The laws of investment apply to marketing investments as much they apply to investing in starting a business or buying government bonds: you cannot increase your return on a reduced investment without increasing your risk.
To put this statement into a context for the challenge facing marketers, and assuming past behaviour is a predictor of future behaviour, then the uncertainty facing British businesses in the face of Brexit will encourage many businesses to batten down the hatches in preparation for a storm. For marketers, this defensive/protective behaviour usually means greater conservatism with brands experiencing reduced or even cancelled marketing budgets.
UK inflation is already on the rise, the weaker sterling is forcing price rises, particularly for imported goods. With the obvious exception of the global financial crisis of 2008, most of the recessions or economic downturns I’ve experienced have been relatively short lived. During these shorter-term downturns, the risk-averse school of thought on marketing investment was for organisations to brace themselves and ride it out, waiting for better times before reinvesting in their brands. The difference with Brexit is that the protracted nature of the negotiations means that we don’t know when things are likely to become stable or some kind of normal. Indeed, what we might have seen before as a temporary downturn many say may well be the new normal for quite a long time.
UK manufacturers and those outside the FTSE 100 will be concerned that as their cost of goods rises so will their retail prices. (Some companies may choose to take the hit of that increased cost of goods for fear of losing customers, but this is probably not a sustainable strategy in the long term.)
Next, in the face of these price rises some customers will choose to buy alternative brands that are less expensive, and given disposable income is falling that’s a pretty safe assumption.
So what can brands do about it?
Well, we already know that brands which advertise effectively can command a price premium over own label or poorly advertised competitors, and that stronger brands can accommodate more price elasticity.
It seems inevitable that some brands will flounder during what seems to be an inevitable economic storm. In particular, the brands that drop down a few gears or even switch off their marketing engines will fare worse than those which double down.
The brands that will win are the ones that will pursue and employ advertising gorillas. Gorillas are advertising ideas which stop consumers in their tracks, give them goose bumps, make them FEEL something about their brand.
So now more than ever, brands need to know How to Buy a Gorilla.
David Meikle
Author and Founder – How to Buy a Gorilla.
www.howtobuyagorilla.com
www.htbag.co.uk