Brand imagery is powerful. A strong brand can command premium prices. Even consumers who are not that well off may pay the premium for products with a superior brand image. For example, people pay good money for Starbucks rather than drink less costly products.

Thus, developing a strong brand image can be a powerful business strategy. Many well-known, popular brands have used this approach to help drive their success. Why? Because it generally works and can lead to tremendous success.

Until it doesn’t.

There are specific circumstances when brand imagery is no longer as powerful as it once was. This happens during tough economic times when people may have a very positive impression of a premium brand, but due to dire economic circumstances, they cannot come up with the extra money required to buy it. This is the case even though they love the product and would find a way to pay a premium for it if their economic situation was less dire.

This happened during the 2007-2008 downturn, a time when major consumer goods companies like Procter and Gamble, for example, suffered weaker sales as consumers traded down away from premium brands. A similar situation is unfolding today, with a tough economy where many consumers are having difficulty affording what they need at the current inflation ravaged prices. Consequently, these people lack the funds to buy those premium products.

This is pointed out in the July 25, 2022 Wall Street Journal article “Store Brands Gain, Pressing Food Giants” by Annie Gasparro. It said, “The shift, which began in March with the onset of rising gas prices, marks a reversal from the past two years, when big food companies like Kraft Heinz Co and General Mills captured more of consumer dollars as private label manufacturers struggled with supply chain problems.”

Some brands can weather today’s tough economy more easily than others. For example, the July 27, 2022 Wall Street Journal ran an article titled “Coca-Cola, McDonald’s Will Be Last to Feel Pain”. The article explained that “Americans aren’t yet cutting back on life’s simpler pleasures.”

The July 27, 2022 Wall Street Journal article “Coke Boosts Outlook on Strong Revenue” by Connor Hart said, “Consumers are still filling up on soda even if they have to pay more.” According to the article, “Coke isn’t seeing much evidence of shoppers switching to lower priced products, but the company is spending more on marketing better value items.”

McDonald’s situation seems similar to Coke’s. The July 27, 2022 Wall Street Journal article “Increased Menu Prices Lift McDonald’s Sales in U.S.” by Heather Haddon reported that McDonald’s “is looking at whether it needs to offer more value options on its menus.” However, the article explained, “Sales of all types of meals, particularly breakfast, were higher” at McDonald’s. The article said, “Lower income customers are choosing more value offerings and fewer combo offerings, while the company is gaining some consumers who are shifting away from sit down and fast casual restaurants.”

From all of this we learn that, yes, brand imagery can be a powerful draw. Consumers want to be able to pay more for favorable brands. And, when they can afford to do so, many will. But when times get really tough, and many consumers struggle to make ends meet, something has to give. When that happens, many consumers will no longer be able to pay the premium for well-known brands. So unless those brands have value offerings, or unless they are fortunate enough to be a trade down option for some market segments, like McDonald’s is, demand will fall since many consumers cannot pay the premium. As powerful as brand imagery can be, it can easily not be enough to continue attracting financially strapped consumers. That happened in the 2008 economic downturn and can happen again in today’s tough economy. That’s why even the least vulnerable brands are evaluating what they might do to weather the current downturn.

Thus, it is important to remember that brand imagery is a valuable business tool. But, brand imagery is not enough to overcome all consumer resistance to buying that emerges during dire economic times when people have no money.