As the pandemic goes on we have been asked more frequently: what can we do to protect our brand in times of crisis? Should now be the time to invest in our brand for long-term value gain?
There is always a risk of crisis. Although we are writing this piece during an unprecedented and unforeseen pandemic (November 2020), which has affected all geographies and sectors, brand crises occur very frequently. It is almost an inherent part of a brand's destiny that it will, at some point, go through a unique crisis of its own. So the questions are: what should, and shouldn't you do in times of crisis?
In this piece, we are going to cover the five most common strategies taken by brands to mitigate the risk of brand value and strength loss in times of crisis with the pandemic as a backdrop. However, it should go without saying, that fluency in these strategies will be a useful tool for unforeseen crises lurking on the horizon.
Many brands have gone dark during this period out of fear to appear opportunistic. This tactic rarely works. Avoiding investing in marketing is not the solution. What companies should do instead is consider how to invest in the future strategically.
The answer is: invest in the brand in ways that will improve the life of your clients or the situation for society in general. This feeds nicely into the next brand risk management strategy, “improving.”
Brands are faced with the choice between doing or saying during times of crisis.
Some brands have used advertising to amplify specific actions undertaken to benefit clients in these tough times. Ford adapted their "Built Tough" tagline for the pandemic with their “Built for right now” campaign by Wieden + Kennedy.
Some companies have understood brand investment in a much broader sense, focusing on social action more than words. There are many examples of these brands, some that have stood out to us include: Armani, Inditex, Dyson, LVMH, Seat.
These companies sought to improve their brand perception by converting their plants to produce PPE or ventilators, and in some cases offering their logistic assets to help the government transport medical supplies when most needed. social action at this juncture as paid off in terms of value creation.
So, one of the main risk management strategies for brands now is answering the question: How to generate positive impact? And the answer is: placing action over words.
A lot of brand directors and leaders equate brand investment with advertising investment, and this reduces their options to make a significant impact on brand value, and society in general.
There are good examples of brands that are innovating and implementing short-term changes to reduce the impact of the crisis and increase the earnings post-events, by actioning other elements of the marketing mix: either adjusting their offer, prices, or distribution in creative and innovative ways.
Brands can also absorb the loss now, with the view of compensating for it later. The expectation from stakeholders is that brands do everything they can to protect the well-being and financial security of their employees and their suppliers, even if it means suffering big financial losses until the pandemic ends.
This is exactly what many of the most valuable brands have done: they have looked to protect their employees, long before governments confined them to their homes, putting their health above any economic consideration.
Twitter, EY or bank Santander were among the first to react and implemented home office or "smart working" in an effort to protect the health of their employees. Patagonia closed all its stores voluntarily and promised to continue paying the wages to its employees despite the losses in which it will incur.
All of these brands chose to put their employees above profits. Their decision will definitely affect short-term profitability but will strengthen their brands and reputation, presenting them with a recipe for success.
Redistribute the burden of the crisis. Why is this relevant? Because being a leader is a complex role, which entails the sort of protection that extends beyond employees to encompass the broader society.
In the last few months, we have witnessed how public-private collaboration is key to mitigating the effects of the health, social, and economic crisis we are living in.
The French luxury group, LVMH, has dedicated its production plants for perfume and cosmetic brands in France to manufacture large quantities of hand sanitizers, which will be donated to hospitals. Armani decided to reconvert part of its production capacity to put together the PPE required to support medical staff during the crisis.
In an industry that has been among the hardest hit by the crisis, many other Italian fashion brands have joined forces to produce millions of masks. In Spain, Santander Bank and BBVA have made financial donations to acquire medical equipment. The fashion giant, Inditex, announced it would deploy part of its productive assets and logistic network to making and facilitating the acquisition of medical supplies.
Many of these corporate and public actions and initiatives are already contributing to generating a reputation for those brands that have acted in a quick, honest, and compelling fashion.
Leadership and Brand Value
These brands understood that leadership in the 21st century means more than simply possessing economic power and revolves around the ability to have a positive impact on the world.
Leadership today relies on collaboration, rather than unilateral decisions based on short-termism and a thin concept of "value creation", which fails to account for the impact on the wider society.
This is the opportunity that this pandemic represents for brands in general: to generate value through proactive collaboration and cooperation with other relevant players and stakeholders. The collective effort in these unprecedented times will reward participating brands with improved reputation and long-term profitability.