The damage caused by the Great Recession has left companies and employment “bruised” across America. Economists and historians believe this period in our nation’s history will have a long and lasting psychological and sociological affect on an entire generation. The behavioral shift is similar to that of the Great Depression generation – our grandparents and great-grandparents. Value is back and here to stay, and if your business is planning to wait out the storm until things get back to “normal,” you will be sadly disappointed.
This shift toward value is palpable, and name-brands are paying a price. While the impact varies, it is clear that consumers and businesses have become significantly more price sensitive. The trends are reinforcing the expected permanent change in the way we consume as a society.
Retailers have adjusted to meet the needs of price-sensitive customers. House or private label brands are squeezing name brands in the fight for shelf space. And the smart brands have assessed their customers and adjusted their product mix, messaging and price points, to ensure they remain relevant to their customers’ needs and expectations.
A recent Knowledge@Wharton article titled “Brands on the Brink: Marketing in a Down Economy” provides a concise point of view on keeping your brands relevant and competitive. The piece describes some examples as food for thought. Here’s a link to the article – if you don’t get this free Wharton newsletter, you might want to subscribe.
Tags: behavior, Brand, bruised, business, consumer, recession, wharton
Posted in Tear Sheet 2 | 2 Comments »
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Jeff Brown says:
I would also say that even in down economy people will pay the price for a premium branded technology product such as DAMPS Technology Footwear. If you have a one of a kinds superior technology product such as Ferrari, there will be market demand for that product, no matter what the price.
George Tierney says:
I would agree with you Mr. Brown — to an extent. Yes, there will always be a market for premium brands. However, there is no disputing the numbers. I would argue that it is the premium market in the short and long term that suffers the greatest loss. Global and national wealth was decimated in the wake of Lehman Brothers to the tune of about 1/3+. Much of that wealth will not be returning. Combine this with significant reductions in credit lines and consumer financing and you have customer base reductions to levels of pre-internet. This may sound like economic rhetoric to some, but consider that growth and expansion of these markets were heavily dependent on moving consumers from the middle-class to the upper middle-class through access to easy free flowing credit. Example: A Lexus GX in 2006 had an average lease price of $670. The current lease price for the same car in 2010 is roughly $1,150. This massive jump in cost eliminates a large swath of costumers that drove much of the Lexus growth through the 90’s and into 2007. Point being is that all brands have been effected significantly in this “new normal” economic environment. The brands still standing 5 years from now will be the ones that recognized this early and acted accordingly.