Weathering the COVID-19 storm means brands must re-evaluate the sustainability of their brand offerings and reinvent their communications with customers, says Lorraine Tay, Gene Kwek and Teo Tze She at Bird & Bird.
Out of sight, out of mind – the fear of being forgotten in the midst of intermittent lockdowns has become very real, especially for "brick-and-mortar" brands which were hitherto unknown in the online space. Although some physical retail operations have resumed with the relaxation of "lockdown" measures, there is still lingering uncertainty amidst the World Health Organisation's warning that the worst is yet to come, and that there will be no return to the “old normal” for the foreseeable future .
At the cusp of this new era, businesses have realised that technology may be key to staying afloat. Some have explored creative ways of hosting virtual events, others have accelerated the implementation of e-payment solutions, and many more have attempted to build an online brand presence to maximise their reach over consumers in this "contactless" world. In light of current trends, we discuss some strategies and pointers for brands looking to digitise and move online going forward.
Creating a consumer-sensitive brand image
The world is changing and so must the brand strategy. At a time when health and safety are threatened, luxury and status may no longer be at the forefront of consumers' minds. The average person now spends more time at home, taking advantage of the convenience of having their shopping, work and social activities done online.
A good branding strategy should be sensitive to the shift in consumer habits, and position itself to capitalise on these new trends. Rex Briggs, founder of American marketing measurement and optimisation firm Marketing Evolution, gave an example of consumer-sensitive rebranding for a luxury car company. Against the backdrop of the COVID-19 pandemic, he opined that it would be prudent to shift away from a status-oriented marketing strategy, and instead promote the car as a way for families to get home safely .
Indeed, it is a delicate balance to strike between capitalising on opportunities for brand promotion and being sensitive to consumer sentiment. Gaming company Razer recently drew flak from netizens for requiring customers to sign up for its mobile e-wallet application as a pre-condition to claiming free masks from its vending machines . What started out as an act of service to the community was thereby spun into a tale of commercial opportunism. In this climate where online criticisms are often louder and harsher than in reality, brands certainly need to tread carefully to avoid becoming the subject of negative publicity.
Enhancing consumer safety and convenience
With a paradigm shift in ordinary lifestyles, brands also need to rethink their business models to take into account consumers' needs and wants in this time of uncertainty. It appears that basic needs such as safety and convenience have become increasingly important to the average person, and brands should leverage on this where possible.
Some businesses which traditionally operated brick-and-mortar shops have opted to do away with physical stores, marketing their products and services entirely via a virtual platform instead.
Large-scale entertainment events such as Shanghai Fashion Week have also migrated online, with runway shows broadcast to viewers over livestream . When rapper Travis Scott become unable to stage a physical concert, he opted to collaborate with game developer Epic Games to host a live in-game concert, complete with a virtual stage and impressive graphic effects .
While some may lament the inadequacy of virtual events in replicating the physical experience, there is a significant upside for brands which take advantage of these opportunities to expand their audience reach, given that livestreams are potentially accessible to viewers from all corners of the globe. Moreover, moving large scale events online can allow businesses to enjoy greater costs savings on venue rental and labour, on top of providing consumers with flexibility and convenience.
Besides online events, the need for social distancing has also brought about the advent of contactless solutions. For certain industries, it may not possible to shift their operations completely online because of the nature of the product and/or services provided. Nonetheless, it remains important that physical contact is minimised so that consumers can have a peace of mind.
The pandemic has greatly accelerated the implementation of e-payment solutions in retail outlets , especially for food and beverage stores which remained open as "essential services" during the lockdowns. Staff who may be involved in food preparation need no longer physically handle the dollars and cents, reducing the risk of cross-contamination. Other industries such as car dealerships have gone one step further to implement contactless sales, servicing and test drives . Pick-ups and drop-offs of vehicles are pre-arranged, with the keys left inside the car at a particular location and time. Consultations and discussions are also conducted via video-conferencing.
