AJPark

Times are tough – so the media tells us daily.  Jobs are being lost, prices slashed and investment retrenched. The good news is that intellectual property (IP), especially brands, can be the silver lining in tough times. 

There is nothing like a recession to test the fortitude of a brand! Remember, brand value is created over a long period of time.  Action or inaction now will have a direct effect on your ability to grow future value in your business.

In times of recession, all areas of a business are under scrutiny for cost savings. While it is tempting to make cuts to all budgets, it’s important that the current economic difficulties do not divert you from making long-term decisions that can create a stronger IP portfolio ready for the inevitable upturn in the economy.

The marketing budget is often an easy victim. However, this budget usually includes costs associated with brand protection and investment, so caution should be exercised before taking a knife to it.  

Branding distinguishes one business from another and enables customers to choose between products when there are little, or no, product distinctions. Instead of reducing your branding spend, the key should be to focus your attention on how you can better and more effectively manage and leverage your brand portfolio.  Rather than scaling back on your investment, the emphasis should be on developing new branding and marketing strategies that will strengthen your brand, improve customer loyalty and increase your long-term profit margins.

A recession often weeds out weaker brands and can make category leaders even stronger. The brands that will survive are the ones that are managed well.  Instead of cutting back, retailers and other businesses should continue with their spend, but at the same time ensure that they are getting a return on their investment.

Retailers and other businesses need to plan for different market scenarios.  Who knows what is around the next corner? 

To make decisions about your brand portfolio, an important first step is knowing what you have and don’t have.  Any long-term branding strategy needs an audit.  This is true in good times as well as bad, and you may be surprised by what you learn.  Considering both the importance of brand rights for growth and their basic value, a surprisingly high proportion of  businesses do not have the basics covered for effective management.  An audit will provide an ideal platform from which to develop a plan.  It will identify the scope of your portfolio and any ownership issues, if they exist.

Without a plan, it is easy to miss opportunities to exploit your rights.  Also, a plan enables you to clearly structure your approach in line with your business strategy. 

Registered protection

Should the audit reveal that your protection is not as strong or as broad as you thought, then filling those gaps should be a priority. Make sure you have comprehensive registered protection for your most valuable brands. There are different ways to protect and register your brands not just in New Zealand, but internationally. Consideration should be given to the best way to protect your brand that also does not put a strain on your financial resources.

The audit may reveal brands registered but not in use or relevant to your business. Be proactive about culling them from your portfolio. This may involve not renewing brands when they fall due for renewal and actively looking to sell brands that you no longer have an interest in.

Once you have a clean, relevant and well protected portfolio you can look at ways of maximising and exploiting your brand assets.

Now is the time to review your brand’s distribution channel.  Are there any weaknesses?  Can you get your products to consumers more efficiently and effectively? 

Explore the full range of choices available to increase the potential of your brand. Licensing is an obvious example, but don’t forget about co-ownership, cross-licensing, joint ventures, franchising, merchandising and co-marketing agreements.  Provided these techniques align with the core values of your brand, they could improve margins you never thought existed.  The key is keeping your brand integrity.

Arrangements like those mentioned above could provide opportunities to share the costs of brand clearance, protection, maintenance and enforcement. After all, if another party will gain benefit from your vision, then asking them to contribute to the costs of protection is not unreasonable.

Many customers change their buying habits in a recession, often becoming more selective. Recognise this and work with it.  Make sure you know what your customers’ drivers are.  What motivates them to buy your products?  Is it your product mix, product quality, or after-sales service?  This insight can guide your marketing strategy and drive any necessary changes.  It will also enable you to keep in contact with your customers.  Trading in a recession provides scope to explore alternative and cost-effective ways to communicate and touch base with your customers.

Identifying a gap in your product line-up and creating product line extensions will enable you to capitalise on the strength and recognition of your existing brands.  This is happening in the food and drink market with many looking to introduce healthier food and drink choices into their product menu. 

Aligning your products with your customers’ needs will bring benefits.  As well as strengthening your existing relationships with current customers, you could also attract new ones.
 
Brand selection is another area where time and effort spent at the outset can pay dividends downstream. Make sure that any new brand you adopt is able to be used by you and meets the criteria for registration if you want monopoly rights. Working with specialist advisers to weed out weak or unavailable brands will enable you to focus your time and investment and avoid any costly mistakes.   

In summary, investment in your brand should occur in buoyant times but is even more important when there is an economic downturn.  While it can be difficult to justify the immediate investment, that investment is critical to preserve and grow market share.  It is also critical to place your business in a position so you will benefit when the financial crisis is over.  Brands with a strategic perspective are the ones that survive economic downturns.  Weaker brands don’t – they fall by the wayside.

Tough times don’t last but tough brands do! 

An edited version of this article was publsihed in NZ Retail, April 2009.

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  Corinne Blumsky

  Partner