10 Bulletproof Brands in a Bad Economy

BOSTON (MainStreet) -- No matter how bad the economy was, is or will be, there are many companies that are likely to treat troubles as no more than a speed bump.

Simply put: No matter how bad the European debt crisis gets, many will still be munching on Big Macs and washing them down with a glass of Coke while checking email on an iPhone.

Barbara Sullivan, founder and managing partner of Sullivan NYC, a brand engagement firm that has worked with big name brands such as American Express ( AXP), Bank of America ( BAC) Charles Schwab ( SCHW) and Chase ( JPM), doesn't like to use the term "recession-proof" when addressing the durability of a brand.

"That's an unrealistic expectation, because nothing is really recession-proof," she says. "I think volume will go down across pretty much any brand because people are not spending as much money. I think the goal for companies is to keep their customers loyal -- to keep their relationship -- and not to worry as much about their sales volume."

"The biggest risk is for marketers to compromise their long-term brand equity by making knee-jerk changes or reactions to an economy," she adds. "There are other things you can do to tweak the marketing, but I think making wholesale changes and compromising brand equity just to boost short-term sales would be a very costly proposition over the long term."

Reinforcing long-term "value" and "trust" are more important than seat-of-your-pants strategies, she says.

Among the ill-advised moves Sullivan sees happening on a frequent basis are "drastic" price cuts "where they will just try to sell at any cost." Doing so, she says, focuses consumers squarely on price point rather than brand attributes.

"Price is not a very sustainable advantage and it doesn't really build brand equity if it is not part of the brand's core offering," she says.

As an added problem, once buyers get accustomed to the lower cost, it is hard to ever readjust them back to a higher price point.

Cost adjustments aren't just limited to the sticker price. Some brands will maintain their suggested retail price but cut back on quantity or extras. A cereal maker, for example, might charge the same for a box that contains fewer servings. An automaker may eliminate features.

Nevertheless, the lower-price brands in any category -- if they have traditionally been considered as such -- will be in a better position amid tough economic times.

"They do better in recessions, even if it seems to be a discretionary product, because it is easy for people to feel rewarded without spending a lot of absolute dollars," Sullivan says. "During the Great Depression, lipstick sales went through the roof because it was the one luxury women felt they could still afford to buy. There are other examples of low-priced items that might seem discretionary -- like Starbucks ( SBUX) or McDonald's ( MCD) -- where the actual cash outlay isn't that great."

The following are 10 companies that have managed to deal effectively with the economic slowdown -- and decrease in consumer spending -- by building a bulletproof brand.

BrandZ, which bills itself as the world's largest brand equity database, annually crunches data collected from more than 650,000 consumers and professionals in 31 countries. Its annual comparison of 23,000 brands developed with MillwardBrown -- an agency specializing in advertising, marketing and brand equity research -- put Apple atop its 2011 list.

Unique with the list is that it focuses on brand names -- which can be a single product or product line -- rather than companies as a whole (although some companies keep all their offerings under a specific umbrella).

Apple ( AAPL), according to its research, was the world's most valuable brand, increasing its "brand value" by 84%, to $153 billion. For 2011, it replaced Google ( GOOG), which held the top spot for four years and was well ahead of Facebook, despite that company's 246% "surge in brand value."

BrandZ credits successful iterations of Apple's product line -- the iPhone and iPad -- and "anticipation of a broadened strategy making the brand a trifecta of cloud computing, software and innovative, well-designed devices."

Stressing the importance of perceived value, Sullivan points out that Apple has "clung to its pricing model" in good times and bad.

Although some products occasionally drop in price slightly -- such as the latest, entry-level iTouch -- Apple chooses to keep a level pricing strategy even as its technology evolves.

"They also have built in obsolescence," Sullivan says. "That's another big one of their marketing strategies. By building in obsolescence and continuing to innovate, they are giving people reasons to continue to buy their products."

Coca-Cola ( KO) has remained a leading worldwide brand because its inexpensive product has become a habit for consumers and benefited from its consistency of product and name recognition.

According to BrandZ, Coca-Cola is the sixth-most valuable brand, with a value of nearly $74 billion, an 8% increase over last year.

Separating its product line, traditional Coke was tops among soft drink brands, followed by Diet Coke, which surpassed Pepsi to take the No. 2 spot.

"The shift reflected an ongoing move to diet in the face of health and obesity concerns," BrandZ says. "It happened in a year when the ongoing slide in soda sales slowed, perhaps because consumers needed a pleasurable break from the barrage of headlines about unemployment and the need for sacrifice."

Coca-Cola, according to the report, was aggressive with traditional advertising and, with Pepsi, "relied on innovative social media that asserted the strength of their brands and the emotional bond with customers."

One thing the economy can't take away is the need to eat. As consumers look for convenience and value when dining outside their home, McDonald's has held onto their business even as dollars moved away from more conventional restaurants.

In its survey, BrandZ found that McDonald's scored high in categories gauging "desire" and "value."

In fourth place among all companies analyzed, McDonald's had a brand value of $81 billion and saw a 23% increase over the previous year's metrics.

BrandZ credits breakfast offerings as helping McDonald's -- as well as Starbucks (which had a 40% jump in brand value), Burger King and Subway -- meet consumer demand and increase brand value. In sync with breakfast menus, increased coffee sales added a jolt to revenues.

For McDonald's, its $1.99 oatmeal, available all day, was perhaps an overlooked way that the chain "drove traffic, projected value and reinforced its efforts to offer healthier offerings." (Actually, it turns out McDonald's can even make oatmeal not so healthy.)

In BrandZ's 14th spot and rising, Amazon ( AMZN) has continued to benefit from a perception of value and convenience.

