Posted on October 09, 2010 | By lindstrom

Contagious: Branding Fear: by Martin Lindstrom

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 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 defence 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 favoured 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 goes to print, 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 behaviour. 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 favour 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.

MARTIN LINDSTROM is a 2009 recipient of TIME Magazine’s “World’s 100 Most Influential People” and author of Buyology—Truth and Lies About Why We Buy (Doubleday, New York), a New York Times and Wall Street Journal best–seller. A prolific traveler, Lindstrom is on the road 300 days annually dispensing his brand of wisdom to top executives of McDonald’s Corporation, Procter & Gamble, Nestlé, PepsiCo, Microsoft Corporation, The Walt Disney Company and GlaxoSmithKline, amongst others. His personal global audience is estimated at over a million people. Lindstrom has and continues to feature in the Wall Street Journal, Newsweek, TIME, The Economist, New York Times, BusinessWeek, The Washington Post, USA Today, Fast Company, and numerous other publications. His recent book, BRAND Sense, was acclaimed by the Wall Street Journal as “…one of the five best marketing books ever published.” Lindstrom’s latest book, Buyology, has been translated into more than 30 languages. More at martinlindstrom.com.

Posted in: Archive

Share This Article