The economy is in trouble. The stock market has gone haywire. And consumers have drastically reined in their spending. These are not good times for most companies and most families.
But now is not the time to panic. Now is the time to preserve. To preserve your brand, its meaning and its identity by staying focused.
In the face of uncertainty, focus is more important than ever.
Of course, it is not easy to be calm and steady amidst such economic turmoil. Your natural instinct is to get out there and do something. To actively tinker with your brand to keep it afloat.
Economic markets rise and fall like the ocean. Strong brands will survive no matter what the tide. The key to long-term success is riding the waves up and down using your brand as a steady rudder. You should not attempt to sail against the current. And you should not over steer the ship.
Changing your strategy depending on the economy is a trap that many companies fall into. That is the worst thing to do.
When times are good, companies often launch expensive versions of their brands like Folgers Gourmet. When times are bad, companies often go downmarket with coupons, discounts and sales.
Can't afford the $160 six-course meal at Wolfgang Puck’s Spago anymore? No problem, now you can get cheap Puck eats, like a BBQ Chicken Salad for $6.95, at Wolfgang Puck Express. “Express” is just a code word for cheap, many companies are using it.
Brands that stay strong and survive no matter what the weather are those that stay consistent. Your brand has meaning and strength only if it owns something in the mind. And the more you adjust and tinker with that meaning, the weaker your brand becomes.
Now that the economy is hurting, the worst thing you can do is to launch cheap versions of your brands or go the sale/coupon route. That just tells consumers your products weren’t worth the high prices you have been charging all these years.
Coupons are like drugs; once consumers get hooked they won’t shop without them. Only a fool would go to Ann Taylor Loft or Bed, Bath & Beyond or Cache without a coupon. Several times I've driven by these stores and wanted to shop for something but refuse to go in because I left the coupon at home.
Companies need to think long term not just short term. The choice is maintaining the brand or maintaining the sales.
Why not both, you may say. Well, when times are great that may be easy to do. But in today’s market that is going to be tough. Everyone’s sales are likely to go down. You need to focus on maintaining your marketshare and your mindshare not your sales.
The goal is to preserve your brand, ride the storm and wait for sunnier days that will eventually come.
If you only look at your numbers over the next few months, you are going to be in trouble. You need to think like a marketer and view the situation holistically. Because what might allow you to make your numbers today could sink your ship tomorrow.
Why should you care about your brand? Why not just look at the numbers?
Because your brand is what allows you to make a profit. Your brand is why people are willing to pay more for your product or service. And profits are what make company’s successful. Not just sales.
When you destroy your brand, you destroy your company’s ability to make profits.
Look at Sony, once a strong a powerful brand that has been decimated by years of reckless expansion. Compare Sony with Nintendo a company that just makes videogames and players.
In the last 10 years, Sony has had sales of $658.3 and net profits after taxes of $12.1 billion, or a net profit margin of just 1.8 percent. (In America, that would get a CEO fired. No wonder Sony is now run by an Englishman, Sir Howard Stringer.)
In the last 10 years Nintendo has had sales of $48.3 billion and net profits after taxes of $7.5 billion or a net profit margin of an astounding 15.5 percent. (More than eight times as much as Sony.)
No wonder Nintendo is worth more than twice as much on the stock market as Sony, a company more than 13 times as large.
Sony is worth $26.5 billion. Nintendo is worth $54.1 billion.
Sony is a well-known but weak brand. Nintendo is a strong, focused and profitable brand.
I know it is ugly out there in the marketplace, but do your brand a favor and don’t tinker. Stay true, stay focused and everything will eventually be alright.
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