I’m not making any bold or surprising claims when I say it’s tough out there. Afterall we launched Bluesoup in the same week as the recession became official, so my time as an MD has been served under one economic climate only; a tough one. And what’s becoming more apparent is that it’s not getting any easier and it’s not going away any time soon.
So what options are open to us as business leaders to navigate these difficult times?
Well the first and most obvious solution is to look at cost. Can we reduce the in cost of raw materials or reduce the overheads of the business. If you haven’t already done this (and probably more than once) you are in a privileged position…and can I franchise your business?!
Having completed the cost exercise, most of us will also have seen a drop in turnover as sales volumes fall. And herein lies the point of this blog. Conventional thinking would suggest you either:
- Weather the storm and cut your cloth to reflect the lower revenues (which takes you back to cost cutting again)
- Reduce your price(s) to stimulate sales volume, albeit at a lower margin. To maintain profitability you now need to cut costs to offset the reduced margin..so the same net result, back to cost cutting. You’ve also inadvertently created a problem for the future…namely will you ever manage to get your customers to pay pre recession prices again?
Bold as it may be, I’d like to suggest that there is an alternative. You own a brand, however strong or weak it may currently be, you own a brand. And it’s this brand that will be able to help you through the next few years. I’m not saying it will be the whole answer, but it can play its part if properly understood & managed.
So what do I mean? Well imagine a person who appeals to everyone…yes absolutely everyone. This individual is the life and soul during happy hour, yet is tea total. They attend church every Sunday, yet they’re an atheist. They support Manchester United and Manchester City and Spurs and Arsenal. Finally, they love, and loathe, Marmite!
Impossible heh? Well that’s exactly what companies are effectively telling us when they say their “product appeals to everyone”. It’s just not possible.
Much better that you do adopt the Marmite approach and understand who you appeal to and who you don’t. Once this is understood, you can dig deeper and understand why they like you, and just how much. If they’re obsessed, evangelists even, chances are they’ll sacrifice other things in their life before they give up on buying your brand. And they’ll probably pay a premium for it too. Why else am I still buying Tropicana and Heinz Baked Beans?!
Many brand people can come across as fluffy, blue sky thinkers. However find the right partner, and they come loaded with commercial insight that focuses their work towards the end goal of helping you sell more, whilst maintaining your margins. From a marcomms perspective, a clear understanding of the who and why enables us to develop motivating campaigns, adopting the right tone of voice, and utilizing the right channels so that marketing budgets become more of an investment than a gut feel cost.
So am I talking a lot of hot air and idealistic waffle? Well no. We undertook exactly this exercise for a client of ours at the start of the recession. We increased the premium nature of their brand & communications given what we knew of their customers. And the results? Revenues have been maintained throughout the recession and given the improved marcomms strategy, volumes have held up too.
So, my recommendation? Instead of adopting the conventional wisdom, be bold and look at what you own and what it’s worth to you. Find yourself a brand consultant with a proven track record of commercial results and invest in their insights (we work with some great ones if you want a recommendation!). I guarantee the upfront cost of their work will be more than saved in increased returns from a more informed marketing strategy on its own…let alone the ability you’ll have to maintain margins more confidently.
