Published in Philippine Daily Inquirer, Business Features Section, February 27, 2009
As recession deepens in advanced economies, and various economic agencies agree that Philippine growth will slow down in 2009 from 4.6% in 2008, local business owners remain calculated in their actions while reservedly optimistic.
|2.0%||Economist Intelligence Unit||Slowdown|
|2.25%||International Monetary Fund (IMF) revised forecast from November 2008||Slowdown|
|3.7%-4.7%||Government target||Slowdown to slight increase|
In the recent annual World Economic Forum held in Davos, Switzerland, an issue that faced the G20 advanced economies including US, Germany, Italy, France, Spain, Japan, United Kingdom, Canada, among others, was the likelihood of an emerging trade and financial protectionism. While world leaders agree that global free trade is vital to keep the world economy going, they also recognize a strong accountability to local constituents. Hence, the challenge remains to keep the domestic economy afloat while supporting world trade. This includes being careful with trade policies and regulations that strongly favor foreigners over domestic trade and constituents. As it is, the export sector in many country markets has become severely affected. Likewise, with the potential scarcity of capital, domestic projects are likely to be logically prioritized.
In the end, far from being a severe threat, the world recession can actually be an opportunity for local, aggressive and visionary companies.
Here are some ways to ride the tide of opportunities presented by a global downturn and a local economic slowdown:
Strengthen your brand locally. Now is the time to build your brand and ascertain a space in the consumers mind. Brands who have worked at owning the consumers mind during prosperous times while remaining unstoppable in an economic crisis are likely to become stronger brands after the crisis. However, not all is lost with brands that have not invested in brand building during good times. So long as these brands have sustained a critical mass of loyal consumers they are likely to ride through the opportunity presented by a recession by expanding their awareness levels among a bigger market.
Send the right economic message with local brands. An economic downturn provides a reason for consumers to explore using local brands. Local brands that are able to signal value for money and quality while tapping the right market and appealing to the right consumer motivation can become a serious option for consumers. Categories that are likely winners include branded generic drugs (over global branded medicines); branded local food, beverage and confectionary items (over imported options); branded local fashion (over more expensive global fashion brands); reputable local brands over local commodity products, among others.
Grab that retail presence when global brands ease their retail space requirements. With endless cash and marketing budgets in prosperous times, global brands practically owned the shelf and retail space, leaving nothing of prime spaces to local brands. As world brands begin to prioritize their markets due to rising scarcity of capital funds and consumers tighten their hold over disposable money, local brands must take the place of empty spaces left by global brands.
Fortify your company’s star brands and build your question mark brands after careful assessment of your product assortment. Star brands grow more than the market projection but question mark brands may be hidden champions, not fully nurtured, often disregarded but yet, more than satisfactorily growing. Now is not the time to invest in new product development and introduction since consumer optimism to spend is far less robust. However, creating winners out of mildly familiar brands with a critical mass of loyal consumers may be a more practical and sustainable business strategy in downtimes.
Spend your marketing communications budgets wisely and efficiently. Put in place a feedback system that will allow you to measure the success of your brand building effort. Companies can gauge the effectiveness of media spending by the amount of extra media values that agencies get for clients or the friendly rate per spot or insert that is much lower than the rate card. Nonetheless, the true measure of a successful campaign is the incremental business the campaign has brought, visibly evidenced for products and services beyond the introductory stage. Likewise, the rise in awareness levels and brand equity scores that determine what it is about your brand that compels consumers to buy or shift from a competitor.
Building a brand is no longer the turf of money-muscled global brands. Today, there are far more ways and means to build local brands with far lower budgets and more efficient ways. Of course, not in the same level when global brands are often introduced in a country market. Nonetheless, local brands stand a better chance today than their counterpart many decades ago. Business owners simply have to determine whether they want their brand building efforts fast-tracked with great impact in present time or slower and more measurable but sustained over a longer period of time.
Recession or not, brand building is an important piece of creating demand and building robust revenues. For products to remain in business for a long time and passed on from one generation to the next, it is imperative for business owners to invest in brand building in much the same way as they make investments in infrastructure; plant facilities, equipment and machineries; people resource; product development and research. Having a good product is only one side of the coin but having your target market know that the product or service exists is likewise, a most important other half. What good is it to have a good product or service, if potential consumers are not aware of the product or service.