Despite the recession, it’s clear that some products are doing surprisingly well. Phillip-Morris tobacco products, McDonald’s hamburger franchises, Wal-Mart superstores, Kraft Foods, Johnson & Johnson, Costco Wholesale, Toy Industry Association companies, and Novartis medical supplies are all quite healthy. “Some companies get healthier and stronger after weathering recessions,” says Vivek Wadhwa, founder of tech startup Relativity Technologies. Here are some anti-recession tactics and tips from some of America’s top-performing companies.
The most important of all anti-recession tactics is understanding the new problems your customers are facing and offering them innovative solutions. The most successful businesses are those that can save customers money, make their lives less stressful, and offer more value. For example, one company developed a fast-curing resin to maximize the productivity of injection molding machines; however, when the recession hit and increased production was no longer needed, the company switched gears and developed a less expensive, slower curing resin, which ultimately proved profitable. “We can’t put meat on a burger anymore,” admits CKE chief marketing officer Brad Haley, who oversees the Hardee’s and Carl’s Jr. franchises. When times are tough, executives need to be more creative. He adds, “Carl’s Jr. is promoting a cheeseburger with guacamole and bacon. Avocados are a less expensive topping.”
Another conventional recession tactic is to reset your priorities and stay flexible. Since the market itself is always changing, you’ll want to be in a position where you can follow the bumps. This is not to say that you shouldn’t have marketing plans at all, but you certainly should have contingency plans and alternative directions to move, in case one of your marketing campaigns or product lines fails. If you find yourself in a crisis, you may need to cut back on meetings and travel, or you may need to postpone moving to new markets, hiring more people, and increasing profits. The recession requires a different mindset, according to Whole Foods Market CEO John Mackey. “We have to be more frugal, think about every expense, every capital investment, because growth is not going to bail us out.”
One of the common anti-recession tactics is to cut prices to move inventory. However, this does not always equate to profit. According to McKinsey Research, the average company that cuts prices by 5% would need to sell 19% more to pay for itself. However, the decision to lower the price also depends on what customers are doing. In the gasoline industry, once gasoline reached $4 a gallon, American consumers significantly reduced their purchases. This season the Wii and PlayStation consoles will drop in price to reach a larger audience. “In recent years, game consoles, especially the PlayStation 3, have been a bit out of the price range for a Christmas present,” said Eiji Maeda, an analyst at JPMorgan Chase & Co. in Tokyo, Japan. “The reductions make the PS3 and Wii available to more people and should stimulate sales.” Of course, the advice of the experts indicates that innovation must also accompany its movements because nobody will buy the console if new game titles are lacking.