Looming Financial Crisis, Brands and Commodities

I don’t see the Financial Markets settling soon. Global Financial Markets will stay volatile till 2020, possibly beyond. It’s like a FINANCIAL BAZOOKA, like a train coming straight at you and you are not going to stop it by standing in its way. I see more financial bloodbath and rocky times ahead for many countries & their markets. Simple investors will have sleepless nights and smart investors will have peace of mind with their funds. But the question is where to park your funds when markets are so uncertain and unpredictable?

The Answer: Follow the basic rule of LIFE and invest in REAL ASSETS for Wealth Preservation. The global economy stands at a crossroad of growth and decline and few financial markets might even collapse. If we analyze economic history, we see that there is a recession in the global economy after every 7/8 years. So it’s long overdue now and which is why 2016 has started on a rocky note as markets went down in China, Europe, US and Asia. Financial markets look too choppy at the moment. According to Sam Zell—American Business magnate and Real Estate mogul:

US economy is knocking at the doors of deep recession in the next 7 to 11 months. Global economy is witnessing a bigger crisis which will last longer and perhaps will be more severe than the 1930s… History is repeating after 83 years and many investors are not aware of the gravity of the situation

So what’s a MARKETERS ROLE IN TOUGH TIMES? Consumers are very sensitive to Brands. FMCGs are much stable even in hard times when the economy hits rock bottom but the same doesn’t apply to Retail especially for Auto and Luxury markets as these two sectors suffer the most. The question that Economists frequently ask: Can Brands sustain themselves in times of hardship when companies cut their Marketing budgets?

The answer is simple; Brands can live long if they are real Brands (and not commodities) because of their relevance for and being the preference of their target segment. In a volatile Economy, Brands who share the same Category Values suffer the most because consumers end up making decisions based on Price. In these times, Marketers who depend on huge budgets suffer the most because they depend on Advertising as a means of influencing Consumer decisions unlike Brands which are grown organically and are sustainable in a recession economy simply because their consumers’ habits and reactions depend least on communications or any tools that influence their call to action. In tough times, Brands survive and thrive over commodities, for example: McDonald’s globally and Saudi Brands such as Al Baik and Al Marai will still perform well, like previous times

It is only in uncertain times that Marketers can innovate and come up with strategies to move ahead and support the companies’ reservation on spending

Shan Saeed is Chief Economist at IQI Holdings whose expert views have been aired on CNBC, Bloomberg and Al Jazeera English. He advises clients in the Middle East and South East Asia

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, an author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renowned Brand Consultancy firm Siegel+Gale on Branding in the Middle East

Space and Evolution

If the Brand Google is on the cover of any magazine, Google owns the entire edition; Google is preferred, relevant and owns the space. Google is irrelevant in the social arena but more preferred in sharing information. What Google needs to do is capitalize on the space the Brand has created rather than extending the Google name in areas that are irrelevant like Google+ (Social Media) and others. ‘Create Your Space’ is about being the most relevant within your space so competitors face barriers when trying to enter that space

When the space matures, your Brand becomes the reference point for the space it created. Every Brand seems to focus on Communication over Values or Design over the science of Branding; however, it’s crucial to hold on to your Values as a Brand through enhancing customers or users experience rather than focusing on Advertising. If you ‘Create Your Space’ and provide genuine experience you’ll own the space, if you own the space you’ll lead the category, it might not be as easy as it sounds but look at the following example:

Is Five Guys taking over McDonald’s and Burger King? Not now but eventually. Reason being McDonald’s is fried, Burger King is broiled, Five Guys is grilled and fresh. McDonald’s long holding space is threatened; will fried burger eventually die? McDonald’s need to innovate within the space and not outside the space. Recently McDonald’s claimed that their produce is fresh from the farms and that failed to sit well with their audience. A fast food fried burger Brand is far from being fresh which is why McDonald’s leads the ‘Junk Food’ perception and owns the junk food space

Chipotle the fresh, conscious ingredients Mexican chain of restaurants is growing super-fast across the US and rarely do you see the old guard ‘Taco Bell’ around unless in rural areas or in most highway service centers. Did Taco Bell lose the space? There are so many keys in creating your space, but usually management who chase short-term returns to please the board are threat for Brands to lose their space and this is the case with most Fortune 500s

In order to own your space you must continuously innovate with in the space!

