Safer to Have a Brand than Revenues

Tian Tao, vice president of CTR Market Research Co., Ltd.

Faced with a crisis, enterprises tend to lay focus on marketing, so as to go through the difficult period by improving their cash flow. However, marketing is silver, brand is gold. The reason is simple: having a brand is more important and provides greater security than having short-term revenues. This is the value for us to embrace during the crisis.

We conducted a survey on the priorities of enterprises in 2009. The result indicates that marketing is a top priority, which is an instinct when enterprises encounter a crisis, and brand construction is put in the second place. However, this is a myth. It is short-sighted to only aim at going through the difficult period. In fact, it is more important to positively deal with the economic crisis than passive defense. It is likely that passive defense will fail to support you until the end of the economic crisis.

In the meantime, very positive signals have appeared on our market. We have seen a 10% increase in the income of urban and rural residents at their disposal and a 15% increase in social retail volume in the first quarter of 2009. This suggests consumption still exists, and thrives. As our latest survey in 2009 indicates, 85% of the consumers retain their former expectation for consumption, and only 15% have been affected. This figure tells us that market demand is still strong. We classified all sectors into three categories: those that keep growing during the crisis, like education, medicine, home commodities and diet etc., on which residents spend more instead of less; those that keep steady during the crisis, like communication, durable consumer goods and cosmetics, which have not been much affected; and those that have been truly affected during the crisis, like luxuries and unnecessary goods, the demand for which has been suppressed.

As we see, spending on automobiles remain high in the first quarter of 2009. 93% of the consumers we have talked to said they would stick to their original plan of purchasing a car in 2009. This is because buying a car is not a short-term consumption plan, but a medium or long one, as well as a consumption behavior decided by all family members, free from influence of external or short-term economic situations. In the first quarter of 2009, models benefiting from the preference policies of the country on the automobile market of China, including 1.6L cars, remain very strong in sales volume, and no sign of recession has shown in the whole auto industry.

In the crisis, consumers still have strong brand awareness. We selected a sample group of consumers and conducted a survey on their attitudes toward life during the crisis. The result is interesting. The consumers said: “We still stick to well-known brands.” So-called “well-known” brands refer to those brands with great popularity. Besides, major companies are more reliable. So, what are major companies and which of them are reliable to the consumers? They keep their eyes on those companies appearing on major media etc., and regard these as major companies and think they are more reliable. They also said: “I prefer to buy products of a famous brand, even if they cost more”. As you can see, consumers still would like to pay premiums for brands.

Brands deeply impressed on consumers’ minds have a quality indestructible by the financial crisis or any difficulty, which makes the brands safer. Only by laying greater focus on brand building while laying focus on marketing can you build a long-standing brand and go farther in the market. When the enterprise or industry is in recession, the closer to the consumers, the more likely and faster you can get rid of your competitors and the industrial crisis, and the greater brand recognition and favor you can acquire.