This article first appeared in Advertising Week, written by Tom Gray, Chief Strategy Officer.
Businesses around the world are navigating another year of economic uncertainty. When consumer behaviours and market dynamics change, a brand repositioning may be needed to maintain relevance in the market and strategic direction internally.
A growing body of work shows the correlation between investment in brand building during a recession and higher than normal returns. In fact, cutting marketing budgets in a recession can actually hurt long-term ROI. So, while marketing budgets are often one of the first to be cut in a recession, those taking an opposite approach can expand their reach and share of voice at a lower cost.
Repositioning a brand is challenging for established brands, there can be a credibility gap between an entrenched current perception and the promise of a new positioning. Traditional comms can only take you so far – but experiential marketing is one of the most effective ways to close the credibility gap.
We spoke to Tom Gray, Chief Strategy Officer at Imagination, about how experiential marketing can work even harder for a brand during a financial downturn, by bringing customers closer to the brand, entertaining them, and enabling a new capability to be experienced directly.
Q: What are the major challenges brands are currently facing?
As the UK navigates uncertain market conditions, brands must prepare for the challenges presented by an unpredictable economy and changes in consumer behaviour.
Whether due to advancing technologies, geo-political risk or a shrinking economy, our recent survey of 375 senior marketers across four leading industries, found that three quarters of businesses plan to refocus their brand in response to the shifting market. Last year, 54% of respondents reported launching new products or services, pivoting to a new strategic direction / repositioning their brand (51%) or expanding into new markets (49%). This year, this trend is set to continue with more brands set to adopt these strategies over the next 12 months.
People are also demanding more from brands than ever before. People are increasingly preferring to support brands with strong, transparent values and clear social purpose.
Governments are responding by increasing Environmental, Social and Governance (ESG) regulations which further prompts businesses to re-evaluate their positioning. This creates several strategic issues that can require companies to re-evaluate their core business models and recalibrate their value propositions accordingly.
To keep up with increased environmental regulations and societal expectations, brands should consider creating focused units that can ensure they are not only compliant but are harnessing the opportunities in the change. Brands must also reassess how they connect with their target customers as people continue to re-evaluate their spending habits, harness their purchasing power and gravitate towards businesses that align with their own principles.
Q: In which industries do you predict the biggest changes?
As customers reappraise the value of brands and their relevance to customers’ evolving lifestyles, companies are not just tweaking, but completely overhauling their place in the market by pursuing repositioning strategies with purpose.
This is particularly prevalent in the business to business (B2B) technology space, with almost 80% of senior marketers from enterprise technology companies planning a brand reposition in the coming year, closely followed by luxury, consumer technology and retail sectors.
Automotive brands are well into this transition as they shift from legacy internal combustion engines to new electric vehicles and mobility services.
AI is an emerging driver of change too, and while we are only just scratching the surface of its applications and capabilities, we’re already seeing examples of how it can increase efficiencies in sales and marketing. We expect to see similar changes flowing through into supply chains, logistics and products.
AI has also presented brands with new ways in which to engage customers – not only by reducing the cost to serve, but by enabling more personalised, targeted services and experiences.
While technology has up-ended the retail model for high street stores, we are seeing a strong bounce back in demand for experiential retail and higher value experiences that can only be delivered in person, in destinations and flagships. By providing an immersive, omnichannel shopping experience, brands can drive brand salience and preference, which in turn can increase customer lifetime value and reduce price elasticity.
Q: Are there any upsides for brands in a recession?
It’s important to remember that the changing landscape presents a number of opportunities, as well as challenges. Firstly, research demonstrates a correlation between investment in brand building during a recession and notably higher returns.
Previously marketing and advertising budgets have faced the first round of cuts. However, savvy brands can seize the opportunity to expand their reach and share of voice in the market by going the other way and increasing investment in marketing during a recession. These bold business leaders are the ones who will reap the rewards.
This also brings a huge opportunity for brands to experiment with experiential marketing. By bringing customers closer to the brand, entertaining them and providing them with a memorable experience, experiential marketing can work even harder for a brand during a recession.
Q: How can brands overcome the challenges ahead?
Businesses need to embrace making changes to their brands in order to seize opportunities presented by the current economic climate. From our survey, three quarters (74%) plan to reposition their brand in the next 12 months – up from 53% who did so last year.
Repositioning a brand can be difficult for established businesses, often accompanied by a credibility gap between the current perception and the promise of something new. Traditional comms can only take you so far – but experiential marketing is one of the most effective ways to close the credibility gap.
Investing in brand building, repositioning to address changing customer expectations and behaviour and finding new ways to connect with customers through experiential marketing are all strategies that can help brands weather a recession.
This article draws on the research published in our recent White Paper. We surveyed 375 marketing executives to understand the reasoning behind brand’s strategic initiatives this year, revealing how brands can pivot amidst market changes, societal changes and a looming recession. The findings identified two key drivers, to grow market share and increase brand value – with more than half (54%) planning to do so through experiential marketing initiatives. Email marketing@imagination.com to receive your copy of the full report.
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