Even though about eight out of 10 executives believe maintaining a strong brand is more important in a downturn than good economic times, just a fifth are devoting more time than before to brand protection. The reason? They’re too busy.
Businesses are becoming increasingly protective of
their brands and are attaching greater importance
to them in the recession, according to a new report
by intellectual property firm Marks & Clerk.
The survey of 222 businesses reveals that 84 per cent of
executives believe brands are more important in an eco
nomic downturn than favourable circumstances, with busi
nesses taking an increasingly focused approach to their
business strategy. An overwhelming 97 per cent intend to
channel marketing efforts on core products and services in
the recession, while 62 per cent intend to use their existing
brand as the means to diversify into sister offerings.
Correspondingly, more than three-quarters (77 per cent)
anticipate that companies will become more aggressive in
protecting their brands in the current environment – with
an even greater number (86 per cent) suggesting that their
own businesses are more inclined than previously to defend
existing products and services.
However, despite the increased aggression, many busi
nesses are still not acting at an early enough stage to pre
vent threats to their brands emerging. Only a fifth of
senior management is taking a more active role in brand
protection in the downturn than previously, with the
remainder either “too busy” or getting involved only after
a direct competitive or counterfeiting threat has arisen.
Alarmingly, this is in spite of the fact that 95 per cent
believe consumer demand for counterfeit goods will rise
in the current market – and be met with a willing supply.
Meanwhile, 89 per cent believe the rise of outsourcing
will leave companies more open to potential abuses of
their brands than in previous downturns. Notably, 80 per
cent blame intellectual property systems in emerging mar
kets for failing to develop sufficiently for businesses to
have confidence in their handling of counterfeiters.
“One of the most important contributions a strong or
dominant brand can give a business is long-term resilience
and a greater ability to weather the storm as consumers
fly to quality,” says Marks & Clerk partner Pam Withers.
“Businesses recognise this truth, reflected by a rise in trade
mark applications, and dissatisfaction with the protection
their brands may have in overseas territories.
“However, they need to take more responsibility them
selves. Too many are only focusing on brand protection
when their business comes under direct attack from com
petitors or counterfeiters. The costs of effective brand
protection and monitoring are relatively low and far out
weighed by the financial headaches brand dilution or
infringement will bring a business down the line.”
The survey also reveals that the reality of business’s ability
to protect brands prior to litigation is worsening. Eighty-two
per cent of those surveyed predict that “economic reality” will
inevitably result in cuts to budgets that relate to brands, while
almost half (46 per cent) already spend less than 1 per cent of
that budget obtaining brand protection and monitoring.
“Luxury” and “green” to decline
The research shows a distinct shift in the kinds of brands
that businesses believe will fare well with consumers in
the current market. Luxury brands are expected to strug
gle the most, with only 14 per cent believing they will
prosper. Similarly, respondents anticipate that environ
mental brands or those that exude social responsibility
will perform badly. Only 39 per cent believe environ
mental brands will fare well in the recession, and less
than a third (30 per cent) think socially responsible
brands are likely to prosper.
By contrast, 93 per cent believe “value for money”
brands will emerge victorious. Eighty-two per cent sug
gest “trust” is of increasing importance to consumers –
echoing the 94 per cent who believe the reputational
damage brought to financial services requires serious
brand repositioning to regain confidence.
“Part of consumers’ dissatisfaction with pricey brands
will be a direct result of tightening purse strings and the shift
towards perceived value for money,” Withers says. “Yet
this goes hand in hand with the more negative associations
we have from the boom coming to such an abrupt end,
particularly relating to financial services.
“Fiscal responsibility, proportion and thrift are the
new zeitgeist. Likewise, the embrace of ‘green’ and
socially responsible brands appears to have been over
taken by the realities of the recession. Such brands are
in danger of being seen as luxury or expensive options.”
Significantly, the research further reveals that such
shifts in consumer behaviour may be more longlasting,
changing the marketplace in the long-term. Eighty per
cent state that the relative strength of market players is
shifting, creating real opportunity for new or lesser
brands to take and retain market share long-term.
However, some doubt is cast over the new cheap and
cheerful “value” brands, which have been some of the
most aggressive and successful forms of competition to
emerge in the recession. Regardless, a healthy 79 per cent
still believe they will continue to prosper.
Correspondingly, 81 per cent also expect more value
versions of existing brands to be launched. Yet 73 per cent
believe there is danger that this could devalue a brand
long-term, with nearly half (44 per cent) going so far as to
suggest brand extensions will be “harmful” to a core brand.
“While the phenomenal success that the likes of Aldi
have achieved is undeniable, businesses are rightly wary of
moving down the value chain purely to survive,” Withers
says. “Interestingly, it is ‘value for money’, not just ‘value’
brands that they believe will have the most resonance with
consumers. Businesses will need to position their brands
very carefully and demonstrate meaningfully the value and
quality they represent, not least as the commercial bene
fit could prove more longlasting. Brand dynamics may
well be changing now for the long-term.”
Distressed brands
The study casts serious doubt over the ability to turn
around “distressed” brands, this despite the strong emo
tive reaction the rescue of brands such as Woolworths
in the UK elicited from the public consciousness.
Fifty-eight per cent believe the market at large will respond
to distressed valuations and see opportunities to acquire a
brand at a low price. Even so, only 64 per cent are confident
of a business then being able to turn around the fortunes of
an ailing brand. Eighty-eight per cent believe “tired” brands
will be punished in the current economic climate, and only
39 per cent say that they themselves would consider or
recommend purchasing a distressed brand.
“The cautious reaction to distressed brands probably
reflects the market’s current risk-aversion and recognition
of the effort it takes to rejuvenate a flagging offering,” With
ers says. “However, the chance to reinvent a tired brand with
new ideas is an excellent means of stealing a march on rivals.
Acquiring complementary brands can provide synergies in
terms of business models and markets and can also open
doors to access new territories swiftly and effectively.
“Such an opportunity could provide a particularly useful
introduction to the Asian market where China, for example,
is expected to outstrip the number of luxury purchases made
by US buyers within five years. Reputable western brands
with a strong history that resonates overseas could provide a
singular opportunity for those that concentrate on defining
and protecting their brand strategies in the here and now.”
News