In times of crisis sales of generic store brands rise. What should premium brands do or not do when faced with this?
The answer to this is to find out "what are we selling" and "what is our point of difference?" Once premium brands start down the road to promotions and price cutting it's often very hard to bring prices back up. The key is to evolve the brand so that is stays relevant to its audience.
it goes back to customer service and knowing that you will do what it takes to NOT lose a customer. Sales promotions, showing customers that you understand the difficulties of life at this time (Think "Mr. Mom" and Schooner Tuna ad). It's true, this really works. Boutiques, small business and prems hate to discount because they feel it cheapens their brand (and some should totally not take this route), but I think you would rather generate some sales than none at all, left sitting on old inventory you can't move. Being sensitive to your customers will be well-received and appreciated. In fact, you might even create stronger brand loyalty. I believe that if you can accommodate your customers and "suffer through" together, that they will remember and pay you back for the loyalty you've shown them.
Concentrate on service.
Every company must weigh it's own needs in such times. There is often a place for price competition for any brand. It doesn't make sense to be rigid about brand esteem vs. price wars.
Create a "Significant Differential."
Build value. What makes your product
significantly different (better) than
other brands and why should consumers
pay more for it.
Brands really need to focus on connecting with consumers during economic crisis on a more personal level. Sympathizing with your customers and being there to answer those questions and reinstate feelings on their purchases being good decisions is vital.
From both working in the print and internet fields, I have first hand experience with businesses making significant decreases in their advertising/marketing budgets. Unfortunately, its usually one of the first areas to see cuts and is one of the biggest mistakes made. Not maintaining a presence can stop your flow of new business and significantly decrease your current customer base if you are unable to be found.
Premium brands must avoid discounting to compete. This easily said, but the reality is brands still need to generate cash flow.
When crisis's hit they are a range of under-lying emotions that drive the response behavior of clients. The key for premium brands is to understand these emotions and find a way to connect.
Social media is critical in doing this because it provides insights in to how people are thinking.
Quality over quantity has always been our mantra. Tough economic times force our clients to dig deeper, become more creative, and justify why their products are still viable. It's a good business lesson, albeit a Darwinian one.
Premium brands should accentuate what is different in their products but not overly so. Offering additional bonuses such as a % free helps. If the company is committed to its customers and is sympathetic to their needs they are more likely to succeed. For instance, donating to charities during times of crisis will help to endear a premium brand in the minds of consumers.
Individualize yourself. Accentuate your uniqueness and your service. If people feel like they have a real relationship with you, they will keep coming back.
Premium brands must realize the fact. As soon as they realize it they will also take the route through the social media marketing to keep their position intact.
Get even more focused and target those customers who want their brands. Patagonia does it very well.
Lower their price -- yoo hoo, that's why people pick the generic brand.
Reinforce value propositions. Run campaigns that develop brand trust, and invest in programs that increase customer loyalty and repeat purchases from existing customers.
What they shouldn't do? Blast message after message about the fact that they are premium. Premium brands can alienate prospective customers when the time of crisis is over if they simply promote their premium status.
Stand firm and keep their brands in the face of the consumer by putting their core values forward. People do not buy by cost alone. They buy for loyalty, community and perception. |
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