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The Importance of Brand Relevancy During and After a Recession-Type Event

Recessions, or recession-like events, trigger a type of anxiety for brands – no matter the industry. Many brands instinctively react by making big changes, believing that its customers have or will alter their usual mindset. But contrary to belief, consumers don’t change… but their buying behaviors might. The most important thing to consider during any situation, good or bad, is that a consumer will primarily be driven by their emotions. What does change during this time is their financial security about how they’re spending money, potential anxiety levels triggering them to re-evaluate what brands they choose to engage with and be loyal to, or their routine of buying from a certain brand because it’s convenient. All of this makes a brand’s understanding of the consumer’s emotional state more important than ever. Understanding that a recession heightens consumer’s emotions allows you, as a brand, to think clearly and strategically about how you can retain your most loyal customer and acquire new ones through brand relevancy and purpose.

At Kobie, we focus on the consumer emotions that drive loyalty – status, habit and reciprocity. During and after a recession-type event, emotions are heightened, and it’s important to not focus on the transaction, but those moments that you have with your customers between the transaction. During this time a consumer’s habits will be highly disrupted, their desire for exclusivity or status may diminish, and others will look for their money – which has become more precious than ever – to be appreciated and valued by the brands they shop with.

Let’s take a specific generation for a second… Millennials. Many of us think of Millennials as the generation who spearheaded socially conscious shopping, but we often forget the environmental triggers that underlay that behavior. During the 2008 recession, Millennials ranged in age 12 to 27 with the average being 19-years old. As they traversed the complexities of becoming an adult, it was compound by the shift from a life of comfort backed by 15 years of steady economic growth, to a time of uncertainty, high student loans, and limited starting salaries. For many entering adulthood with extremely limited funds, they craved an emotional connection, more than ever, with brands. They wanted brands to value their purchase and help them

feel that their money fueled something greater than themselves. Insert the use of reciprocity and the importance of brand relevancy and purpose.

Reciprocity is an emotion that is easily triggered during times of uncertainty, and there are brands that know how to navigate those waters well and others who will struggle. Reciprocity is built through multiple channels – changing your messaging, changing your value proposition, giving back to the community, and the list goes on. In immediate response to the COVID-19 outbreak, we saw hotel programs such as Marriott Bonvoy take action to change its message and value proposition by extending the expiration for loyalty rewards, while Ford pulled all promotional ads to let consumers know they would assist with payment relief for up to six months. A similar example from the 2008 recession included Hyundai launching its, “Assurance Job Loss Protection” program to provide people with the comfort that they would be there to support them through uncertain times. Not only did the program receive accolades, very few buyers actually had to leverage the program, creating a great deal of reciprocity with very limited financial impact to the company. Though it may seem all of this ‘emotional connection’ is just for the customer, Burger King took it a step further and is capitalizing on data collection, while supporting the community. With children struggling to have lunch without school in session, BK is offering “Free Grub for Kids.” The promotion is only available through their app for take-out or drive-thru, driving an immense amount of new first-party data collection and new-found customer appreciation for the food being provided.

And, it’s obvious that what brands are doing during a recession will continue post-recession to drive long-term relationships and meaningful support for one another. After the 2008 recession, we saw entire new sub-segments of retail begin to crop up based on the desire to capitalize on customer segments driven by reciprocity. Patagonia was a company that had been in business for over 30 years but saw a steady increase in sales by messaging their ethical sourcing and trade, while start-up companies like Everlane promised “radical transparency” showing costs and mark-ups directly to the consumer to engender a sense of fairness and understanding in the relationship.

What makes our current situation so unique is that factors beyond finance are disrupting consumer habits. Disruption of habits can be extremely emotional for people, but there are reasons new habits are born out of recessions. The “lipstick effect,” as it’s been dubbed, has long since been a theory that consumers will buy less expensive luxury goods during a recession in order to retain their “small joys.” This is a time when a brand’s positioning can become critical to creating new habits and/or finding ways to adjust to make a consumer’s habits maintainable during a disruptive time. Many restaurants are focusing on maintaining habit while companies like Starbucks gained footing coming out of 2009 after an initial hit in 2008. Starbucks doubled down to make themselves an “approachable” luxury during that time. By building new habits, they capitalized on shifting consumer behaviors that followed them with benefits for years to come. The key to executing messaging to the habit-driven consumer is to ensure you are considering your audience’s current situation. While hotels.com can’t change that they have already purchased significant ad space on air, they are aware that they can adapt to their customer’s needs. Now “Captain Obvious” will come on to say, “Stay Home… we’ll be here when you’re ready,” ensuring that despite any broken habits, brand recognition will stay intact.

As I go in reverse through the way we discuss emotions, I come to status. The main question many brands think is, “how can status be an option during a time of recession?” There will always be people who are status-driven, but how can you help them at a time their financial situation may have changed? While they have suffered in recent years, JCrew had a surge of success following the last recession as they positioned themselves as “affordable luxury” making them appealing to the status-driven consumer who could no longer afford traditional luxury brands. Other start-ups like Gilt and Poshmark found extreme success post-recession and became some of the most relevant brands of the last 10 years. Nordstrom will have a strong opportunity going into the recession with their “See You Tomorrow” program now providing consumers the ability to purchase pre-owned goods. The trend that stemmed from 2008 but was adopted in 2020 may be one of the reasons Nordstrom weathers the storm and doesn’t have to resort to extreme, unconditional discounting.

Whether your brand purpose is steeped in the consumer’s desire for reciprocity or simplifying daily life, creating exclusivity or convenience, it all leads back to one important message… During and after a recession-like event, your brand relevancy and purpose will tap into a consumer’s emotions and give you the opportunity to grab or retain the brand loyalty that consumers will still be providing to the lucky recipients out there. Ensure your messaging, value proposition, benefits, and actions reflect your brand purpose to garner the full value of the consumer at a time when their emotions will be heightened and have a lasting impact on their behaviors and the brands they choose for the long-term.

Wendy Culpepper

Wendy Culpepper