Can A Strong Brand Beat a Recession?
Despite dismal economic and business conditions, two companies with strong brands seem to be oblivious to the chaos that surrounds them. In an environment that seems to have no silver lining, Colgate Palmolive and Apple Computer have posted results recently that would make any business envious. How did they do it? Good management and a strong brand appear to be the magical combination to beat even the worst of recessionary conditions.
The current economic environment over the past 12 months has been anything but encouraging. The Dow Jones Industrial Average (DJIA) and NASDAQ Indices are down over 35% since this time last year. The U.S. unemployment rate has risen by 2.3 percentage points - to 7.2 percent - since the start of the recession in December 2007, according to the Bureau of Labor Statistics. The Consumer Sentiment Index reached a 28-year low in 2008, according to the University of Michigan.
Needless to say, the past 12 months have not been conducive to profitable business growth. Yet two companies with strong brands have managed to weather the storm quite well. The strength of their brands has instilled deep customer loyalty that appears to be unbreakable, even when consumer spending is under tremendous pressure.
As economic prognosticators continue to predict doom and gloom, consumers appear willing to spend their hard-earned and well-guarded cash on the brands that they love and trust the most. Consider the recent earnings reports from two brands that lead their respective product categories: Colgate Palmolive and Apple.
Colgate’s (CL) 2008 fourth quarter earnings jumped 11%. Their net income rose to $401.2 million, or 73 cents a share, from $361.2 million, or 65 cents a share, a year earlier. The company, whose brands include Colgate toothpaste, Irish Spring soap and Ajax cleaner, said sales rose to $3.21 billion from $2.9 billion a year earlier. Colgate achieved this stellar performance despite the reduction of worldwide advertising costs by 140 basis points.
Apple (AAPL) recently reported the best quarterly revenue and earnings in the company’s prestigious history. The company posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion. All of Apple’s key brands showed strong growth: Apple Macintosh® sales grew 9%, iPod sales grew 3%, and iPhones sales grew 88% over the year-ago quarter.
These companies were able to achieve outstanding results in a recessionary environment by establishing and managing a strong brand. That is good news for businesses and economists that are seeking a path to success through the fog of recession.
Apparently, a strong brand can beat a recession. Establishing a strong brand just may be the most critical strategy for any company looking to weather the current – or future – economic storms.
Establishing a strong brand, however, does not happen overnight. A brand is not simply a logo, a tag line, nor a snappy ad campaign. The brand, in fact, is not even defined by the company – but rather the perception that is created in the minds of the consumer. Establishing such a strong and differentiated brand perception takes time and an outstanding customer experience.
As a sign of hope in tough times, companies that have successfully built a strong brand have shown that they can indeed beat the recession.
The current economic environment over the past 12 months has been anything but encouraging. The Dow Jones Industrial Average (DJIA) and NASDAQ Indices are down over 35% since this time last year. The U.S. unemployment rate has risen by 2.3 percentage points - to 7.2 percent - since the start of the recession in December 2007, according to the Bureau of Labor Statistics. The Consumer Sentiment Index reached a 28-year low in 2008, according to the University of Michigan.
Needless to say, the past 12 months have not been conducive to profitable business growth. Yet two companies with strong brands have managed to weather the storm quite well. The strength of their brands has instilled deep customer loyalty that appears to be unbreakable, even when consumer spending is under tremendous pressure.
As economic prognosticators continue to predict doom and gloom, consumers appear willing to spend their hard-earned and well-guarded cash on the brands that they love and trust the most. Consider the recent earnings reports from two brands that lead their respective product categories: Colgate Palmolive and Apple.
Colgate’s (CL) 2008 fourth quarter earnings jumped 11%. Their net income rose to $401.2 million, or 73 cents a share, from $361.2 million, or 65 cents a share, a year earlier. The company, whose brands include Colgate toothpaste, Irish Spring soap and Ajax cleaner, said sales rose to $3.21 billion from $2.9 billion a year earlier. Colgate achieved this stellar performance despite the reduction of worldwide advertising costs by 140 basis points.
Apple (AAPL) recently reported the best quarterly revenue and earnings in the company’s prestigious history. The company posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion. All of Apple’s key brands showed strong growth: Apple Macintosh® sales grew 9%, iPod sales grew 3%, and iPhones sales grew 88% over the year-ago quarter.
These companies were able to achieve outstanding results in a recessionary environment by establishing and managing a strong brand. That is good news for businesses and economists that are seeking a path to success through the fog of recession.
Apparently, a strong brand can beat a recession. Establishing a strong brand just may be the most critical strategy for any company looking to weather the current – or future – economic storms.
Establishing a strong brand, however, does not happen overnight. A brand is not simply a logo, a tag line, nor a snappy ad campaign. The brand, in fact, is not even defined by the company – but rather the perception that is created in the minds of the consumer. Establishing such a strong and differentiated brand perception takes time and an outstanding customer experience.
As a sign of hope in tough times, companies that have successfully built a strong brand have shown that they can indeed beat the recession.
Labels: Brand Management, CRM Strategy, strategic planning
posted by Robert G. Howard at
4:35 PM
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