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Patrick Smith analyzes the effects of the current economic crisis
Visiting Chile for the opening of his firm’s local office, the President and CEO of FutureBrand Worldwide analyzes the effects of the current economic crisis.
The brands affected by the crisis “should lead the debate about the change.”
This week, with the bankruptcy of General Motors, people began to witness what they hoped would be the last chapter in a long line of companies that have fallen victim to the world economic crisis. We talked to Patrick about the possibility of capitalizing on the brunt of the crisis and how to strengthen brand image and maintain value in a complex financial environment.
To the expert, there is no unique recipe. Nonetheless, in terms of brand building and corporate reputation, Smith emphasizes that we should never forget that a brand is a long-term asset and investment. For example, brands like Burberry and Gucci, which target the higher end of the market, have launched campaigns based on the pricing we saw last Christmas. These are examples not to be followed.
“McDonald’s have faced the crisis in a different way, they have utilized another business model to survive and have found a way to expand their brand through their coffee stores. In this way, they have confronted Starbucks, who just announced the closing of 600 stores.”
Smith added that: “Virgin’s multifaceted and intelligent brand management is another example of how to show strength in a crisis. The company has just announced $68 million in profits, while British Airways has reported losses in the vicinity of $401 million. This shows that with a simple proposal, lots of benefits can be generated, even for companies that have a complex structure.”
Those opportunities have been made possible by the current economic situation, but should brands also be thinking in terms of long-term strategy?
“In many industries, such as technology and retail, long-term means six months, but brands should always balance their long-term strategies with the opportunities that emerge in the present. For example, Virgin is doing well with their Premium Economy class, so, companies such as British Airways or Midland should be reviewing how their brands are addressing this segment.”
How can the brands that have been more affected by the crisis reposition their image?
By righting their business first and then working on the brand. The financial industry that was handling a complex product offering for different types of consumers should now bet for something much simpler and more conservative. Today, this sector should talk more about transparency and lead the debate about change.
New niches
Although he recognizes that marketing budgets in companies are around 6%, Smith says that there are signs of recovery, and he is particularly optimistic about the potential that Latin America has in the fields of marketing and advertising.
