WHITE PAPER: THE WORST OF TIMES, THE BEST OF TIMES
As the pandemic combines with global economic shock, the world is entering a period of economic contraction in which, at the time of writing, recession is forecast for many countries and prospects for recovery are uncertain.
Many commentators expect that premium brands will be the ones likely to suffer most.
Recessions hit incomes and make people price sensitive, so they may want to trade down to cheaper alternatives.
So recessions feel like the worst time to be in marketing premium brands (as opposed to mainstream or value brands).
But new findings from the EACA’s Effectiveness Knowledge Centre of Effie Europe winners from 2008-2019 show these grim predictions often aren’t realised. With the right growth strategy and using communications as an accelerator, premium brands can achieve growth in the toughest of times, as well as times of economic growth.
This White Paper has been developed by Effie Awards Europe and EACA, in partnership with The Effectiveness Partnership.
1. Communications drive stronger growth for premium than non-premium brands, both in and out of recessions
Over the whole of the 2008-19 period our findings show campaigns for premium brands outperform those of non-premium brands in generating large business effects.
2. Most successful campaigns for premium brands in recessions balance volume growth with value growth
Success for premium brands depends on selling high volumes as well as maintaining a price premium. However, in recessions a more balanced approach is needed with premium brands becoming more likely to focus on market share and volume to grow their market positions and maintain mass sales, potentially at the expense of margin, giving them scope to raise prices when market conditions improve.
3. Capturing new users is the lifeblood of growth for premium brands
Growing penetration is the #1 marketing objective and effect for successful premium brands achieving large or very large business effects, in and out of recessions, as our data shows.
4. Most successful premium brand campaigns
in recessions support new product launches
Our data shows that 64% of premium brand campaigns support new product launches in a recession. Brand relaunches are far less likely to be the focused of successful campaigns in recessions than in non-recessionary times, which may be a sign that successful brands have the confidence to maintain the investment in innovation in hard times that made them successful in good times.
5. Emotion pays (even more) when you’re a premium brand in a recession
Looking across our dataset, emotional campaigns are far more effective than persuasion or purely awareness building campaigns in generating large business effects.
6. Broadcast and narrowcast channels work hand
in hand for success
TV continues to be the most effective channel in driving large or very large business effects for premium brands, whether in recession or better times. TV allows emotional messages to be delivered at scale and as such is critical to growth.
7. Premium brand success depends on a clear definition of a core audience segment
Although growing penetration is vital, successful premium brands captured in the Effectiveness Knowledge Centre are rigorous in their focus on one audience segment. A qualitative analysis of our cases shows that rather than trying to be all things to all people, successful brands define a target that is aspirational and has unmet needs that these premium brands can satisfy.
The recession currently sweeping the world is unprecedented in its scale and severity.
Brands, businesses and the people who depend on them are under pressure as never before.
Nonetheless, even in these troubled times there are rays of hope and our data from the EACA Effectiveness Knowledge Centre shows that communications can help premium brands, which might be expected to suffer most in recessions, not just survive but thrive.
This paper only is the start point of what will be an ongoing drive to use the data-led insights from the EACA Effectiveness Knowledge Centre to inform and inspire the communications industry. But we can already also see that our findings into premium brands can give timely lessons that also create some optimism and hope, even in tough times.