Brand Building In The Face Of Fear

Martin LindstromMay 14, 20096 min

What do guns, burglar alarms and condoms have in common? Their sales all boomed in 2009, with condom sales jumping 22 per cent over the same period in 2008. But why?

The answer can perhaps be found in Nigeria and Chile – two countries I visited on my world tour promoting my branding book Buyology. Surprisingly neither of the two countries was familiar with the “R” word. When asking government officials why that was the case, the explanation was simple – the media hadn’t paid that much attention to it, and as such no one had effectively read about the Recession, so the Recession simply had not yet arrived.

Is this whole thing just a well-orchestrated media story whipping up that dreaded component – fear?  When you are told repeatedly that the world is buckling under the weight of a financial crisis, the first line of defense is to save whatever money you have. That sets a whole new train in motion. Suddenly your local retailer around the corner loses revenue from your less-frequent visits. They are forced to lay off staff, who in turn are spending less, and in fact are no longer buying your products.  It becomes a cycle somewhat akin to a self-fulfilling prophecy.  We’re told it’s a crisis. We stop spending. They stop spending. Everyone from producer to retailer suffers.  And the economic meltdown keeps on melting.

As sophisticated as we have come to believe we are, at this point in time, we need to  remind ourselves that we’re not that far from our evolutionary relatives – primates who live their lives taking care of most basic needs – food, sex, sleep and survival.

In an atmosphere of fear, we tend to revert back to our own basic needs, and this can explain why we’re stocking up on condoms, buying weapons and installing burglar alarms.

A recent neuroscience study shows that fear is a far bigger driver than we would ever care to admit.

Fear of losing our job, fear of not being able to make the kid’s school payments, fear of ending up in the proverbial gutter. These thoughts are scary enough to bring on an  instant anxiety attack. When we’re operating in survival mode, fear and sex become our two main drivers.

When President Johnson ran his ‘Daisy’ TV commercial, which threatened voters with nuclear annihilation if he wasn’t elected, the voters hated it. George W. Bush tapped into a similar zeitgeist in 2004.  His commercial, showing wolves crossing the border as stealthily as terrorists, he instilled the self-same dread and fear.  Both TV commercials acted on the amygdale, the region in our brain responsible for generating fear. Voters spoke of their dislike for both commercials, yet what brain scans showed was that as a consequence of these ads, voters favored the politicians that would best ‘protect’ them.

From the very first days of the US recession, all three big car manufacturers announced unheard-of discounts to shift their stock. They continue to offer their cars at cost, and despite this, nobody’s buying.  The problem is not the cars, but the proposition which has failed to take the fear factor into account.  People who fear for their jobs, are hesitant about spending money on a big-ticket purchase. The Korean car manufacturer Hyundai took this cautious mood into account and began and offering very real assurances. They say, “Buy any new Hyundai, and if in the next year you lose your income, we’ll let you return it.” In just a month Hyundai increased its sales by more than 20 percent in the US alone.  You may wonder if the company’s sitting with a lot of returned stock.  Well, as this gets posted, supposedly only two cars have been returned.

You cannot build brands in a recession unless you are able to manage fear. It’s essential that you understand how fear works, and consequently how it affects purchasing behavior. Fear is often as irrational as everything else in our lives. When a plane crashes, the airline industry allows for 10 percent less traffic in the weeks that follow. Yet you don’t have to be a statistical genius to know that the chances of a second plane crashing shortly after, are substantially lower than before.  Irrational propositions become more powerful than ridiculously high discounts.

Over the past months, a flurry of new banks have opened their doors for business on Main Street, USA. They have no track record, no established history and no known personnel.  Their proposition is straightforward – We’re new. We have no links to Wall Street. We’re here to serve you. Consumers are finding this immensely attractive.  Yet, I’m sure we’d agree that a similar proposition a couple of years ago would not have stood a chance.

So what can we learn from neuroscience to help us cater for a market reeling in the depths of a financial recession? How can we continue to build brands? I offer three ways to do this.

First, there’s always good news in bad times. A standard approach in this situation is to address consumers’ problems. And people always have problems. The fact is we rarely know what we want, but we have no trouble pointing out our difficulties. For example, no one knew they wanted an airbag, but everyone agreed they wanted safer cars.

It’s therefore important to ask yourself what sort of problems are consumers facing during this economic recession? There are many. People have had to cut back on travel and if they can afford to still take a holiday, well, it’s much cheaper to keep it local. Which might explain why those French perfumes are still selling – they offer a whiff of Paris. And if you can no longer afford expensive dining, you can always supplement your home-cooked meal with an after-dinner Lindt chocolate. We’re increasingly reluctant to invest in the share market, but we’re happy to put our money in gold.

