WHAT BRANDS CAN DO FOR BREXIT
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 British-based marketers, and assuming past behaviour is a reliable predictor of future behaviour, then the uncertainty facing British businesses in the face of Brexit will encourage many to batten down the hatches in preparation for an economic 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, and the weaker sterling is forcing price rises for imported goods. With the obvious exception of the global financial crisis of 2008, most of the recessions or economic downturns weâ€™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 donâ€™t know when things are likely to become stable or some kind of normal.Â Indeed, the temporary downturn we have experienced in the past many say will be a long-term downturn – a new and a worse kind of normal.
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 that disposable income is falling thatâ€™s a pretty safe assumption.
So what can brands do about it?
Well, we already know that brands which advertise most effectively can command a price premium over poorly advertised and own label competitors, and that stronger brands can accommodate more price elasticity.
It seems probable that some brands will flounder during what will most likely be an 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 advertising ideas that stop viewers in their tracks, inspire them, entertain them, give them goose bumps, make them FEEL something about the brand.
So now more than ever, brands need to know How to Buy a Gorilla.
Author and Founder â€“ How to Buy a Gorilla.
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