POST Online Media Lite Edition


How to build a resilient brand

Christian Fernsby |
Great brands are built over the long haul, yet the macroeconomic cycle forces brand managers to continually re-adjust their strategy to changing short-term market conditions.

Article continues below

In the current environment, for example, managers must prepare for a possible recessionary climate that brings a very different set of challenges than those confronted during periods of expansion.

How can managers use the tools at their disposal to ensure continuous growth of equity despite these fluctuations?

A new research paper co-authored by Tarun Kushwaha, professor of marketing at George Mason University School of Business, plumbs 17 years of U.K. data on hundreds of CPG brands to formulate a model that connects brand success in good and bad economic times to six strategic factors—price positioning (budget vs. high-end), advertising spending, brand architecture (presence in one vs. multiple product categories), market position (leader vs. follower), product line length (i.e. assortment) and distribution breadth.

Kushwaha's co-authors were Koushyar Rajavi of Georgia Institute of Technology and Jan-Benedict E.M. Steenkamp of University of North Carolina—Chapel Hill.

For each product in their data-set, the researchers first estimated SBBE (sales-based brand equity), a construct attributing sales variance to the effectiveness of brands in the marketplace.

They then drew statistical correlations between brand-level changes in SBBE and the six factors listed above, as well as macroeconomic growth and contraction over the observation period (January 1994–December 2010).

As they suspected, the mix of attributes associated with higher sales performance shifted with the macroeconomic climate. In bad times, brands with an umbrella architecture, dominant market position, and higher ad spend prevailed on the whole.

"These attributes permit brands to signal their higher quality and evoke confidence in consumers during economically uncertain times," Kushwaha explains.

However, the effects were somewhat modest.

During economic expansions, the positive impact of umbrella brand structure and advertising expenditure disappeared, and premium pricing emerged as a brand-equity asset.

"Premium brands are associated with higher product quality and lower purchase risk, and when the disposable incomes are higher, consumers are willing to splurge on premium offerings," Kushwaha says.

In contrast to the middling or mild effects above, three of the six factors provided a strong boost to brand equity that was not as contingent upon economic conditions.

High product assortment was neutral in bad times—because its positives and negatives were seen to cancel each other out—but supplied a significant lift during expansions.

When consumers are flush with cash, the researchers reasoned, they are more apt to be adventurous and try a new product marketed to their individual needs. But in times of belt-tightening, consumers' unfamiliarity counterbalances their curiosity about niche products.

Regardless of the economic climate, broadly distributed brands had a sizeable advantage in equity over less widely available ones.

Distribution, after all, influences the relative visibility of a brand, which in turn affects consumer perceptions.

Brands with a ubiquitous presence are generally seen as higher-quality. They are also in greater supply across the marketplace, which makes them more amenable to discounted pricing and other recession-friendly marketing maneuvers.

These findings add depth and granularity to the marketing maxim, "In good times and bad times, strong brands win."

While wide product assortment and broad distribution are positive indicators of brand strength, other indicators (advertising spend and premium pricing, for example) were less unconditionally effective. Managers of strong brands should be aware that not every advantage available to them can be equally leveraged to further bolster the brand.

As expected, leading brands were able to build brand equity regardless of the economy.

But this is a less surprising and useful insight, as markets, not managers, choose their leaders.

There are, however, steps managers can take to promote the growth of brand equity over the long haul.

The researchers recommend, firstly, that brand managers place more emphasis on expanding distribution.

Narrowly distributed brands should either rethink their strategy or increase efforts to overcome whatever barriers to wider distribution they may be confronting.

Second, managers should discard the conventional wisdom advising R&D cutbacks during recessions.

Since bigger brand families fare much better than average during expansions, and no worse during recessions, a good strategy for bad economic times might be to focus on product development so as to capitalize fully when the cycle comes back around to prosperity.

"Macroeconomic cycles are unfortunate, but a much needed, aspect of our capitalistic economic system. They help keep the system efficient by cutting the unnecessary excesses. Along the same idea, our study highlights that brand managers can ride the expansionary waves and buffer their brands from the recessionary cycles to enhance and protect their most important asset, their brands' equity," Kushwaha says.

The paper is published in the Journal of Marketing.

What to read next

To get customers to buy more in the future, help them buy a gift
New research suggests language influences how consumers trust a brand
Leaders who embrace learning on job have more resilient teams

Flooding concerns in Puerto Rico; thunderstorms across southeast U.S.

The main weather feature and focus for showers and thunderstorms through this weekend will be a cold front progressing across the East and stalling between the Southeast and southern Texas.


Concept Medical announces enrollment of first patient in "MAGICAL-ISR" ide study in U.S.
U.S. oil rig count up by 5 to 511
Rhode Island Governor, State Police promote safe travel across Washington Bridge
Governor Abbott met with Samsung executives to discuss billions invested in Texas


California: Nearly 500 arrests, 160,000 stolen goods recovered in just 3 months

Romania: EPPO probes public officials in investigation into €160 000 fraud involving employment funds
EPPO: 3 convicted of evading €3.1 million in customs duties on imported e-bikes
Romania: EPPO conducted searches in investigation into €1.7 million fraud involving irrigation systems
U.S.: Pacific storm over west
4.8 magnitude earthquake rattles New Jersey and New York


U.S. drillers cut oil and gas rigs to 620

Australia: East coast gas surplus expected in Q3 2024
Kuwait-Saudi rail link to be ready by 2028, says report
Cambodia approves investment projects worth $2.2 in Q1
Venice to charge day trip tourists 5 euros
Commission opens two in-depth investigations in solar photovoltaic sector

