Brands can prosper in recession, says Polman

29 October 2009

LONDON: Brands which are able to tap in to the changing needs and priorities of consumers will be able to improve their position despite the pressures of the financial crisis, Paul Polman, the chief executive of Unilever, has said.

Speaking in an interview with McKinsey, the management consultancy, Polman suggested "we definitely will see slower growth in many of our markets, and actually start to see that already."

Consumer behaviour has also been transformed in a number of ways, from the postponement of "big-ticket" purchases to cutting back on discretionary and premium items and dining out less often, he added.

In response, Unilever has launched products such as meals branded under the label of P.F. Chang, the restaurant chain, and Starbucks ice cream, which can be enjoyed by its customers at home.

To benefit from the current climate in such a fashion, Polman posited that it was vital to try and gain an insight into changing shopper preferences.

"Obviously, you have to peel the onion and get very close to the consumer. And you see many opportunities for anybody that understands change and can actually lead that change, can turn it into a competitive advantage," he said.

As part of this process, Unilever has attempted to increase its focus on execution rather than strategy, and also regularly conducts in-store and in-home research among its current and potential customers.

"I go to a lot of home visits or go around with shoppers, and I've seldom met a consumer who buys our wonderful Knorr products or Lipton or Omo or Skippy because they like our strategy," said Polman.

"And so, our business is a very simple one of getting the right products at the right place at the right quality at the right price, all the time ... we put the products on the shelf that are needed."

Moreover, while the recession may have encouraged some people to trade down in order to save money, Polman believes it could also offer some further benefits to brand owners.

"Interestingly, especially people that are most affected by this crisis – the people concerned about unemployment or their long-term wealth – actually tend to gravitate even more back to brands, simply because they cannot afford to take the risk to experiment with other things," he said.

Looking forward, the former Nestlé and Procter & Gamble executive predicted "the consumer will continuously look, even after today's crisis, for products that are more convenient, that are healthier – 'vitality', we call it."

With regard to communicating with its target audience, however, the changing media environment poses a range of challenges.

"It is definitely more difficult to reach consumers now and engage with consumers. And marketing has rapidly changed from what you might call 'the push model' to a model that you reach consumers when and where they are receptive," Polman stated.

In demonstration of this, over half of Unilever's marketing spend in support of Axe, its deodorant brand, is now directed towards digital, a medium that is developing rapidly.

"The digital space is evolving so fast," said Polman. "You know, what was YouTube yesterday is Twitter today is an unknown thing tomorrow."

One consequence of this trend in that the role of a brand manager has become more complex, with the capabilities required by occupants of such a position growing increasingly broad.

"It requires a brand manager that is in tune with society; that is agile, very close to new technologies; frankly, increasingly more global, and doing that with a broader perspective than just selling the brand from the brand benefits," Polman suggested.

Another key initiative for Unilever at present is empowering its brands with a "social mission", such as Lipton's partnership with the <

Data sourced from McKinsey; additional content by Warc staff