With South Africa on the edge of recession after a larger than expected contraction in GDP, many senior marketers are re-examining their strategic planning and budget allocation.
The country’s economy declined 1.3% in the fourth quarter of 2022 — three times more than the market consensus estimate of a 0.4% drop.
Several marketers tell the FM that customers are already becoming more price-conscious, particularly in the fast-moving consumer goods space. They say it is important for marketers to focus on creating a compelling value proposition supported by content that is tailored to their customers’ needs.
One says: “Content that is relevant and engaging is more likely to be shared and will help build relationships with customers.”
Another marketer spoke of amplifying a digital-first strategy by creating content and building long-term relationships that will ensure that the business remains successful during difficult times.
Companies often resort to a quick discounting strategy to shore up a looming loss in market share, but according to a new research note by data analytics and brand consulting company Kantar, the perils of discounting are greater for name-brand or national-brand products and services than for private-label or store brands.
Kantar says research has shown that share gains made by private-label brands during economic disruptions are asymmetrical: when the economy recovers, private-label brands retain a good portion of their share gains, but name brands don’t recover all their lost market share.
“Possibly the greatest tip for surviving a price war is not to start it by signalling to your competitors in advance what you will do. Shoppers might be lured by a competitive price, but there are other values they seek on top of it, including choice, quality and membership rewards points.”
Kantar’s note references the effectiveness of good advertising. It says: “Whether you are a big player or a small one, a brand that gets remembered gets bought.” There is also enough empirical evidence, it says, to suggest that brands with a share of voice greater than their market share tend to grow.
Kantar says the more a brand is perceived as different, in addition to the belief that it stands for something, the more valued it is.
“People are not looking to cheapen every aspect of their lifestyle, and as they prioritise, meaningfully different brands stay at the top of the list.”
In times of recession, the agency says, emotions trigger repeat buying.
“As humans, we are creatures of habit. It’s mainly habit and social copying that drive our behaviour. But we can also develop strong emotions with things that resonate with our needs, motives, values and aspirations. Experience plays a consequential role in getting a brand chosen; also, consumers are willing to pay a premium for experiences that will delight them.”
Another local brand executive tells the FM his company is considering ways to collaborate with competitors to reduce costs and increase revenues.
The concept isn’t entirely new and has been dubbed “co-opetition”. According to brand and marketing collective RDW Group, through collaborative marketing companies can remove some of the anxiety that comes from competition, and work together on a joint venture that benefits them.
Collaboration, it says, can help businesses reach a new audience that may have an allegiance to a competitor, or establish a new identity angle by associating with one another.
According to the most recent Nielsen “Global Annual Marketing Report”, brand agility has never been more important. “We continue to hear from marketers that an adaptive mindset is the most important attribute to have in business today. Combine that with a clear and real-time understanding of consumers and their behaviours, and brands become well positioned to hone their messages, allocate their adspend, adjust their media mix and optimise to drive their return on investment.”
The report says brand awareness and new customer acquisition remain top objectives, which will become more difficult in an economic downturn. Interestingly, brand awareness is not currently a high priority in European, Middle East and African markets. But given the prevailing local economic outlook, that is likely to change.
Nielsen says marketers should relook at aligning strategy and tactics, stay top of mind with consumers across the platforms and on channels where they spend their time, and lean into the mass reach capabilities of digital channels.
So-called next-gen channels like online video and connected television are increasingly growing in their ability to engage wide audiences, and they can help round out well-balanced and holistic marketing strategies.
This article originally appeared in the Financial Mail.