"Illustrating how dramatically shopping has changed, Amazon, the online company with no stores, surpassed Wal-Mart ( WMT) as the most valuable retail brand," BrandZ says. "The company continued to add categories last year, even food, to drive traffic."

Traditional bricks-and-mortar retailers have also weathered the economic storm by cultivating a perception of balancing price point and value, according to Sullivan.

For example, Ikea (which saw its brand value increase 28%) has persevered in the furniture space.

"This focus on value isn't just limited to the lower price points," she says. "I think another example of a company that has done a tremendous job of focusing on value is Target ( TGT). They help consumers justify their purchase. It offers whimsical products, but it is perceived to offer great value -- you can get that great design at a much lower price than you would get somewhere else."

Spending on "luxury" brands did suffer during the recession, but not as badly as it might have.

BrandZ notes that in 2011 Burberry boosted its brand value by 86% and there was a measurable brand appreciation for Cartier, Estee Lauder and Hermes. Upscale brand names such as Nordstrom ( JWN), Louis Vuitton (ranked highest among luxury brands by BrandZ), Bulgari, Gucci, Chanel, Rolex and Fendi were also noted for their prestige and loyal customers.

"I think Tiffany ( TIF) is another good example," Sullivan says. "The blue box is worth something. And, even though they may have high prices, they are perceived to offer value because people get what they are paying for."

"For companies that have multiple price points like Tiffany," she adds. "They have some jewelry that is a million dollars or more. They also have other items that are relatively inexpensive -- silver jewelry or on the small side of diamond engagement rings -- but you are still getting a Tiffany ring."

Even "high-end luxury price points can make their value proposition," Sullivan says.

"I think the best example is the watch company Patek Philippe," she says. "That's like a $10,000 price point. But their campaign that has been going on for a long time, very successfully, is you never really own a Patek Philippe watch, you merely look after it for the next generation. It connotes this idea of being a rational, good economic decision. I think every company should really be thinking about 'Are they offering consumers a good value?'"

Southwest Airlines
Sullivan singles out Southwest Airlines ( LUV) as being better positioned than some of its rivals in a sluggish economy.

"If you look t the airline category, Southwest has an advantage during a recession because it is perceived to be lower-priced and better value," she says. "Some people would argue that it has better service."

Southwest cultivates trust by not overpromising, something successful companies across all industries and price points have needed to do post-recession, she says.

In a survey of 1,400 high net worth people about their attitudes around the recession, Sullivan says she found "that it is really important that marketers acknowledge the situation and be authentic and study language that resonates with people versus language that is not believable."

"Words like 'ensured' and 'results' and 'savings' are really good; saying things like 'dreams come true' are really bad because they weren't believable," she says. "Customers love words like 'experience,' 'certified' and 'customized" because it made them feel like they were making a good, rational decision."

It is cynical (and not always accurate) to ascribe a boost in alcohol sales to a down economy. Nevertheless, America loves beer and Budweiser ( BUD) has done an admirable job building its brand during, and since, the recession.

In BrandZ's 2011 ranking, Budweiser reclaimed the top spot among beers, beating out its own sister brand Bud Light.

Brand Z says that "because of distribution challenges, only Budweiser and a few other beer brands, such as Stella Artois, enjoyed global recognition.

Also helping Bud's case is its taking over an NFL sponsorship from Coors ( TAP).

The key to a beer brand's success -- whether it's Bud, Miller Light, Guinness or Heineken -- is relatively straightforward, according to BrandZ: "When people bought less, they spent on what they liked."

A financial adviser recently noted that the one bill Americans once prioritized above all others was their rent or mortgage, but today he sees that "important" bill being their cellphone and smartphone charges.

One might debate whether that's hyperbole, but the addiction to communication has kept AT&T ( T) atop the world's most valuable brands. It was No. 7 in BrandZ's rankings, with a brand value of nearly $70 billion.

Although the company's rapid growth in recent years went flat post-recession, it was well positioned to recover quickly with enviable cash reserves and loyal investors kept happy with a high dividend.

Again: People need to eat.

Just as that truism bolstered McDonald's dominance in the fast food industry, it has also been a simple explanation for the recession-beating prowess of Kraft ( KFT). Yes, people need to eat, and they also need to do so cheaply when possible.

When the going gets tough, the tough eat more Mac & Cheese.

When you add in the many brands under the Kraft umbrella it's easy to see its unyielding dominance at your dinner table -- Maxwell House, Philadelphia Cream Cheese, Oscar Meyer, Cadbury and Nabisco among them.

Toyota ( TM) has faced numerous challenges in recent years, starting with a decrease in car buying as potential consumers stuck with their old vehicles to save money. The automaker also suffered through bad publicity brought on by claims of uncontrollable acceleration problems in its Prius hybrid.

Nevertheless, BrandZ ranked Toyota as the top brand among its competitors. It "rebounded 11% in brand value, demonstrating the resilience of strong brands."

Even the recall of 8 million cars, it seems, was not enough to dissuade buyers from their association of "value" with the brand, leading Toyota to beat out BMW, Mercedes and Honda ( HMC).

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

>To follow the writer on Twitter, go to http://twitter.com/josephmont.

>To submit a news tip, send an email to: tips@thestreet.com.


Follow TheStreet on Twitter and become a fan on Facebook.

More from Personal Finance

What Is Shane Smith's Net Worth?

What Is Shane Smith's Net Worth?

What Is Cristiano Ronaldo's Net Worth?

What Is Cristiano Ronaldo's Net Worth?

3 Apps Than Make Retirement Planning Fun for Millennials

3 Apps Than Make Retirement Planning Fun for Millennials

What the Fed Rate Hike Means For You

What the Fed Rate Hike Means For You

What Is Drew Brees' Net Worth?

What Is Drew Brees' Net Worth?