Innovation key to surviving recession

Innovation is key to maintaining brand equity and surviving a recession.

Alex Thomas, Head of Trade at WITCO said during a recession, customer and consumer confidence was down, and consumers had less disposable income. That meant, while they still loved their brands and would continue to buy them, they would not have the money to do so as often.

“It goes back to brand building and brand equity. You don’t want to have a product with lukewarm positioning or that’s just middle of the road. Those products are going to get kicked to the side.”

Thomas made the statement Wednesday during a panel discussion at the TT Chamber of Commerce’s Brand Equity breakfast session at the Chamber building in Westmoorings.

He stressed that there was no one way to address the problem as companies had a number of considerations to take into account. These include the fact that retailers and customers may have been forced to consolidate their portfolio, changes in shopping patterns, how easily their product could be substituted, as well as the resources and capabilities of the organisation.

He gave examples of how some brands adjusted to the recession market. Coca Cola, he said, made different sized bottles at different prices for those with different out-of-pocket price points. Other companies, such as Tide, re-engineered their products by cutting out the frills, in this case perfumes, dyes and fancy labelling, so they would be able to lower the price.

Thomas warned about immediately discounting products as dropping the price too low, or discounting too often could cause the brand to lose its value. “In a recession people are very much looking to extract value. You also have to be careful what value offers you put out there as well. There is a serious danger that your volume base and your profitability base are going to be eroded.”

On the other hand, he said if a company did not lower prices, there was a risk of losing the brand’s consumer base to competitors. In order to mitigate that, some companies launch price fighters – a cheaper brand of the original product. He warned companies to be careful with the formula of the new product because if it worked or tasted the same or better than the flagship brand, the consumer may shift loyalties to the cheaper one.

Carla Furlonge, Head of Sales and Marketing at RAMCO Industries Ltd suggested that those responsible for maintaining or improving brand equity, despite the country’s economic climate, should work on their connection with the consumer. She said they should work to remain relevant in customers’ lives so when the recession lifts, they would stick with the brand.

She believed the main way of doing that was through added value. “It’s not about free. It’s about giving that something extra or something more. It could be in service, it doesn’t have to be in product. What you do is keep your brand as the preferable choice.”

Kenrick Attale, Executive Chairman, Lonsdale, Saatchi and Saatchi Advertising Ltd, also noted larger, local firms that made changes in their brands to remain viable over the years. Regarding Telecommunications Services of Trinidad and Tobago’s (TSTT) rollout to bmobile he said, “They felt, I think, the name TSTT carried baggage because it came with a bad legacy. They couldn’t get TSTT to evolve so it was time to distance it.”

He also noted that Massy was several individual brands so the actions of one brand did not affect the other because no one associated them with each other. However, with all the companies under the same brand, each company and its staff had a greater responsibility to “behave in the same manner all the time.”