Throughout their evolution, brands have held on to one common part of their definition; of being a promise of a certain standard or quality. The expectation from the consumers at large has also not changed over time. At the least, a branded product is expected to deliver a pre-set experience vs. an unbranded product, thereby reducing the risk of investment. When you know what you’re purchasing in exchange for your hard-earned money, you’re making a conscious transaction/ tradeoff in your mind. You are dealing in terms of value.

Now whether you’re in good times or bad economically, the above premise remains true. It could be argued that in recessionary times, it gets exacerbated, and people become even more conscious about the price they put on value and become pickier about the return they’re going to get in terms of the experience. In these times, it becomes imperative not to play with the formulations which will impact the quality of your product because that is one thing the consumer is not going to forgive. If they are used to a certain experience for a pegged amount of money, and you alter that, well, that is a cardinal sin in the marketing world. Consumers will be unforgiving and will most likely leave your franchise and not come back, just out of spite.

Why is the above so? Like most answers in marketing, it’s quite simple. Familiarity. That’s it. I’m not going to quote any psychological or human behavioural studies. Instead, we will just rely on common sense and logic. Familiarity breeds comfort, safety, and confidence. You tend to be more open and relaxed with people you know well, you think less when buying brands you regularly buy or see more, and you let your guard down when it’s a repetitive action. The human brain works in mysterious ways, but at its core, it tries to simplify by sorting and providing structure. To do that, it assigns labels, puts in boxes and codifies stimuli to automate responses as much as possible. It does this to reduce the processing load and free up capacity for the more complex tasks that await the brain. Brands provide that opportunity for the brain to sort and simplify. They promise a certain value that the brain is used to.

We decipher value in many ways, the simplest being the price we pay for a certain item or service. However, in marketing terms, it also alludes to the benefits being offered. Two detergents priced the same may offer different values; if one promises better stain removal or more fragrance or being soft on clothes as additional benefits, It may also be an extra product for the same price, it could be more mileage (lasts longer or washes more clothes) for the same price, or it could be a bigger pack at a less per gram price. Value comes in many different shapes and sizes, and it is important to be aware of all its aspects so we as marketers, can know which ones we can tweak when faced with margin pressures.

To recap, brands provide a promise of delivering a certain value consistently. In good times or bad, consumers rely on that promise to help them decide whether to part with their money or not. Brands help the brain make this decision easily by dialling down the risk due to the familiarity,, and everyone goes home happy. Can’t be that simple, right?

Well, actually, it is, but we forget that we still haven’t discussed the marketer here, and marketers love to complicate things. In good times or bad, we need to keep focusing on the basics. These include continuing to build mental and physical availability (Byron Sharp), to building Top of Mind via investing behind excessive Share of Voice, maintaining a healthy balance between short-term tactical moves and long-term brand-building campaigns (typically a 60:40 budget split as per Les Binet & Peter Fields) and ensuring we keep revisiting our segmentation definitions and our 4Ps (Mark Ritson).

It is also prudent to remember that FMCG categories usually tend not to get as severely impacted as some other discretionary categories during a recession. Whether it was the global meltdown of 2008 or the pandemic of 2019, companies operating in the FMCG sector actually came out quite well. This goes back mainly to the adage that people won’t stop having food, washing clothes, or taking a bath. Now this is a very simplistic and presumptuous view, and category contraction is an actual thing; however, it takes time. The price of 1kg of tea has gone up by 20-60% in just one year, yet the category shows no signs of volume loss. Numerous household and personal care categories have taken multiple price increases either directly or through downsizing in 2022, with, at worse, a flat volume internally and a low single-digit volume growth for the category. The trend is pointing downwards, but it takes time, which gives marketers enough room to try and figure out how to navigate through these times.

The playbook is simple, but it merits repeating as it is easily forgotten. When faced with margin pressures during recessionary times, don’t downgrade the quality by tinkering with the formulations. Downsize to an extent but know your cutoff. Don’t take away the single-use experience. Cut all the frills, excess packaging, fancy features on the box, reducing outer carton dimensions etc., go through the entire value chain and question everything. Above all, don’t stop talking to the consumer or observing them use your product. Most of the answers will come from here. There are no easy solutions to breaking out of fixed price points, but the clues will come from them, nowhere else.

So, what do people want from brands amid a cost-of-living crisis? Keep delivering the same value you always have. That’s it. If you’re downsizing, don’t play with the quality and ensure the single-use experience is not diluted. If you’re increasing the price, don’t diminish the quality and try to add an extra benefit.

As mentioned before, difficult times are usually ok for the FMCG industry, so you would think that marketing budgets wouldn’t get impacted. The contrary is true, however. Remember Coca-Cola’s announcement as soon as the pandemic hit? Time proved that that was the wrong decision. Many astute minds will tell you to maintain your marketing spends, if not double down on them during difficult times. This goes back to mental availability breeding familiarity, and we all know how that helps, building excess SOV since others will be cutting their budgets; you’ll get higher SOV for the same money leading to higher TOM and eventually market share.

Along with the above, tweaking messages to communicate value to our brands will only help. This doesn’t mean we start making slow-motion montages of closed roads and offices set to a monotone VO and black-and-white visuals; instead, stay true to your brand’s tone, character, and essence. Communicate how you’re continuing to provide value and it’ll do a world of good.

I write the above more as a reminder to myself than anyone else, as I’m faced with similar challenges on my brands. It helps to step away sometimes and take a more holistic view of the situation before diving back in. 2023 is going to be a difficult year; there are no two ways about it. We will struggle to keep our heads above water, so if we can help in any way possible, we must. Businesses will face margin pressures; inflation will continue to rise which will put hard choices in front of consumers. So, if we can hold off that price increase a little longer, or not take the grammage cut a little longer, not dilute the formulations a little longer, run that consumer promotion for a little longer, not cut marketing spends for a bit longer, introduce, protect and communicate value, then let’s do it!

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