The Salesby5 Blog

When Merrill Lynch used the 1990 recession to pull ahead of the competition

According to an Interbrand study, Leveraging Brand Value in a Downturn, “Merrill Lynch was seeing the return on its early ’90s branding investment in its ability to build and leverage its reputation in a broader market. It may have outspent Bear Stearns to do so, but the positive return was clear.”

How clear? Look at this chart from the study comparing indexed share prices of the two competitors during and just after the 1990 recession. Merrill Lynch’s “outspending” had a huge impact, redefined the competitive landscape between the rivals and set the stage for Bear Stearns’ demise.

For some companies, it is time to see a recession as a strategic time to take offensive action. When the competition focuses more on internal cost cutting, they focus less on customers.  This study also documents two other rivals whose competition was redefined during the last recession; Wal-Mart pulls ahead of Sears and Gillette from Colgate Palmolive. Credits: Josh Gordon.

We are not trying to scare you into taking action. We are trying to warn you about what is going to happen in the competitive landscape.  It has all ready started! Have you?

Recently we had a meeting with Alan Weinkrantz, Ryan Kelly and Steve Patti.  During our discussion, we were talking about how important it is for companies to live their brand on the inside of the organization before taking it to the public.  This ensures that everyone is on the same page as far as what’s being sold, what’s been promised and what the experience should feel like.  Steve put it into his words by saying that the gap the customer feels between the brand promise (what the customer expects) and the experience (what the customer actually receives) is what ends up affecting the perception of the brand.  The closer the brand promise and the brand experience are to one other, the better the client feels about having done business with the company and the more likely they are to return.  Conversely, the further the gap, the more damage is done to the brand.

Consider if you went to Wal-Mart (low prices) and you purchased an item, then later found that Target actually had lower prices.  What if you were to go to a Ritz-Carlton Hotel and not experience remarkable, world class service?  These experiences would clearly cause a disconnect between the brand promise and brand experience.

Have you had a similar experience or the complete opposite experience, where you expected less and got more?  Share with us in the comments.

photo by dustin