Stand by Your Brand

Author:Ms Julia Matheson
Profession:Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
 
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Co-authored by Claudia Spielman

Originally published in Trademark World, February 2002

There's no question about it — these are hard times. Our minds are preoccupied not only with terrorism and war, but also the economy. We are on the brink of, if not already in the midst of, a national and global recession. It is a time when short-term thinking about trademark strategy can have a very dangerous long-term impact.

During a recession, it is common for companies to respond by hibernating and cutting brand building out of their budget. Many companies, in times of recession, have the misconception that consumers buy what is cheap regardless of brand or quality. As a result, many companies make a number of critical errors as they try to retain market share during the recession: they discount their products and move to down-scale retail establishments; they slash or even cease promotional efforts; they abandon protection efforts and give up on enforcement. The reasoning that underlies these decisions is not only wrong but detrimental to a company's long-term economic health.

A recession has proven to be the best of times to strengthen brand building and increase market share even if money is tight.1 Research has shown that companies that continue to protect, enforce, and promote their brands during a recession can capture market share that might be financially unattainable in better times.2 In other words, a little investment can go a long way in a down economy.

The misconception that consumers prefer non-branded generic products during a recession over their more expensive branded counterparts has been disproven again and again. In Japan, for example, consumption of branded merchandise not only has remained steady but has actually increased for well-recognised merchants, as evidenced by Louis Vuitton, Hermes, and Benetton all opening Japanese superstores.3 Research shows that consumer spending in the US actually increased during the recession of the early 1990s.4 Consumers seeking stability in an unstable world showed their willingness to spend limited resources on the known entity — the brand they had grown to trust over the years.5 Just as many are drawn to comfort food, consumers engage in comfort buying in times of economic trouble.

As we all know, successful brand management helps consumers get to know and grow to trust and appreciate a brand. Those seeking security in an uncertain time will look to familiar brands both to reduce uncertainty and to obtain momentary...

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