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The Post-Recession Brand Reshuffle

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Last night I was reading the latest copy of Newsweek, the one with the heading "America's Back" (April 19, 2010). The feature article included short interviews with a number of economic commentators who, predictably, gave mixed messages on whether the economy would recover quickly, along with likely economic growth figures for the short and medium term.

All well and good but can we expect big brands to emerge unscathed? Nielsen previously reported that, on average, marketing spend was down by 9% during 2009. But, not all marketing spend was down: spending on coupons was up 11.5%, while spending on magazines, television and newspapers was down anywhere from 9-24%. What this shows is that spending on short-term sales generation was up and spending on long-term brand building was down.

Of interest to me is that when companies come out of the recession, those firms that neglected to continue investing in their brands by focusing on short-term sales generation might find their market shares slide.

This short-termism that has characterized marketing expenditure has also characterized other aspects of business. Think about it: if demand for goods and services is down and cash positions are up (for example, the total cash held by Standard & Poor's 500 is now over $830b) some fairly drastic cuts have been made in an number of key areas: we know that employee numbers have been slashed and marketing budgets have been cut, and it seems that companies have also looked for other ways to save money by cutting back on R&D and quality. For example, in an article in Bloomberg BusinessWeek (April 19 2010), reference was made to a slight drop in Honda's market share at a time when Honda should be doing well against a troubled Toyota. The view expressed in the article was that Honda was no longer the "Japanese BMW"; its cars look pale alongside newer models from companies such as Nissan, Hyundai, Ford and GM.

I think we could find a reshuffle among brand leaders in the next 12-24 months with some historically strong brands finding that they are no longer relevant to the market. Of course, with a bit of good luck and good marketing these brands could be strengthened again but some might fall off the radar. Another outcome of the great brand reshuffle is that there will be some great opportunities for brands that are trying to gain traction.

Jenny Darroch is on the faculty at the Drucker School at Claremont Graduate University. She is an expert on marketing strategies that generate growth. See www.MarketingThroughTurbulentTimes.com

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