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April 6, 2010
Removing Fear to Build Your Brand
 

What do weapons, burglar alarms, and condoms have in common? Their sales all boomed in 2009 with condom sales up 22 percent since 2008. Why?

The answer can perhaps be found in Nigeria and Chile -- two countries I visited on my globetrotting tour promoting "Buyology." Surprisingly, neither country has detected the "R" word. When asking government officials why that was the case, the explanation was simple: The media simply hadn’t picked it up yet. As no-one had read about it, the recession, therefore, never arrived.

Is this whole thing just a well-orchestrated media story, containing one essential ingredient, fear?

When you’re told that the world soon will go under due to a gigantic financial crises, what is the first thing you do? Save money. Suddenly the local retailer around the corner will lose revenue from your less frequent visits and fire staff -- the same staff who now will spend less -- and buy less in your company. You’ve just witnessed the cycles of a self-fulfilling prophecy.

As sophisticated as we seem to be, we still should remind ourselves that our ancient brothers were monkeys with basic needs: sex, food, survival, and sleep. Even though we may convince ourselves that our lives are much more sophisticated than that, exactly those parameters seem surprisingly dominant when push comes to shove and the recession starts dominating the world situation, explaining why condom, weapon, and burglar alarm sales have increased.

A recent neuroscience study shows that fear drives us more than we ever would admit. Hate it or love it. The fear of losing my job, fear of losing out on my school-fee payments for my kids, or fear of ending up in the gutter. Thoughts so scary for anyone to think about that we clock into panic mode.

Remember fear and sex are two of our main drivers, and thus factors, which at the end of the day, take control once we’re in survival mode. When President Johnson ran his Daisy TV commercial up to his election, a commercial that used an A-bomb to illustrate what would happen if he wasn’t elected, the voters hated it. When junior Bush did the same in 2004 -- showing wolves entering the boarder as a metaphor to illustrate how terrorism would take over the entire country -- people hated it. However, both TV commercials had profound effects on our amygdale, a region in our brain responsible for generating fear. Yes, the voters hated both commercials when asked, yet the scan surprisingly indicated that voters still would cast a vote in favor of these politicians. They simply couldn’t resist.

Since the very beginning of the U.S. recession, the Big Three automakers have offered steep discounts in order to get rid of their cars. A majority of their cars are sold at cost, yet still no one wants to buy their cars. The fundamental problem isn’t that the cars are useless; the problem is the proposition, which has forgotten to take fear into account. Of course, no one wants to buy a car if they’re afraid of being fired tomorrow. Hyundai realized this and began to offer cars attached with an assurance: "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 with more than 20 percent in the U.S. alone. The returned cars? Well, so far supposedly only two cars have been returned.

Building brands in recessions is all about fear management -- to fundamentally understand how fear works, why we react as we do, and what the consequences of this are in our purchase behavior. Fear often is as irrational as everything else in our lives. When a plane drops from the sky, the airline industry knows that people fly up to 10 percent less weeks after. You don’t have to be a statistical genius to know the chances of a second plane crashing days after are substantial lower than before. All this means is that irrational propositions often are substantially more powerful than a steep discount.

Over the past months, a flurry of new banks have hit the ground in the U.S. -- banks with no track record, clear history, and unknown personnel. Their proposition is simple (We’re new, with no Wall Street links or links to the past), and consumers love it. Can you imagine such proposition just two years ago?

What does neuroscience tell us in order to cater for the consequences of a financial recession and build surviving brands? Here are three points.

There’s always good news in bad times.

One of the oldest tricks in innovation is not to ask consumers for what they want but for the problems they see. Believe me, we see a lot of problems! The fact is we rarely know what we want, but we’re amazing in pointing out problems. No one knew they wanted an airbag, but they knew they wanted safer cars. No one knew they wanted toilet seat covers, but they knew they hated to place toilet paper individually on the seat.

Ask yourself what are the problems consumers are facing during the recession? There’s a lot -- like they no longer can afford to travel to exotic destinations for holidays (which might be why those French perfumes seem to sell well; it’s kind of a whiff of Paris). We’re bored; we can’t afford fancy dinners anymore (which is why the sales of Lindt chocolate, McDonald’s, and Rubik's Cubes are going through the roof). We’re afraid of putting our money into stocks or banks (which is the reason why collectors' gold coins sold out twice last year in the U.S.). Start your innovation circle by letting the consumer point out all the problems, then convert these into problems.

Add a practical dimension to an irrational decision.

It has become fashionable to save and only buy on discount -- no matter who you are. What do you do as a brand owner?  (Remember, discounting your brand typically takes seven years to recover!) The answer is simple: Add a practical dimension to the equation (explaining why a brand like Willeys boots is selling through the roof -- they’re practical as hell). No one wants to buy a fancy jacket at the moment, but if you’re able to add a practical dimension to your product, like designing the jacket so that the customers can turn the jacket inside out, featuring a second color (matching the evening dress), you’ve armed the consumer with a rational argument helping to lock in the deal. The fact may be that the consumer in reality is buying the jacket because they love the design, yet in recession times such arguments don’t hold -- the practical dimension does.

The systematic removal of fear.

Hyundai did it, and a stream of new banks are doing it: identifying the underlying reasoning why consumers won’t buy their services by fundamentally understanding fear and building a new and better product offering around it.

Sales might be down, but do you really know why? Answers citing the recession are invalid and useless. What counts is to understand the fundamental role of fear and to turn this around to strengthen your brand. The pre-war time in the '40s gave birth to some of the world’s greatest brands. These brands all had one thing in common: They turned a threat into an opportunity. I see no reason why you shouldn’t be able to do the same.


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Martin Lindstrom is a New York Times and Wall Street Journal best-selling author, the CEO and Chairman of the Lindstrom Company and the Chairman of Buyology, Inc. (New York) and BRAND Sense agency (London). In 2009, he was recognized by Time magazine as one of the world’s most influential people. Lindstrom is an advisor to Fortune 100 companies including the McDonald’s Corporation, Nestle, American Express, Microsoft Corporation, the Walt Disney Company, and GlaxoSmithKline.

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