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Strong Brands Turn Tough Times Into Good Times

Writer's picture: Quynh NguyenQuynh Nguyen

Tough times force every business to make tough decision. For weak brands, it's the medicine they need and for strong brands, it's the vaccine that strengthens them. When the budgets in our hands are tighter than ever, it’s only natural to be torn between two paths: should we double down on discount to save sales performance or invest in building and growing our brand? 


The temptation to pursue short-term solutions like price cuts to attract customers can seem appealing in times of financial uncertainty. After all, discounts can drive immediate volume, protect market share, and offer quick relief in a strained environment. Having said that, this approach risks diminishing the brand’s perceived value and creating a race to the bottom that may be hard to reverse once the economy recovers.


Investing in brand-building during a downturn may feel counterintuitive—especially when survival feels more urgent than growth. Yet, this is precisely when strategic brand development can yield the greatest long-term dividends.


The most successful brands didn’t merely weather downturns—they used those downturn moments to their advantage.


In 2020, Airbnb experienced a net loss of $3.9 billion as bookings and revenues plummeted due to travel restrictions, lockdowns, and health concerns as the consequential impact of COVID19. However, by the end of 2021, they reported a net profit of $55 million in the last quarter, signaling a significant recovery and a strategic pivot. Airbnb’s top leaders confirmed the key factor behind their success during this period was moving from performance marketing which focuses on immediate sales conversions to brand building [Source: marketingweek.com]. This strategy impacted their marketing efficiency and led to a significant reduction in overall sales and marketing expenses by 44% year-on-year. 


When market shrinks, mindshare commands marketshare.


In bad economic times, consumer behaviors can be super rational as well as surprisingly irrational. Whether they choose to spend more or spend less, both are valid. But one thing we should know: where their mind goes, their money follows - not the other way around. 


A classic example is the 'lipstick effect,' where people opt for small luxuries like cosmetics to lift their spirits, despite tighter budget and their growing concern about finance. Globally, luxury sector reported 2021 and 2022 as their blockbuster years in which sales number outpaced pre-pandemic results. Similarly, in Vietnam, despite economic uncertainty, strangely, young people are spending considerate sum of money on experiences like concerts.


These behaviors highlight a truth: while people are cutting back on large expenses or even essential spending, they remain willing to invest in things that provide emotional value or immediate sense of enjoyment. Mindshare isn’t just about top of mind awareness—it’s about being the brand that’s on people’s mind, even when their money is tight.


A good crisis provides the fertile ground for brand breakthroughs.


When would be a good time for non-dominant brands to reset the market structure? A crisis is a powerful opportunity to make that happen. 


In the 1950s, Toyota struggled to penetrate the US market, hindered by American consumers' preference for large, fuel-guzzling cars, until the 1970s oil crisis allowed Toyota to break this entry barrier. The crisis, triggered by oil embargoes and skyrocketing fuel prices, sent shockwaves through the automotive industry, particularly in markets like the United States, where large, fuel-inefficient vehicles were the norm. In that volatile environment, Toyota saw an opportunity to finally align its brand with the change in US consumer tastes and paved the way for Toyota Motor Corp to become the 2nd largest automobile manufacturer in US and remain their position uptil now. 


A good crisis doesn’t happen often. Time is of the essence. We would waste a crisis by merely navigating and surviving through it. Leverage it to set the course for a long-term transformation.


When in doubt, go back to your brand essence.


A financial slump creates uncertainty, demand that we re-evaluate our assumptions and strategies, and often it confuses us. In the sea of many variables, what should be your constant anchor? 


A recent struggle from the legendary brand - Nike, has shown us the true power of a brand essence. On June 28 2024, the company recorded its worst performance on the stock market since going public in 1980 and witnessed its shares take a deep plunge by 20%, erasing $28.41 billion from its market value in just one single trading day [Source: Inc.com]


Many analysts blamed Nike’s recent performance hiccups on the company’s chief executive officer, John Donahoe [Source: Fortune.com]. A former executive at eBay, Donahoe was named as Nike CEO in January 2020, succeeding former CEO Mark Parker, a long-time Nike veteran who lived and breathed the brand’s culture. Under CEO John Donahue, the brand shifted its focus towards a direct-to-consumer model, drastically reducing its physical distribution, cutting ties with their long standing third party retail chains, streamline its product lines into to broader categories like men’s, women’s, and children’s sales, instead of individual sports, and finally laid off 2% of it workforce [Source: mi-3.com.au]. Despite the substantial growth of D2C sales [Source: Fabric.inc], what looked like a great cost-cutting strategy, especially during the heat of the pandemic, in reality, has cost Nike the brand connection with sports and the sneaker culture. 


When the stock price plummeted, it wasn’t just about financial missteps. It was a signal that Nike lost touch with the very culture and communities that helped build its identity and appeared to be a corporate behemoth which lacks character and only focus on making money. 


Any seasoned businessman would know that market downturn is not the end but a turning point, an opportunity waiting to unravel. That turning point could unfold to be either a exponential growth or a downward spiral. Good times or Bad times are in your brand decision.


© 2020-2024 Narrativ.Design. All rights reserved. The author is the Lead Strategist at Narrativ.Design. She is relentlessly driven by the passion to explore human insights and foster people’s behavioral changes. Her approach aims to find the sweet-spot between business performance and positive cultural impact. Connect with her at connect@narrativ.design.

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