Wednesday, November 12, 2008

Brand Value in a Down Economy

The economy is on everyone’s mind – where it is now, where it’s going, and how it’s affecting individuals, businesses and countries.

The folks at YouGovPoliMetrix recently fielded a survey – the BrandIndex survey – to research the effect the economy is having on consumer perceptions of brand value. The data were collected between Sept 1 and Oct 27, and Ad Week reported on the results in its Nov 4 issue.

The survey found that the five brands with the highest perceived value right now are: Craftsman, History Channel, Discovery Channel, Google and Rubbermaid. Brands with the worst perceived value today are: MTV, Hummer, Red Bull, AIG and Abercrombie & Fitch. Additionally, the survey found that over the past two months, brand value perception scores have increased for Microsoft, Starbucks, Verizon Wireless, Folgers, and Bath and Body Works, while they decreased for AIG, Wachovia, Washington Mutual, Foot Locker and Merrill Lynch.

Here are my takeaways from a review of the brands consumers perceive as the best and worst in terms of brand value right now:
  1. Conspicuous consumption is out; self improvement and DIY are in

  2. Value doesn’t mean cheap, but the price better be justified

  3. Management's track record matters

  4. Familiar, tried and true brands are reassuring in these uncertain times

  5. Consumers are paying attention to advertising
The survey also measured brand value perceptions by category. Home improvement stores is one of the categories hardest hit by the housing meltdown, so it’s particularly interesting to see how consumer perceptions of brand value have been affected there. The YouGoPollMetrix survey found that Brookstone and 99 Cents Only currently have the worst perceived brand value in the category and Home Depot and Lowe’s have the best.

Our own category research at Brand Amplitude over the past year has shown consistently that consumers perceived Lowe’s as better than Home Depot on every dimension we asked about. From selection to knowledgeable advice and friendliness of service to speed at check out to the number of sales people on the selling floor to store layout to price to value, Lowe’s beats Home Depot, hand’s down.

I’ve written before about Home Depot’s challenges. Though the company scores well for consistency across customer touchpoints, our research shows that its messaging misses the mark. They don’t deliver on their “You can do it, we can help” tagline. And as outlined above, they fall short on multiple aspects of the customer experience compared to Lowe's.

The housing slump has hurt home improvement centers hard, and both Home Depot and Lowe’s have scaled back expansion plans in light of the soft economy. Given Lowe’s huge perceptual advantage, it makes sense that the company is not confining itself to a value message right now. Instead, Lowe’s just announced that it plans to tout its in-store shopping experience to drive consumers to its stores this holiday season. Smart move!

1 comment:

bige said...

Excellent post on customer loyalty, backend marketing, and recurring billing.
These are all the best ways to generate a solid business model.
Long term reccuring customers are where the money is at.
If you treat and market your loyal customers
with incentive programs,sales incentives,
and customer loyalty programs,
you will be setting yourself up for
long term success based on proven business principles.