Trending Now

Coca-Cola Company to create approximately 250 new jobs in Town of Webster

Governor Abbott met with Samsung executives to discuss billions invested in Texas

Egypt to establish free zone for yachts along Red Sea coast

Johnson & Johnson Q1 earnings $5.3bn


Egypt to establish free zone for yachts along Red Sea coast

UK Exports Minister visits Latin America to boost trade and unlock billions worth of exports
Argentina, Brazil in talks to reverse Bolivian gas pipeline amid shortage
Trudeau offers $6 billion to provinces to build housing
€1 billion Greek State aid measures to support renewable energy generation and storage projects
North Carolina reaches electric vehicle registration goals two years early

Today We Recommend

Egypt to establish free zone for yachts along Red Sea coast


Nokia Q1 sales down

UnitedHealth Q1 $99.8 billion

Johnson & Johnson Q1 earnings $5.3bn


Coca-Cola Company to create approximately 250 new jobs in Town of Webster

99 Cents Only Stores to close all 371 stores
Alaska Airlines says Boeing paid $160 mln for 737 Max 9 grounding
Lindsay announces agreement to acquire minority interest in Pessl Instruments
Saint-Gobain to acquire Bailey for $650 million
Farmers Mutual Hail to acquire Global Ag from AXA XL


MainStreaming appoints Tassilo Raesig as COO

BioArctic AB proposes for election board members and chairperson
TerraPay names Marco Boldini as EVP and global head of governmental affairs
Farmers Insurance appoints John Griek as CFO
PA Media Group appoints Emily Shelley as new CEO
BioNTech appoints Annemarie Hanekamp as chief commercial officer


Slovenia's economy expected to grow 0.9 pct in Q1

Italy faces deficit infringement procedure
Real GDP increased in all 50 U.S. states
Inflation continues to decline in Germany
UK house prices log unexpected fall
South Korea's FDI logs double digit growth in Q1


Nokia Q1 sales down

UnitedHealth Q1 $99.8 billion
Johnson & Johnson Q1 earnings $5.3bn
Dollarama Q4 sales increased 11.3%
Conagra Brands Q3 sales decreased 1.7%
Liebherr finished 2023 business year with record revenue of €14,042 million


Micromanaging is the worst enemy of efficiency and teamwork

Niger set to monetize massive gas reserves through Saharan natural gas pipeline
Putting the brakes on EV folly that choked the market
Oil discovery in Kavango Basin may mean huge benefits for Namibians
Cape Town and Dubai battle over Africa's energy future
Is America going to lose its superpower status?


FAO Food Price Index rises in March

Australia grants license for GM bananas amid Fusarium Wilt TR4 concerns
Indian government allows exports of 10,000 tons of onions to UAE
Analytical survey: Sales of agricultural lands in Ukraine up 50% in February
Decline in Norwegian seafood exports in Q1
Tanzania's first fishing harbor to be completed in 2025


Study finds workers misjudge wage markets

Some organizations may need to expand their hierarchical structures earlier than others
Study finds there's right way and wrong way to deliver negative feedback in workplace
Allyship is critical and its needs appreciation
Generating 'buzz' about new products can influence their success
Hiring 'problem directors' can knock up to 64% off firm's value


HSBC pays penalties for alleged breaches of Consumer Data Right rules

Sanofi to settle thousands of Zantac cancer lawsuits
Former asset manager and board member of Geneva private bank referred to Swiss Federal Criminal Court
South Africa: SAP ordered to pay SIU $26m over 'invalid' Eskom contracts
Former Steinhoff director appears in court for $1.1b fraud, racketeering
Genesis agrees to pay $21 million penalty to settle SEC charges



Buna channels, an unreal and beautiful part of Bosnia and Herzegovina

JW Marriott unveils Mindful Haven with opening of JW Marriott Hotel Nairobi
Sotheby's Sports Week returns with fantastic artifacts
Red Roof properties open in Michigan
Treyam, your premier lagoon destination in Saudi Arabia
San Francisco: SkyStar wheel on Fisherman’s Wharf to stay for another 18 months


2025 Chevrolet Equinox stands apart with fresh looks and capability

Hill Helicopters HX50, luxury in the sky
Opel Movano becomes fully equipped camper van
Porsche Panamera, new hybrid variants
Dodge Charger, 670 horsepower of electric
Pagani Huayra R Evo, 900 hp from 770 Nm


Cold night, hot fire pit, cool entertainment

Embellish your home with PVC panels
You'll have to hurry if you want one of 20 new Louis Vuitton watches
Luxury duvet looks good, fells good and keeps you healthy
Vacheron Constantin, watches for life and more
Schüller kitchens, where functionality marries design


reMarkable 2, monochrome tablet for your thoughts and your eyes

OnePlus Ace 3V, first with Snapdragon 7 Plus Gen 3
ASUS Zenfone 11 Ultra, flagship with a reason
Samsung Galaxy S24 is photography powerhouse
Casette tapes are making a big comeback, and so are portable players
Neumann TLM 103, standard microphone for both voice and music


India launches first home-grown gene therapy for cancer

UK scientists win funding for 'cancer detecting' Lollipops
State to cover rare disease treatment costs in Bulgaria
Type 1 diabetes patients in England to receive 'artificial pancreas' as medication
Pilot study shows ketogenic diet improves severe mental illness
Texas reports possibly U.S. first human case of bird flu linked to cattle


Rare species of wild bees discovered in Berlin

SLAC completes construction of largest digital camera ever built for astronomy
Solar eclipse next week in U.S., Mexico and Canada
Gravitational waves may have made human life possible
Astronomers unveil strong magnetic fields spiraling at the edge of Milky Way's central black hole
Scientists on hunt for evidence of quantum gravity's existence at South Pole