‘How brands can survive COVID-19’
Nigeria maybe in for another round of recession, as the coronavirus pandemic continues to lock down the world’s economy. Factories are currently closed and oil price has dropped to a 30-year low, hovering around $20 per barrel. Worse hit are service brands and the informal sector that have experienced total shutdowns since the efforts by the Federal Government to contain the spread of coronavirus gathered momentum two weeks ago.
Not long ago Nigeria exited from a three-year economic recession. Although there were recorded slowdowns in economic aggregate value that also affected the value of the naira, the productive sector wasn’t this adversely affected.
As businesses remain closed and the number of infected people grows by the day in Nigeria, indications are that the economy will struggle for a few more quarters before returning to pre-recession growth momentum of five to six per cent yearly.
A recent COVID-19 barometer research conducted by Kantar provides brand owners with clear direction on how to ensure their brands stay connected to their customers during this pandemic.
The researchers had a sample of over 25,000 people across more than 30 countries, conducting about 502 of their interviews in Nigeria, via online and telephone.
The outcome of the research shows that 72 per cent of people are concerned about the negative impact of COVID-19 while 66 per cent are disturbed about the financial implications of the pandemic in the long run.
The study states that though the use of social media is on the rise, national and international media channels are the most trusted information sources, as only 33 per cent trust social media while on the average, 68 per cent trust the established and traditional news sources.
Nigerians, the research also discovered, believe that brands should do more in the area of social responsibility for the consumers and the community at large. Eighty-five per cent of those surveyed agree that brands should reassure the consumers and provide hope; 85 per cent said brands should not shut out any form of communication but at least continue to inform the people while 86 per cent believe brands should be seen to be lending helping hands to the people in this difficult period. A whopping 98 percent agreed that brands should not because of the situation of things exploit consumers while 78 per cent think brands should, in addition, provide reliable information that consumers can use in protecting themselves in the uncertain times.
The outcome of this research appears to resonate with Nigerians, if the views of those who spoke to The Guardian is anything to go by. Brand analyst, Ikem Okuhu said the entire marketing landscape had dropped to the lowest level, as brands have cut back on budgets with all planned new campaigns discontinued.
According to him, “Awareness on products and values has shriveled. On the consumer side, purchasing power has dropped to its lowest because production has been shut in and all economic activities locked. People who have money to spend, and very few people can be said to be in this category, now do so on commodities, especially the basics. No one spends on lifestyle brands because they are not even available. You have to be outdoors to enjoy most lifestyle brands.
“Coronavirus has created situations where people are locked in their homes. This means they cannot patronise brands, especially lifestyle brands, which are mainly enjoyed outdoors. In the media, brands have slowed their relationship-building activities. Billions of naira is lost every day across all the spectra of the products and services value chain. There will be loss of jobs. It’s a massive loss that will take the world a very long time to recover from and even when the recovery begins to happen, the adverse effect on industries like travel and tours will likely linger for much longer. Can you imagine anyone thinking of vacationing in Spain, Italy or on any of these cruise ships after this whole thing has come and gone? The only industry I think could hit it big after the whole pandemic has come and gone is the insurance industry, that is if they know how to take advantage. This might be so because people may take wagering and mitigating against eventualities a lot more seriously and that is the whole business of insurance in a nutshell.”
Managing Director, Integrated Indigo, Bolaji Abimbola, said though the worst hit so far is the aviation and the hospitality sectors, there will be global negative impact on brands and economies.
He pointed out, “The impact on FMCG is relative because e-Commerce has made it possible for consumers to be able to sit in the comfort of their homes and shop for goods. However, because of the lock down, some companies would lose a lot of money for shutting down factories and not producing. Meanwhile, it would be difficult to measure how much they are losing daily but they would definitely lose significantly in revenue and this would impact the forecast and projections for the 2020 financial year.
Abimbola advised, “to sustain top of mind, brands must remain visible to the consumers through the unconventional channels especially digital/social media. As for cash flow, organizations must innovate and find a way to remain relevant and remain in business by embracing e-commerce.”
Also, Lolu Akinwunmi, Chairman, Prima Garnet Group, speaking on the financial implication of the COVID-19 pandemic, said it would be too early to say exactly how much brands are losing daily.
Akinwunmi who was the former Chairman of Association of Advertising Agencies of Nigeria (AAAN) said, “I am sure even the brand owners are still counting the costs. Don’t forget that a lot of stuff will be with distributors that already left the factories. The cumulative cost may not be available for the next month or two.”
He, however, said a lot would happen after coronavirus. “Please note that many companies will shut down. Many will lay off staff. Why? Sales have been very poor. I see many engaging customers through sales promos to try and re-create awareness and refresh demand. Also note that disposable income will be low and so it will be tough for many brands.”
For Lampe Omoleye, brand owners, based on what they are selling now and what they were selling before the pandemic and lockdown, could only determine the financial implication.
According to him, “For some, such as those in alcohol or carbonated soft drinks that thrive with parties and entertainment, sales are very likely to have reduced. But for those playing in health and pharmaceutical and indoor activities, sales would increase.”
For brand’s sustainability, Omoleye said they must find creative ways to engage with their target customers online through various platforms, and develop e-commerce capabilities, which would include online order and delivery logistics.
Odion Aleobua of Modion Communications said the impact of COVID19 Pandemic on brands would be ‘dire’ especially because the pandemic came as a “surprise environmental factor that was not factored into the sales performance projections at the start of the year.”
Said he: “The closure of businesses and almost entire shutdown of the economy in compliance of the social distancing recommendations, will hit the bottomline without a doubt. The loss to businesses can’t be accurately gauged right now, but with 50% crash of crude oil prices, government and Nigerians may just be staring at another recession in the face. The projections don’t look very pretty right now.”
He said the instinctive reaction to this kind of economic headwinds would be to take a flight to safety by cutting back marketing budgets. Odion added, “but with consumers thinking twice about expenditures, it’s the brands that are constantly on the face and have a good portion of their mindshare that would enjoy patronage. Brands just have to double-down on their market penetration strategies by being creative and compelling in their messaging and positioning.”