Lessons from the History of Crises. Which Brands Will Come Back Stronger?

A good understanding of the reality surrounding a company and the consequences of the pandemic is the key to gaining a market advantage, but also a chance of survival for some of them. Analysts from VMLY&R and BAV Group took on the challenge and analyzed the impact of major crises (including the 2001 attack on the World Trade Center and the 2007-2009 financial crisis) on brand strength. In their latest report, "Emerging Stronger: Understanding New Cultural Dynamics Through the Lens of History," they present at times surprising recommendations for companies struggling with a difficult situation, and identify four trends that may matter in the future.

How Consumer Needs Change in a Crisis:

How Consumer Needs Change

According to the BAV Group study "COVID-19 Pulse Study, 2020":

  • 77% of consumers believe that brands should talk about how they can be helpful during a crisis in their audience's everyday lives
  • 75% of consumers believe that companies should inform the public about their efforts to cope with the new situation
  • 75% of consumers believe that companies should not use the pandemic to promote their brands
  • only 8% of consumers believe that companies should stop advertising

Key Takeaways from the Analysis of Past Crises:

Lesson One: Changing Customer Needs Are Key

What is crucial is a full focus on customer needs, ideally in a customer centric model. In this way, brands can satisfy the real needs of their customers, which change under the influence of events. Under stress, customers willingly return to brands that are familiar, stable, valuable, or emotionally closest to them. An interesting example is Starbucks, which as early as 2002 was perceived as a functional brand thanks to the assistance offered to the community and rescue workers after the attack on the World Trade Center.

What lessons can we learn from the history of crises? — illustration 1
Source: BAV USA, FY1999, FY2002, All Adults

Lesson Two: A Crisis Is a Time for Innovation

Brands that see emerging barriers and uncertainty as an opportunity for innovation and invest in research and development during a crisis are more likely to emerge from it stronger. This is illustrated by the examples of Alibaba Group (the SARS crisis) and Amazon (the 2009 recession).

What lessons can we learn from the history of crises? — illustration 2
Source: BAV China, FY2001, FY2005, All Adults

Lesson Three: A Low-Price Strategy Works in the Short Term

Strategies focused on delivering value and low prices will always succeed in times of crisis, but to achieve long-term growth it is essential to develop unique ways of building value. This is illustrated by the examples of the American brands Dunkin' Donuts (the brand found a new path) and Folgers (a low-price strategy weakened the brand during a period of prosperity).

What lessons can we learn from the history of crises? — illustration 3
Source: BAV USA, FY2006, FY2013, All Adults

Lesson Four: You Must Take Care of Brand Distinctiveness and Uniqueness

Lessons from the History of Crises: Which Brands Came Back Stronger?

Brands that clearly stand out from the competition and are more respected bounce back more easily after a crisis thanks to the support and emotional attachment of their customers. This is illustrated by the example of Uber, which after its problems in the USA in 2017 returned to its previous strength in 2019.

What lessons can we learn from the history of crises? — illustration 4
Source: Source: BAV USA, FY2017, FY2018, FY2019, All Adults

Lesson Five: Investment in the Brand Remains Important in a Crisis Too

Brands should consistently continue investing in their development in times of uncertainty. Most companies reduce marketing spending during a crisis, and that does not have to be the optimal strategy. Unfavorable conditions are a great time to strengthen and expand a business. This is well illustrated by the example of the image problems of Domino's Pizza during the 2009 financial crisis and of Southwest Airlines in 2001 (after the attacks on the World Trade Center).

What lessons can we learn from the history of crises? — illustration 5
Source: BAV USA, FY2008, FY2009, FY2011, All Adults

Lesson Six: Interactions with Consumers Are Valuable in a Crisis Too

Brands that take consumers' voices into account and directly address their needs emerge from a crisis stronger than before. Constantly conducted social listening and response time to emerging situations are essential here. We cite the example of the Gerber brand on the Polish market, which thanks to communication and crisis management dealt with the problem of mechanically separated meat in jars of baby meals.

What lessons can we learn from the history of crises? — illustration 6
Source: BAV Poland, FY2007, FY2010, FY2014, FY2016 All Adults

The Impact of Covid-19 on Our Lives

What lessons can we learn from the history of crises? — illustration 7

What Can Your Brand Do?

Consumers expect support and action from brands that will take the "new reality" into account in their strategy. This can help companies achieve growth, examples of which may include:

  • moving Formula 1 races into virtual reality, launching an app and other technological solutions consistent with the brand's ecosystem
  • building communities and deepening interactions with audiences using technology, e.g. the Netflix Party plug-in
  • supporting other entities in line with the brand's business core, e.g. the Yelp service helping local businesses
  • cooperating with state institutions to protect health and life, e.g. the brand New Balance sewing face masks

How Might the Future Take Shape?

  1. A shift in the meaning of empathy among the values represented by brands – actions by companies supporting local communities, their employees, and those on the front line in the fight against the coronavirus will be appreciated
  2. Detoxification of social media – consumers expect more authenticity and a sense that ordinary people stand behind brands' communication
  3. The flourishing of technology driven by changing consumer needs – COVID-19 has become a catalyst for many technological innovations and the digital transformation of businesses, which enables combining the brand experience with the consumer experience
  4. Redefinition of brands' purposes and their social engagement – consumers will appreciate companies that are purpose driven organisations, and not focused solely on profit

Summary

The VMLY&R and BAV Group analysis shows that companies focused on customer needs and investing in development and innovation in times of crisis can emerge from it stronger. The examples of Alibaba, Amazon, Starbucks, and Gerber illustrate that even difficult situations create opportunities to strengthen one's position if the brand remains authentic and distinctive.

Key data from the COVID-19 Pulse Study: 77% of consumers expect concrete help from brands. Experts also point to future trends, such as the growing importance of empathy, authenticity in social media, and the acceleration of digital transformation, which may redefine the business goals of many organizations.