Written by Alyssa Posklensky – – –

COVID-19 has turned our every routine, habit and ritual upside down. This, in turn, has led to dramatic changes in our consumption patterns. We no longer go to the store and browse the shelves leisurely, mulling over our purchase. Instead, we are simply purchase online. Convenience and speed of delivery seems to be the main factors for decision making.

Since brands are built on consumers’ values, priorities, and preferences – what happens when these change overnight? Do brands matter in a COVID world, or does ease and convenience become king?

Brands mattered in a pre-Covid world

Before the pandemic hit, it was a fairly well established truth that brands do matter. In order to matter, however, brands must be able to find a place in culture and continuously adapt to their consumers’ needs. Let’s also make clear that branding involves so much more than just the advertising and communications of companies and products – it encompasses everything from the product, to packaging, to shopping experience.

The more analytically inclined might wonder, where is the data? Tying branding to financial results is often difficult, and branding tends to be seen as at odds with the bottom line – viewed as an expense, instead of as an asset.

A HBS study on brand-building and its financial implications, among other work, has proven that a strong brand is key in many industries through an analysis of stock market values. Those with strong brands showed higher levels of shareholder returns, proving the value of branding on the bottom line.

This doesn’t mean Private Label or other niche brands don’t matter as well. A non-branded alternative will win a certain percentage of the time when shoppers are simply looking for the cheapest option. On the flip side, niche brands with unique offerings will always have a place, albeit small, in the market.

The Rule of Three

One way to think about strategic positioning (of brands) is the Rule of Three framework. Professor Jagdish Sheth, from Emory University, explains that mature markets generally have three large players that account for the majority of the market. The big three are full line generalists with broad appeal that are driven by volume and compete on value and promotions. As “one stop shops”, branding is what truly sets them apart from each other.

As you can see in the diagram below, the niche specialists serve smaller segments (small overall market share), but they often enjoy higher margins and profitability. They compete by being small.

The worst case scenario for a brand manager is to get “stuck in the ditch” where you are not big enough to drive economies of scale, but not small enough to serve profitable niches. Strong branding can be the difference between successfully surviving as a generalist or specialist or being stuck in the ditch.

Among leading brands, industry experts found that:

Consumer loyalty toward leading brands is very high, with a repurchase rate around 58% (1.5x higher than the rates for emerging brands)
Brands with declining sales appear to be victims of declining categories, which does not reflect on the brand themselves but on consumer buying habits

Brands in a Covid World

Let’s use the COVID-19 pandemic as a case study. If strong brands help to drive customer loyalty and repurchase, then there is no reason to believe they will matter less in the COVID-19 shopping (or panic buying, depending on the category) era. Since online shoppers have such low switching costs (a different brand is just a “click” away), driving preference and lifetime customer value is critically important.

If anything, the impact of COVID on purchasing patterns just accelerates the changes that we’ve seen for some time: nimbler brands are often able to uncover hidden insights and react faster to customer needs. Customers are changing, and so should brands.

Online is not “in-store on the computer”

As more and more shopping shifts online, there is increased competition but also additional opportunities for branding, and consumer communication. Many of us will remember the 4P market framework (product, price, promotion, and place). What does that look like in-store vs. online?

Dependent on the involvement level of the category, certain P’s will matter more. For example, for a low involvement category Price and Place are integral to being in the consumer’s decision set. However, a higher involvement category with more complex products will need to fully flesh out the Product offering and ensure it meets consumer needs.

Ultimately, a shift to online experiences gives brands more opportunity than ever to control both their image and products to stand out from the crowd. While initially a shift to online shopping may result in a proliferation of brands, three main players will likely emerge over time.

Keys to Relevant and Authentic Branding

Brands should strive to be relevant and authentic. Given this, today’s climate creates a challenge – how should they react to the pandemic? Consumers were craving more human interaction and personal connection with brands before the pandemic, and that need has only escalated.

However, beware – the wrong actions can easily be converted into negative perceptions. What does this look like? It’s the same advice that you might have heard as a child. At its root: Say something only if you have something valuable to say.

So, how do we know if it’s something “valuable” to say? If you think about business as a combination of your company, your customers and your competitors, it might look like this.

Anything related to competitors is discouraged. Instead, three areas brands should focus on under the Customers and Company realms are:

Pivoting to meet an unmet/undiscovered customer need (that arose or was amplified due to the pandemic)
A strong fit with the existing brand message and company point of difference
Explaining any divergence in the brand’s messaging (Most applicable to companies with highly familiar messaging or slogans)

First, a poor example. Early on in the pandemic, we saw brands embrace a trend of ‘socially distant logos’, where they spread their graphic elements apart to encourage customers to heed calls for social distancing. CNN’s analysis lays out on paper that many consumers felt this diminished the seriousness of the situation, rather than contributing positively.

While certainly there was no bad intent here, the brands did not have anything significant to say and it is very clear to the consumer.

Similarly, Amazon, Walmart and grocery chains have placed ads showing their workers, masked and in PPE, doing their jobs in stores or distribution centers. Other companies are promoting their efforts to switch to mask production. While these activities are all positive, the question is whether they need to be celebrated in advertisements – and from this framework, we can see that they do not. There is no significant change for the company or customer, and the barrage of these messages on TV or online has proven frustrating. Instead of creating and airing these announcements, how about focusing on giving employees hazard pay or providing paid sick leave? In all likelihood, companies can find much better use of that same money.

Be, Do, Say

As many of us learn in Kindergarten, sometimes showing good intent, not telling us about it, is the best approach. Joey Reiman, a branding consultant, calls the marketing version of this idea “Be. Do. Say” – be the change and do better before you say anything about it. By the time you speak about the action, it will be relevant and authentic because the work has already been done.

What brands are you watching?

What brands have you found to be successful during this pandemic, and how?
Which brands should react to COVID-19, and which should not?
Can this framework be applied to other events, not just COVID-19?

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