Convert problems into assets for your brand.

Second, add a practical dimension to an irrational decision. No matter how much money you may have in the bank, or how secure your employment may be, it’s now fashionable to save your money and buy everything at a discount. What can a brand owner do?  Particularly in light of the fact that a discounted brand typically takes seven years to recover!

The answer is simple. Add a practical dimension to the equation. One only needs to look at a hardwearing boot like Willeys to see that this manufacturer of sturdy reliable footwear is clocking up big sales. A well-designed jacket, that just happens to be reversible, could tip the balance in favor of the consumer who perceives they’re getting two coats for the price of one. The fact may be that the consumer is buying the jacket because they love the design – yet in recession times, the practical dimension is the deal maker.

Third, you have to systematically remove fear. Hyundai did it. And a stream of new banks are doing it. Both have succeeded in identifying why consumers are reluctant to spend. Once this is understood, then you can harness it and build a better product by addressing the fear and finding a way to eliminate it.
You sales may be down. But do you know why?  People are certainly buying less, and explanations like, Well, there’s a recession going on out there, is not helpful. What’s important is to understand the fundamental role of fear, and then turn it around to strengthen your brand. Some of the world’s most enduring grocery brands were built on the back of the Great Depression, Each one turned the threat into an opportunity.

There’s no reason why you shouldn’t be able to do the same.

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Martin Lindstrom


  • Randall Beard

    May 14, 2009 at 3:34 pm

    Excellent post. Another way to eliminate fear is to create simplicity and transparency. Said differently, people cannot have confidence and trust if they don’t understand something. This is particularly true in financial services, where people are fearful because there is insufficient openness and transparency. About what? Whatever their concerns are. Research can help pinpoint their biggest fears, and then communicating openly and transparently about these issues can help eliminate, or at least reduce, them.

    Randall Beard

  • AliSwi

    May 15, 2009 at 10:31 am

    Great post and Randall’s comment is right on. It’s necessary to be very upfront with policies and show that you stand behind your product or service 100%. Honesty and a satisfaction guarantee can certainly assuage consumer concerns. I think Hyundai has made a great move with their return policy. They’re building an image based on trust and genuine concern for the consumer. I would imagine we’ll see an even greater surge in sales after the recession due to the messages they’re sending now.

  • bharat

    May 15, 2009 at 12:37 pm

    Fantastic rational post. The key word here is ‘irrational’. We all like to believe there is crisis of magnitude which then subconsciously drives us to think safety/insulation. Guess it will change the moment a few influential opinion makers start singing ‘recovery’, and then people will feel positive, secure, and the cycle will start all over again.

  • Eric Tsai

    May 15, 2009 at 2:50 pm

    Good stuff as always and I would add that at times like this consumers are focusing on their needs not wants. It’s similar to the Maslow’s hierarchy of needs approach, which reverses back to the basic needs. The shift in behavior is from the change in psychology, in this case – fear.

    I actually see opportunities for new brands to emerge and a shuffle in ranking.

    An example would be how the insurance companies are spending heavily in advertising now than ever. Insurance creates a layer of assurance when people felt betrayed and lied to by the bank and the government. From Geico to Progressive, they are solving consumer problems by giving them a practical solution to remove fear with the perception of protection.

    Eric Tsai

  • Andre Golard

    May 16, 2009 at 12:19 am

    This post gives a wonderful, positive and practical way to look at the current crisis.

    As a scientist interested in thinking errors, I need to point out that *some* fear is useful. Uncontrolled fear is detrimental. A few years ago, Andrew Lo at MIT wired traders to measure their emotional state (blood pressure, heart rate, sweating). The trades made that day were later evaluated, and matched with the emotional state at the time of the trade. Trades tended to be good when emotions were up. They were bad when emotions got out of control, or were absent. In complex situations, our rational mind can lead us astray.

    A minor point: the probability of a plane crashing is exactly the same after one crashes, unless the two collided. If two events are independent, one happening does not change the probability of another one happening.

  • atul chatterjee

    May 18, 2009 at 5:53 am

    Agreed fear is a factor. But the subprime crisis began in 2005 not in 2008 and it was simply being covered up.
    As far as Nigeria is concerned I think it still derives a lot of money from oil, and those economies have done reasonably well, and nosedived only in 2009.
    As far as Chile is concerned I don’t know the reasons but economies which are primarily agrarian will be less affected.
    The recession can’t be chased away as a scare.

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