Recession-proof brands ready

With the prospect of an economic contraction appearing more likely by the day, the concept of the fail-safe 'recession-proof brand' has re-entered the lexicon with a vengeance....

With the prospect of an economic contraction appearing more likely by the day, the concept of the fail-safe ‘recession-proof brand’ has re-entered the lexicon with a vengeance.

The idea that there are actually brands that can not only weather a recession but also prosper in such times adds a degree of comfort to what many economists expect to be an otherwise turbulent stretch. Knowing a brand can do well allows marketers to leverage growth potential in a faltering economy.

But just what qualifies as a recession-proof brand?

Bruce Philp, a partner at Toronto’s Garneau Würstlin Philp Brand Engineering, says, in the broadest sense, it is a brand that represents value – whether real or perceived – to the consumer.

‘If a brand has to promote itself to do business in good times, it’s going to get killed in bad times,’ Philp says.

‘If a brand is perceived to represent a great value proposition – the product is good at what it does, delivers reliably and has positive social meaning – then it’s going to be better positioned to weather the storm.’

Philp says that in some cases these are brands onto which consumers project value – be it quality, durability or substance – and consumers are therefore willing to make a purchase regardless of price. President’s Choice, which came to prominence in the recession of the late 1980s, falls into this category.

The other category contains those types of brands that, quite simply, are the most affordable.

The concept of recession-proof brands has its roots in the economic theory of income elasticity, which came to prominence in

the late 1800s. Under that

concept, developed by British economist Alfred Marshall, certain products and services, known as inferior goods, actually see sales increases when incomes go down.

The theory, however, holds little real-world worth today because, when times are good, such products accordingly see sales drop, and no self-respecting marketer would continue to invest in a weak brand over the long term.

As a result, there are few

examples of inferior goods in modern markets says econo-

mist Mike McCracken, CEO of Informetrica, an Ottawa-based economic and information research company.

‘Kraft Dinner might be approaching it,’ he says. ‘Bread has been such an example, or old shoes and used clothing.’

But in times of economic slowdown there are most certainly products and services that can prosper, he says. The examples run the gamut from canned soup to television to discount retailers.

David Strickland SVP of marketing at Zellers believes his brand fits the bill. ‘If things get tighter, customers are going to see the kind of value we deliver at price points that make sense for them,’ he says.

Recognizing your advantage is one thing; leveraging it is something else. Strickland says doing so is a question of first identifying growth and then reacting accordingly. One such early response may be Zellers’ deferred credit programs. If Zellers began to see a spike in, say, sign-ups for its ‘Don’t Pay Till the Leaves Turn Event,’ for patio furniture and barbecues, the retail chain could choose to promote it more aggressively in hopes of drawing even more customers, Strickland says.

‘A lot of that is just watching your response rates versus what you expected. If you start to see big hits in those areas, then you have to go after them even bigger for your next event,’ he says.

This, however, does not mean a wholesale shift in strategy.

‘I wouldn’t see us changing our strategies at all and I don’t actually see us changing our investment,’ says Nick Evans, business director of soup with Toronto-based Campbell Soup Company.

‘If we are facing slightly tougher economic times, the reality is people will start making more decisions to stay at home versus eating out, and make their own food versus ordering in.’

Based on this insight, Evans says Campbell would increase its in-store presence through recipe disseminations on displays and offer more recipes using Campbell’s cooking soups, such as cream of mushroom or chicken broth, through its Web site.

‘Our expectation is that there is going to be some growth in the soup category due to the fact that consumers are looking for simple, easy meal solutions and we’re [already] providing it.’

Mike Welling, VP of brand development for foods at Toronto-based Unilever Canada, says it means applying the same basic marketing principles that you do in the day-to-day operation of the brand, regardless. In other words, if you see growth, you should take advantage.

‘If we thought there was a sudden retrenchment of everybody going back to cooking and doing more cooking from scratch, if we were prudent and on top of our game,’ he says, ‘we’d be out there with products that were actually addressing that need.’

Welling is quick to add, however, that in today’s consumer climate, there is no such thing as a sure thing. He points to a previous recession to illustrate this.

‘In a general sense, if there is a concern about economic well being, people put off some of their discretionary out-of-home purchases a little bit,’ he says. ‘But if you go back, when did the dessert houses first start to really crop up in Canada? That happened in the 1980s during the recession, when people couldn’t afford to take holidays and they were staying at home and giving themselves little indulgences.’