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Remembering that perception is reality, we’re headed towards a recession. Whether we are or not. Consumers believe it’s coming…so they will behave accordingly.
So we need to be ready to anticipate how this is going to alter their reaction/response to our marketing messages. And, if they’re right, we need to be mindful of our own budgets as well.
Last week, The New York Times ran a story about how many retailers are pushing the "lower prices" message to capitalize on consumers’ fear. The article documents several companies including the much written about Starbucks $1 cup of coffee.
Is this a good strategy?
Maybe. It depends on your brand position.
Are you the product or service that’s all about being cheap? Are you ready to live with that new brand position far beyond the recession?
A low price strategy is one that’s easy to slip on and incredibly difficult to shrug off, once the economy turns around. Consumers tend to really wrap their arms around a low price position and they aren’t likely to be happy about going back to paying full price.
If your brand is not about price — adopting a low price strategy is probably going to damage the work you’ve already done. And that doesn’t only apply to luxury or high end brands.
As money gets tighter, consumers will want to be confident in the companies they do business with. Brand trust will become even more important, the tighter people are with their cash.
A recession is the time to be even more diligent about protecting your brand by staying consistent. If you weren’t a bargain basement brand a year ago, you should think long and hard before becoming one today.