Custodians of brands and products would have to rethink what they spend on distribution and manufacturing during this period of economic recession. Certainly, this will affect agencies, wholesalers and retailers that are involved in the process of getting the brands perform profitably in the market place. MARKETINGSPACE.COM.NG had a chat with Mr. Otis Ojeikhoa, Managing Director, Brands Optimal Limited, one of the experiential marketing strategists involved in the process of engaging the consumers. Excerpts…
At this period of recession, for brands and products to survive, what are the effective strategies to be deployed by brand owners and custodians in order to ensure maximum performance in the market?
Brand owners, brand custodians or manufacturers as you may choose to call them are among the first set of people that get hit by economic crisis. Any unfavorable fiscal occurrence will have negative impact on many facets of the national economy. The impact of the current economic situation is being compounded by the continuing depreciation of the Naira in the global market. The consequence of this is increasing cost of production which is resulting from the increasing cost of the importation of raw materials that most of the manufacturers depend on. With an increasing cost of production and a high inflation rate, the consumer is squeezed for every purchasing decision. If consumers stop or reduce purchase, brands run into inventory crisis and loss of revenue. So, it is about looking for how to strike an equilibrium in such a way that brands are able to maintain some stability in pricing to ensure that the consumers are not overtly exposed to excessive price escalation.
What inflation does is that the value of currency depreciates and that is actually what we are facing from the consumers perspectives. What the Naira could buy some months ago is no longer able to buy it today because of that same difficulty in maintaining some equilibrium value versus price. I think brands need to be more prudent and cautious in their pricing strategy to ensure that the elements that do not need to be unnecessarily factored in, are removed. Cost management is the key at this period, you have to manage your cost and again you don’t over destabilize consumer support base.
Another strategy that I think will be for brands to look alternatives in sourcing. If there are viable local alternatives for raw materials, that will reduce the impact of the rising cost of forex and shield them from escalating exit pricing.
Also, brands need to continue to engage the consumer to instigate spending. The propensity for a consumer to buy or spend is increased with engagement. So, a reduction in brand-consumer engagement will lead to a reduced consumer spending. If consumers cut back on spending, this will both reduce tax revenues and cause demand to slip which will either create a recession or worsen an existing one. Brands should not stop spending when it comes to consumer engagement. Brands have to encourage consumer to spend more, if consumer stops spending, there will be more crisis. These are the things I think brands or manufacturers should do to deal with the current recession.
To summarise, they must have ability to look at their costing or pricing strategy to do it in such a way that there is some stability where possible, to look at alternatives in their operations in terms of sourcing for raw materials locally and finding new ways of doing things to guide against waste and reduce cost. And of course they cannot stop engaging the consumer because if you stop engaging the consumer that means he or she may stop buying their products.
What do you think an average experiential agency should do to be engaged at this period of recession?
For agencies to be engaged and stay relevant at this time, they must be able to help their clients find profitable and meaningful places in the market. Agencies should be able to understand where their clients are having difficulties and help to provide solutions that bridge such gaps.
Agencies should look at their clients’ value chain and identify where they can play additional role in helping to manage cost and sustaining consumer base. They should look at new ways of reaching out to the market. If there is a need for consumers to understand the value that the brand provides, it is the duty of the agency to help do so cost effectively. So, helping brands to find profitable spaces is definitely what agencies should do more and more of, whether there is recession or not.
Kindly share with us some of the strategies you have put in place to surmount the economic challenges?
Every business at this time more than anytime else, must check waste and boost profitability. Our strategy is the “hour glass” principle of profit management; increasing turn-over, tightened expense, reduced waste and broadening the bottom line. There are really no “sugar” choices at times like this.
What are the things that make Brands Optimal different from other experiential marketing agencies?
Our USP is to do more than we say because not everybody can copy that. If we promise to do you A, we do A plus. If you have an expectation and we exceed the expectation you don’t have a choice than to come back to us. What we have is a team that understands that there is a need to secure the next job. A team that understands the fact that the market is becoming extremely competitive and there is always a need to deliver and exceed on expectations. We have a team that see every new day as an opportunity to do something new, bigger and more valuable to both ends. This is fueled by our spirit. An unrelenting spirit to deliver great results at all times.
