Credit crunch and crunch time for brands?

So, we have a credit crunch, financially unstable markets and a looming recession. There are enough financial models to predict such events and financial cycles are well accepted. Long wave cycles include the Kondratieff cycle with a periodicity of about 53 years have long been used as a basis of prediction. George Soros points out that financial crisis should not come as a surprise, but human nature tends towards optimism and we have come to expect that financial stability will continue even in areas and situations where there is little evidence to justify it.

But financial conditions have significant implications for brands.  At the simplest level it affects the choice of products and brands that consumers choose out of economic necessity.  However, there have been a number of studies mapping anxiety levels on consumers’ positions in the longterm economic cycles. Why this is significant is that consumers can be expected to choose brands whose values are appropriate to anxiety levels. Brands that represent adventure, risk, excitement or new commitment may be less likely to prosper when anxiety levels are raised.

We can’t, and should not try to change our brand values, but sensitivity to the issues adjustments of communications strategies can help ensure a brand prospers in difficult environments.

 

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2 comments

  1. I see you refer to studies mapping anxiety levels on consumers’ positions in the longterm economic cycles. That sounds interesting. Could you direct me to examples?

    Our position is that brand management often overreacts during tough times, end up botching the repositioning, or, even worse, mis-timing the response so they end up being out of phase with consumer sentiments in bad times and again in good times.

  2. The credit crunch has more to it than just numbers and facts. The whole world could get shook up due to defaults in the credit market. And obviously, the buying power of the consumer also falls: and so do the brands!

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