The lack of physical interaction may have been unthinkable prior to the COVID-19 crisis, but is now generally accepted as a precautionary measure towards managing the spread of the virus.
Protect your intangible assets
With significant investments in brand promotion and digital solutions, as well as the increased amount of digital content being created and used , it is important that businesses protect the intangible assets created as result of these ventures. The migration to the virtual world is likely to render businesses more susceptible to piracy, due to developments in technology which facilitate copying and dissemination. Now more than ever, it has also become easier for third parties to misrepresent their offerings as originating from another trader, simply by replicating the look-and-feel of that other trader's outreach channels. The potential of the internet to spread (mis)information directly translates into a heightened risk of brand dilution and passing off.
It is often said that prevention is better than cure. Businesses should proactively identify and protect their intellectual property. Intellectual capital could well exist in a multitude of content, products, services, information and other resources which a business possesses. Businesses need to identify protectable subject matter so as to move it up the value chain as intellectual property rights. Take the example of a mobile application. From the display icon (trade mark), to the graphic user interface (design), and the content published within the application (copyright) – all of these can and should be protected as part of a businesses' intellectual property portfolio.
Further, as brands develop a more sophisticated online presence, it may also be worth investing in the protection and monitoring of "new age" internet identifiers, such as domain names, advertising words and hashtags. Securing these rights enables the rights owner to take effective enforcement action against unauthorised use, thereby safeguarding its economic position.
Alongside efforts to better protect these valuable intangible assets, brand owners should map out the jurisdictions where the business operates, has a presence, or where there are opportunities to further exploit their intellectual property rights. The global nature of the Internet means that there is expedited and easy access to information, products and services. Additionally, brand outreach material can potentially be accessed and copied from anywhere in the world. Unfortunately, obtaining adequate and proper legal protection takes time and is slow in comparison to the speed of commerce. Intellectual property rights are also territorial, meaning that protection for these assets must be sought in individual countries of operation. While it may be ideal to achieve 100% coverage, the brand protection strategy should be balanced against costs and the need to preserve financial headroom in these uncertain times. A practical approach would be to prioritise protection in key markets, and progressively increase the scope of protection as the brand grows.
Diversifying revenue streams
A robust intellectual property portfolio enhances the value proposition of a business in the eyes of investors and partners, bringing greater opportunities for collaboration and diversification into alternative revenue streams. Solutions that look beyond the traditional business model are particularly important in times of economic downturn, to enhance business resilience by mitigating the impact of losses in specific industries – e.g. aviation, tourism, arts and culture.
Diversification can be done by entering into collaborations with third parties to develop novel offerings, such as that between Rapper Travis Scott and Epic Games discussed above. Further, it may be useful to provide these offerings under a sub-brand. Sub-branding allows for the creation of a fresh brand story that resonates with consumers, while reinforcing loyalty and trust for the parent brand. Businesses need to think creatively and act with agility to revamp business offerings so that they remain relevant to the demands of the times.
If the existing business is still lucrative, it may also be worth exploring the option of franchising. Franchising is an arrangement which allows a third party to use the knowledge, processes and trademarks of the business to sell a product or provide a service under the same brand name, in exchange for a licensing fee. This strategy provides not just a revenue stream for the franchisor, but the scalability to expand at a reduced financial risk. However, to derive maximum value from the above arrangements, businesses should be disciplined about protecting their existing and future intellectual property assets. These are valuable resources that can be monetised and exploited as part of a long-term growth strategy for the business.
We are living in exceptional times
The COVID-19 crisis has forced businesses to re-evaluate the sustainability of their brand offerings, and reinvent the way they communicate with customers. In the "new normal", future-proofing a brand will be key to its success. The steps which a brand owner takes will determine how well its brand weathers the storm, and seizes the silver lining amidst the grey clouds.
This article is produced by the Singapore office of Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. For further information please contact our lawyers at www.twobirds.com