The Global Financial Crisis-Brand Management - Essay Example

The Global Financial Crisis-Brand Management Strategies for Global and National Brands to Sustain (Or Regain) Their Unique Value Proposition during the Global Financial Crisis All international companies aspire to create national or global brands that finally get etched in a society’s culture and become cultural icons. However, a small number of these companies achieve this iconic status. The financial crisis that is often experienced globally usually affects the status of these companies thus forcing them to device new strategies to maintain or regain the unique value of their brands. The strategies devised usually vary between companies depending on the targeted market. This paper introduces two general strategies that can be used by these companies to maintain or regain the unique value of their brands during global financial crisis. One strategy that the companies can use to maintain the unique value of their brands during global financial crisis is by engaging the customers as during these economic downturns excellent opportunities for innovation are provided (Roll, pp6). Customers cut down on consumption during financial crises, thus brands can initiate measures that take off their minds from the difficulties of consumption and focus them on the worthy features of the brand and co-create value with them. This strategy also helps minimize loses and more importantly, it successfully protects the companies brand image and brand equity. Singapore Airlines is a company that perfectly used this strategy to maintain the value of its unique brand. During the deadly SARS breakout in South East Asia when customers were afraid of flying, Singapore Airlines offered its customers very innovative vacation packages that encouraged customers to travel thus maintaining their status (Roll, pp7). Creating exciting customer interactions through activities such as product bundling to enhance value and promotions with creative alliances such as celebrities and travelling can also be used to maintain the unique value of a brand during such situations. This strategy takes off the focus of the customers on price and reiterates the commitment of the brand to engage and value customer support (Gelder, p102) Although this paper has discussed two strategies to be used during such situations, there are other strategies that are equally viable. Financial upheavals negatively impact the trust of customers on a brand. Therefore, during such situations it is the responsibility of the companies to devise new strategies that can maintain the trust of their customers on their brands. The Potential for "Branding the Senses" As A Differentiation Strategy for National and Global Brands Brand differentiation is a very important strategy in today’s competitive market where new products are coming in everyday. In fact, it is the key to successful marketing and competing. With the rising competition in the global market, most companies are forced to come up with new ideas of branding so as to differentiate themselves from others (Vadim, pp2). Among the branding strategies that most companies are now considering using in differentiating themselves from others is “branding the senses”. Branding the senses is the untapped and unrealized potential of sensory branding. It is a brand differentiation strategy that appeals to all the five senses, that is, smell, taste, touch, hearing and sight (Lindström, 5). These senses make up the human experience, therefore, engaging all of them at the same time equate to a stronger and unforgettable experience. That is to say, brands that focus on more of these senses at the same time will be more successful than those that appeal only to one or two of them. These appeals form part of the brand’s advertising, therefore, companies should focus on most of them when differentiating themselves from others. Although it is very difficult to appeal to these senses at the same time, most companies have effectively focused on them in differentiating their products from others. The sense of sound or hearing has perfectly been appealed to by many companies in doing so. For example, car manufacturers have developed unique sounds for their cars so as to differentiate their products from others. Nokia, a known phone manufacturer has also used sound effectively in its mobile ring tones to differentiate its products from others (Lindström, 23). The sense of sight has also been appealed by companies such as Coca-Cola and Pepsi in way in which they took on colors. Coca-Cola uses red and Pepsi uses blue in coloring their campaigns and advertisement (Lindström, 20). Human beings experience powerful stimulations from their senses and although most companies have not appealed to these senses in differentiating their products, the few which have done so have seen tremendous success. Therefore, to out shine competitors in the global market, companies should appeal to these senses in their branding strategies. Counter Action for Global and National Brands against Premium Generic Brands during the GFC When Consumers Are More "Value for Money" Although global grand dominance is the key to global marketing, the cost of creating a global brand is very high. Consequently, this high cost often leads to the entrance of premium generic brands which threaten the existence of global brands in the market. Generic brands are brands manufactured by less prominent companies and are often of equal quality as global brands, and cost less. During global financial crisis customers often tend to consume generic brands since they cost less. This erodes global brands from their market share and as a result forces companies with branded products to design strategies of countering the actions of generic brands. Some of the strategies that can be used to counter the action of generic brands include: Differentiation Strategy By creating a product or a service that is perceived by customers to be unique throughout the industry, companies with branded products are likely to compete effectively with generic brands during global financial crisis. Although differentiation is expensive, if well done customers would be willing to pay the extra cost just to have the product with features that they desire. Product differentiation promotes customer brand loyalty and as a result reduces price elasticity. Therefore, with proper differentiation, companies with branded products will not lose their customers to generic brands (Porter, 98). Overall Cost Leadership Strategy In this strategy, the firms with branded products can counter the action of generic brands by developing policies that will ensure that they remain the lowest cost producers and distributors in the industry. Therefore, by being the lowest cost producers, the firms can gain competitive advantage over the other firms that produce generic products and maintain their market share during financial crisis (Porter, 113). Although generic brands are becoming more popular in today’s market and therefore threaten the existence of global brands, it is the responsibility of each company that produces branded products to ensure that it is not displaced from its market share. The strategies that can be used to counter the actions of generic brands are so many. However, these strategies must be effectively used to gain competitive advantage. Extent to Which Customers Will Switch Back From Generic Brands to Global and National Brands Once the GFC Is Over The cost and quality of a product plays an important role on its sale in the market. Products that cost much less and are of good quality often attract more customers than those that are of the same quality but cost much higher (Kroll and Heiens, 2). Generic brands cost less and are usually of equal quality to global and national brands. During global financial crisis, global and national brands often lose their customers to them and the extent to which the customers will switch back to them (global and national brands) is usually a debatable issues. In times of financial crisis, customers often turn to generic brands because they cost less and are of equal quality to global and national brands. The customers find financial relief from these brands and convincing them to turn back to the global brands is usually not very easy even after global financial crisis is over (Kroll and Heiens, 8). Although, most customers who have tried generic brands often find it very difficult to turn back to global brands once they have left, some of them to do so once a financial crisis is over. The customers would turn back for various reasons, one of which is product differentiation. A proper differentiation strategy will always ensure that a global or national brand competes effectively with the generic brands and regain back its customers after a financial crisis is over. Customers who feel that a given product is unique in its features will always go back to the product even if a financial crisis forces them to try other alternatives (Thomas, pp5). The extent to which customers will switch back to global or national brands after a financial crisis is usually not known. However, firms with branded products can always attract back their customers after a financial crisis through various marketing strategies such as product differentiation, regular advertising and proper branding. Work Cited Gelder Van Sicco. Global Brand Strategy: Unlocking Brand Potential across Countries, Cultures & Markets. London: Kogan Page Publishers, 2005. Kotelnikov Vadim. Differentiation Strategy. Retrieved on 17 August 2011 from http://www.1000ventures.com/business_guide/differentiation_strategy.html, 2001. Kroll, M., P. Wright, and R. Heiens. "The Contribution of Product Quality to Competitive Advantage." Strategic Management Journal 20 (1999. Lindström Martin. Brand Sense: How to Build Powerful Brands through Touch, Taste, Smell, Sight & Sound. London: Kogan Page Publishers, 2005. Martin Roll. Branding During Challenging Times. Retrieved on 17 August 2011 from http://www.asianbrandstrategy.com/, 2005-2011. Porter, Michael. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press, 1985 Thomas G. Joe. Generic Competitive Strategies. Retrieved on 17 August 2011 from http://www.referenceforbusiness.com/management/Ex-Gov/Generic-Competitive-Strategies.html, 2011. Read More