty, even as they face pressure to cut costs. Some are tweaking their sales pitch.

The Stanley Works, for example, has cut back on advertising and announced last year that it was eliminating 10 percent of its workforce as the new Britain-based toolmaker sees drops in the number of items it sells. But Stanley continues to sponsor events such as NASCAR races and promote new products, including the FuBar, a heavy-duty crowbar.

Stanley expects to see more do-it-yourself projects during the economic slowdown, which will lead to more sales.

"People are not hiring a professional. They are doing the job themselves," said Scott Bannell, vice president of corporate brand management. "They have more time on their hands, more moonlighting."

He said the company's recessionary strategy is to continue to keep its brand visible to the public.

Taking advantage of trends is a key strategy across the board.

Quaker Oats? It's always been healthy, but there's a new pitch, said Andrew Razeghi, a lecturer in marketing at the Kellogg School of Management at Northwestern: "It's a cheaper form of protein."

"A1 Sauce? Use it for hamburgers," Razeghi said.

To attract or hold customers, banking giant Wachovia, now part of Wells Fargo, is hawking its Way2Save debit card, which automatically transfers $1 from checking to savings each time the debit card is used. In addition, it pays a 5 percent bonus on the amount saved, plus 5 percent annual interest.

You Only Live Once

Hartford resident Tanisha Nixon, a nurse's aide who earns $17 an hour, said she's staying loyal to national brands despite the economic kerfuffle. She buys her clothes at Lane Bryant and fills her shopping cart at the Stop & Shop in Bloomfield with name brands: Nabisco, Betty Crocker, General Mills. On a recent visit, the only private-label items in her basket were a can of corn and some ground pepper.

"You only live once," Nixon said, and besides, her children, ages 10 and 12, refuse to eat store brand staples and turn up their noses at supermarket pizza.

If she's running short on cash, she works weekend double shifts at premium pay. She relies on her boyfriend to bring home takeout meals or meat, but says he's a different type of shopper. "He goes by cheapest. I go by quality," she said.

Marketers, aware of sentiments such as Nixon's, worry not just about current sales, but also about long-term loyalty. Customers who get used to cheaper goods or discount stores may not return to their former buying habits in better times.

"If you discount too much, it emphasizes to consumers that my clothes weren't different from anyone else's. Price competition undermines brand loyalty," said Ravi Dhar, director of the Yale Center for Customer Insight at the Yale School of Management.

So traditional retailers are trying to walk a fine line between lowering their prices enough to stay solvent and retain their price-conscious patrons, and offering something extra, such as durability, value or service.

They may try "bundling," or disguising discounts by selling multiple items at a slightly lower price, or trying to create an emotional attachment with their buyers, such as reviving Travelers' umbrella logo, or emphasizing the traditional "You're in good hands with Allstate" slogan, said Bill Field, president of Mintz & Hoke, an advertising and public relations company in Avon.

Sometimes, when a manufacturer produces higher- and lower-priced versions of the same product, buyers will stay with the company, but trade down. Instead of buying Pampers, made by Procter & Gamble, they might try Luvs, which P&G also makes. Or they will shop at Ann Taylor Loft instead of the main store.

Unique Goods

Many sellers play directly into the recession with pitches and special offers. Hyundai has raised the ante on that strategy. The Korean automaker is offering to take back your car and let you walk away if you lose your job within a year, even if you owe as much as $7,500 more than the car is worth.

"It's clever. It takes into account what customers are worried about," said Dhar, at Yale. "Hyundai really understands."

Some products don't seem to have any competitors, and their manufacturers have not been cutting prices. Tech goods, such as iPhones and iPods, appear to be unique. With iPods, "people want just an iPod," Dhar said. "They have created a differentiated product."

In the same way, some specialty stores seem to have a lock on consumer loyalty. The surge in popularity of organically grown food means that some customers will continue to pay premium prices for produce, meat and fish at a premium store such as Whole Foods, even though more and more big-box supermarkets are carrying more natural and organic offerings.

Liz Filloramo of Manchester is a Whole Foods devotee, even though she knows its prices are higher than those of standard supermarkets. "There are no hormones or pesticides. I'd rather pay a little more," she said.

She relies on the chain's produce, meats and fish and the brands she's familiar with, even the organic pet foods. "I'm basically loyal. I know they are good."

"Traditionally," said Field, at Mintz & Hoke, "the best brands hold their value, even in the case of a recession."

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