Magazine article Marketing

Global Recession Moves Brands in Mysterious Ways

Magazine article Marketing

Global Recession Moves Brands in Mysterious Ways

Article excerpt

Looking out of my front room window, the Jones's seem to be coping rather well with the global economic meltdown. One set of neighbours is just back from Antigua. Opposite, there is extensive building work going on - and a swish silver 'people mover' parked in the drive.

It's not all doom and gloom. Mortgage rates are falling, which could even increase some property values. Who knows, come the annual Christmas get-together in my road, the toast may be Eddie George.

For those in charge of brands which have not lived through a downturn or two, it must all seem peculiar.

The first lesson from recent commercial history is that recessions are as much about mood as about pure economics. The actual change in real spending ability may only be between one or two per cent.

Tim Ambler, a senior fellow at the London Business School and a former top marketer at Grand Met, says the evidence is that companies which manage to keep advertising through a recession invariably come out with their brands strengthened. Not always easy when there are stony-faced in-house accountants brandishing charts showing sales falling off cliffs. Ambler notes that European players, notably Nestle, are better at keeping their nerve than British and US companies.

What else? For a start, it may soon be difficult to make any price increases stick, and own-label products will probably do particularly well.

Ambler is convinced people trade down not so much because that haven't got the money to buy something, but because having the best somehow feels wrong. …

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