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Branding Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com

Create Your Space logo cropped

The article was first published on Linkedin Pulse on 3rd July, 2015 

Starbucks: What’s next?

Starbucks removed the name and the word coffee from its identity not only to recreate the new logo, but because they are about to expand the category or move into a new category. Such acts by corporate management indicate only the additional products that we will witness beside the coffee. The question is what would it be? TEA? Considering the Starbucks example, there is a difference between the case studies of: McDonald’s, Nike and Starbucks

  • Remember one thing that McDonald’s removed the name and added the tagline, “I’m lovin’ it” which drove from their new positioning. This made McDonald’s the Emotionally attributed Brand over the second runner up in the burger joint category which is Burger King (which is the Functional Brand)
  • In the case of Nike, by removing the name and adding there tagline “Go Free” as part of their new positioning, it drove the Brand into the world of limitlessness and become more Humanist. Nike’s tagline was another strong emotionally driven tagline while Adidas, the direct competitor, stayed on as the Functional Brand. If Nike kept “Just Do It” and removed the name Nike, it will only keep the Brand Functional and not Emotional (in direct competition with Adidas)

Starbucks is an Emotionally-driven Brand and without the tagline imposing on the visual logo, it will only stipulate that it’s superior to the consumers’ experience. The whole Starbucks franchise came to life to offer the Italian coffee experience. Again, we see the Emotional Brand over the Functional Brand, which is the essence of the coffee experience in America: Coffee and Cream.  This puts it in direct competition with:

  • McDonald’s coffee
  • the corporate office building’s coffee services
  • $3 coffee
  • coffee from the pot
  • Dunkin’ Donuts

The prevalent question would be: Is Starbucks planning to move out of the category, rather than stay in and focused?

I predict Starbucks is moving outside of the category or expanding the category, which to me builds up to the most unprecedented SHOCK OF THE CENTURY in Brand/Branding history. A Brand with such magnitude in perception is shifting to move its Brand shape and environment from the coffee culture and experience to ‘Coffee + Tea + Whatever’s in the cup’. The paradox is (which few of us know) that the Brand Positioning “Is third place from home”. If Starbucks added a tagline for their new positioning it would at least give a direction to the new Brand Positioning and experience, in which I agree IF it’s within the category and disagree IF Starbucks is moving outside the category

Starbucks’ major challenge for coffee has been and will be the Far East and South East Asia where the Brand faced resistance from the average Far Eastern consumer who is attached to the Tea culture whereas Globally, it faced resistance from the health conscious audience who are massively on the rise. This leads to a serious question:

Did Starbucks management decide to revisit its strategy and change its external Corporate strategy that led to this new Identity?

I don’t know if Starbucks can sustain itself by flooding the new identity into the minds of the current generation and by changing the longstanding perception of Starbucks as ‘Coffee and for Coffee’ in the past three decades. This extreme shuffle would unquestionably drive the Brand to lose its current Brand Essence and Nature. The Human nature is as strong as Brand nature and both are dictated by senses as to which we are associated with as well as to what our minds accept

In the cases mentioned above, Nike remains in the Sports products category and McDonald’s is in the Burger category. Both re-positioned their brands from being Functional to Emotional, while their competitors remained Functional. I truly believe the issue here, is much more than identity. It’s about the Brand changing its nature.  Starbucks is moving into a new category or expanding the current category while maintaining Coffee as a word in the minds of the audience. The name will always remain throughout the platforms of communication, but removing a name from an identity that is associated with coffee and the word coffee itself, can only instruct the extreme change we are about to witness from the brand that was once known to be the ‘Coffee Spiritual Leader’

Said Baaghil is the ‘Unconventional’ Branding and Marketing Adviser to reputable companies in the Middle East, author of many reputable books including the ‘The Power of Belonging’ and a Speaker. Baaghil appeared in books published by America’s experts on Branding and Marketing such as Dan Hill and Libby Gill. Most recently Baaghil was interviewed by world renown Branding Consultancy firm Siegel+Gale on Branding in the Middle East

He can be reached on AskBaaghil.com