We know that good marketing practice means knowing: (1) who your target market is; (2) what problem(s) your target market is trying to solve; (3) what your brand’s value proposition is; and, therefore, (4) whether your brand will solve your target market’s problem.

But recessions can be tough on brands because the relationship between consumer problems and brand solutions often becomes decoupled and preconceived mental models we hold of our markets are called into question. That’s why we see brands trying to reposition in an effort to remain relevant (think: Starbucks) or hold onto their original position in the hope that the brand will survive the recession (think: Singapore Airlines or Abercrombie & Fitch).

At the start of the recession, Abercrombie & Fitch declared that it would not lower its prices even though sales were down 34% year on year and David Cupps, the General Counsel and Secretary at Abercrombie & Fitch, was quoted as saying the brand would not offer hefty discounts because such “discounts could hurt the brand’s integrity and appeal in the long run” (Los Angeles Times, December 13, 2008). In May 2010, same store sales at Abercrombie & Fitch were down 3% year on year at a time when rival stores were starting to show small gains. One commentator suggested that Abercrombie & Fitch might have lost its appeal and is no longer seen as cool by its target market (www.MarketWatch.com, June 3, 2010). By staying true to its brand position, did Abercrombie & Fitch fail to stay relevant in a changing market?

Singapore Airlines is another example of a brand that stayed committed to its market position during the recession. Just before the financial markets collapsed in 2008, Singapore Airlines converted two of its US-Singapore routes to business class only. The cost to travel on this route was $8,000. Rather than reposition the brand, Singapore Airlines instead choose to park planes and cut costs in an effort to ride out the recession (Fortune, June 24, 2010).  A clever move from a marketing point of view and hopefully one that will pay off for Singapore Airlines.

Not only does the relationship between consumer problems and brand solutions become fragile during such turbulent times but the recession has also exacerbated a general mistrust consumers already had toward brands. This is why some brands have no choice but to reposition or, in the case of AIG, rename.  Bloomberg BusinessWeek (June 7, 2010) reported that AIG has sold and its fund management division, which is now called PineBridge Investments, sold its auto insurance division, which is now called 21^st Century Insurance, renamed it core property casualty company Chartis and renamed its annuities business National Western Life.

Singapore Airlines decided to remain focused on its brand position on the basis that the recession, and its effects on corporate travel, was cyclical.  Indeed, recessions are cyclical but in the case of the Great Recession, the recession has been longer and deeper than any we have experienced in our life times. It takes a bold company to do what Singapore Airlines did.

Jenny Darroch is on the faculty at the Drucker School at Claremont Graduate University. She is an expert on marketing strategies that generate growth. See www.MarketingThroughTurbulentTimes.com

Key words:  brand management, marketing strategies, marketing in a recession, target markets, value proposition, consumer trust, Abercrombie & Fitch, Singapore Airlines, Starbucks, AIG.