There’s going to be tears and cheers before this recession is over. There will be winners and losers. Unlike the buoyant growth markets of yesterday where in principle everyone did okay, the recessionary market is typified by what we call “iniquitous failure”; instead of every business sharing in the downturn there is a clear demarcation of winners and losers.
Those that did well yesterday will continue to do well but those on the wrong side of the fence will be in serious trouble. This will occur for a number of reasons.
Firstly some businesses will not have been making great margins when ‘the sun shone’ so this downturn will leave them exposed. But more of an issue is what we consumers tend to do with our dollars; we become more careful with our spending, getting a good deal and obtaining ‘good value’ now matters.
For this reason consumers gravitate towards and support ‘high performance’ brands. If yours is not a brand of significance then your future is likely to be bleak.
For those of us old enough, remember when supermarkets experimented with plain packs? ‘Generic house’ ranges were created that were cheaper because the purchaser did not have to pay for elaborate full colour packaging. Well that was the idea.
The expectation was that the lower socio-economic shoppers would snap up these cheaper unbranded products.
However research conducted after the scheme had been running for some time indicated that it was the rich people that were buying the plain packs, not the poor people.
Not surprisingly when shoppers were asked their opinions about the plain packs, they said they were unsure about who made the products or whether the product quality would match existing brands.
Rich people were trialing them because they could afford to make a mistake. Poor people couldn’t afford to take the same risks, they didn’t experiment with their hard earned cash, they continued to purchase the known and trusted brands.
Watch a variation of this experiment happen all over again. There are truckloads of generic ‘me-too’ woefully ordinary products and services in the market right now and I’m picking that there will be a gravitation toward known and trusted brands.
The question is; is your product or service one of them?
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The discussion about generic house ranges is an interesting one. I will assume the correctness of the customer behaviour research outcomes in your piece. However I'll bet that research was done prior to the current widespread fears associated with, and subsequent backlash against,many products sourced from China.
Even premium brands, particularly in the food and pharma supply trade are now suffering and will continue to suffer from this fear. I have become punctilious in label reading on every packaged FMCG product I purchase. I will not purchase goods stated as having been made or sourced from China in the foodstuffs, additives or pharma areas.Similarly I will not buy goods with labels stating
"made from local and imported ingredients". I assume that in the lack of specificity there lurks shame and guilt as to the origins of some component parts.
Premium canned foods brands are now falling victim to this disqualifier.I continue to buy tuna from Thailand, tomatoes and beans from Italy and Spanish olive oil but not a skerrick from the PRC. Sorry Mr. Watties, this includes you too. Your brand has become tainted. The Oak brand is long gone from my shelves, and these two names were both a big part of the kiwi growing-up experience.
Perhaps the greatest compliment that can be paid to a commercial brand is when the very word enters the language as a synonym for the action achieved by using the product. While you consider that concept I'll just xerox this sales report before I hoover the office whilst wearing my jandals.
I am not a number. I am a free man!
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