Can brands feel consumers’ pain?

A report by the housing charity, Shelter, this week has confirmed that almost one million Britons have taken out an emergency ‘payday’ loan to help pay their rent or mortgage in the last year. In addition, the charity also reported that seven million Britons – that’s 10 per cent of the population - are relying on some form of credit to help pay their housing costs.

With so much of the population under such fundamental financial pressure this situation necessarily has implications for brands.

Consumers will likely be more vigilant and more eagle-eyed than ever and are likely to be not only rationally searching for the best bargains but will be willing to put more effort into securing them. They will also be looking for emotional pay offs: higher level benefits such as “doing the right thing”, “being responsible” etc as well as more basic “animal” drivers such as “competing for scarce resources”, “protecting your family” etc. It will be interesting to see how people’s well developed need to be part of herd and community plays out against this background.

Whilst brands might be tempted to introduce “value” variants of their best loved products we would caution against straying too far from accepted brand values and setting the brand up for a later fall. Brands could more fruitfully consider greater innovation in promotional strategy (we have seen iterations of this with retailer schemes such as Asda’s “Price Guarantee” and Sainsbury’s “Brand Match”). They could do this by applying product innovation research techniques to create, develop and test truly innovative new value/promotional ideas rather than relying on the classic well-trodden path. Larger, global brands may even look to see what has worked for them in less well off, emerging markets to see whether messaging or products for ‘poorer’ consumers might be transferable.

In this sense, there is also a communications role here for brands. They, a little like MPs during this period of austerity, could do worse than to try and look like they are feeling the pain too. It’s tricky to pull off authentically but can cement the relationship with your customer base if you can do so.

As much as there may be temptation for brands to set themselves up to operate within a recession, they often forget to plan for leaving a recession. Launching value brands might bring some dividend now but longer term could damage their positioning if it they operate in a more premium segment. Own Label will by default boom right now, and may be the trick for brands and retailers alike is to promote ‘the game’ of saving money with rewards who can shop savvy whilst still retaining the brands to which they are emotionally and behaviourally are too strongly connected. Who can be the first supermarket to genuinely reward consumers by spending less or buying more efficiently? It is something energy companies have tried in the past – rewards for being more energy efficient. Let’s try rewards for being more shopping efficient.

Brands will need to work harder to put themselves in a position that they do not become the ‘dropped brand’ so that when the inevitable exit from recession arrives they are, from a value perception, in the right place for their brand. In a current economic climate dominated by us having to ‘make do’ with a raft of bland value brands, there will always be a place for more premium products that we aspire to, those brands have to work harder though to keep those emotional ties both through maintaining their position but without appearing to be out of touch with the financial reality people face.