The temptation during downturns is to sacrifice margins with discounts and downscaling to be more affordable. This helps in the short-term but erodes long-term value and equity.
Kantar BrandZ analysis of the brand equity of tens of thousands of brands worldwide shows unequivocally that what makes a brand great is pricing power. When a brand walks away from its pricing power for short-term gains, its value proposition changes for the worse. Almost always, recovering pricing power lost to discounting is more costly than any gains realized.
Consumers react unfavorably to brands that eat into their value propositions. A squeeze on household finances forces consumers to rethink what they buy. This is evident right now in Kantar’s U.S. MONITOR, which is tracking record high levels of worry—78 percent in a wait-and-see mindset; 65 percent feeling inflation will get worse; 53 percent planning for the worst.
Consumers are looking to cut back on what they keep in their ‘spend money bucket’ and toss more into their ‘save money bucket.’ The only way for brands to avoid such de-prioritization is to stay the course by continuing to build value and, in particular, by looking for moments in which to stand out. Which is why Super Bowl LVII is a marketing moment that matters so much.
Brands should never take value out, especially not during times of instability and uncertainty when value is being more closely scrutinized. Great brands take advantage of moments like the Super Bowl to reinforce their value proposition. That’s what is needed in the short-term to remain a high priority in consumer budgets, and that is what builds value for the long-term as well.