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5 Ways to Protect Your Brand from Market Crises


What if I told you that your competitors’ failures might hurt rather than help your own brand’s sales and stock prices?

A recent study from the Universities of Washington and Southern California suggests just that: Negative social media chatter surrounding one company may induce negative chatter towards rival companies. This negative chatter can have a serious financial impact—the study found that a 1% increase in negative social media chatter surrounding an automotive brand’s product recalls led to an average monthly loss of 7.3 million USD for its rival brands.

The study describes just how this happens: social media users tend to trust chatter from other consumers (Source: BuzzMetrics 2015) and inform their own opinions of a brand based on both the information they find on social media and the positive or negative emotion attached to that information. When especially negative chatter occurs—usually due to a newsworthy crisis like a product recall or service failure—consumers use social media chatter to inform their purchasing behavior and brand loyalty.

Here’s the kicker: Consumers connect information about rival products and brands that they view as similar. When one brand is victim to negative social media chatter, consumers decrease their purchasing and loyalty behavior for the targeted brand as well as other similar brands. When brands originate from the same country or the targeted brand owns a greater market share than its competitors, this connection increases.

So what can brands do to protect themselves from these volatile social media influences and decrease the effect of negative chatter on their sales? Here are five suggestions:

  1. Brands undergoing a crisis need to be cautious around ads meant to explain, apologize for, or deny any controversy causing social media chatter. Such ads may backfire by increasing attention and inducing more negative chatter.
  2. Brands should keep close track of rivals from the same country and of the same size. If a competitor starts to attract negative chatter, the brand should lie low and avoid comparisons with any competitors in crisis to maintain brand separation.
  3. Brands from different countries or of a different size may be able to leverage their dissimilarity to a competitor in crisis and increase sales by emphasizing their own strengths and uniqueness during a crisis.
  4. Brands should track which competitor brands social media users connect with their own and leverage that knowledge to avoid unwanted connections during crises and strategically deviate from brand positioning to look unique.
  5. When dealing with a crisis, brands should manage the spread of negative chatter by relaying relevant information and comprehensive FAQs to all important social media sites and monitoring chatter about the brand to engage consumers and assuage specific concerns.

When it comes to social media, the best defense is a good offense. Ongoing, active, and engaged social media strategies can reduce the impact of social and other outside influences by creating a solid and differentiable brand position with consumer connection. By fostering a strong, ongoing and positive social media presence, your brand can protect itself from these volatile market shifts and stay #TopRight.


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