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?