Economic uncertainty and sharp declining buying power: yes they are a significant challenge. In fact, today’s economic uncertainty could be a business opportunity. There’s a simple process to follow.
Take a good look at your business, reconnect with your customers, provide the very best products, services and prices - and market as hard as you can. Survival – consolidation – expansion is the best game plan rather than survival and survival only.
Too many businesses, sensing tough economic times ahead, retreat into their shells. They focus on the cost of everything and the value of nothing, cutting back on spending and making survival the sole priority. Worse case is they drop prices to maintain sales volume, even if it means losing money. Customers and staff can almost smell the decay, the negativity, the lack of ideas, the lack of confidence, “the bunker mentality”. Bad times will not end anytime soon. It’s going to stay for sometime so to survive you have to be positive and aim at growing. Aiming for survival is the worst business strategy one can have.
As a customer, how much do you want to work with a business that is clearly preoccupied with the negative? Doesn’t make you feel confident, does it? In contrast, the smart and successful businesses see an opportunity in every situation and go on battling it out to pass the most difficult times with optimism for the future.
Business and product portfolio can be realigned if required to maintain your topline and gross margin while cutting expenses that does not deter growth. If you are a seasoned campaigner, the lessons you have learnt in the past navigating similar situations though may not be as severe as this but can be applied again.
Reassess your marketing strategies
Changing economic circumstances call for goals and strategies to be re-evaluated and re-set to match the changing environment. Brand building in times of growth is fine, but short-term sales objectives or share expansion may be more relevant. The use of short-term growth strategies such as direct marketing,or e-marketing will increase as a proportion of your marketing budget. Competing on price is not the only option during economic turmoil while it may help in the short term cash flow but the very same action can further deteriorate your ability to survive due to sharp gross margin erosion with cost escalating very frequently beyond comprehension.
Customers will always want value depending on which consumer profile you are targeting. If fuel was not an issue, even in this so called ‘worst economic environment’ all the hotels would be filled during a long weekend.
Go around Colombo and see how well some restaurants are patronised despite the fuel issue. So generalising and taking a conservative approach to stay afloat may not be the wisest decision. Have you not wandered as to how some people are not affected at all and their lives go on as usual. You may wish to attack your competitors instead of trying to expand your footprint where appropriate and prudent to do so.
The concept of value needs to expand beyond economic value. Value can be created through quality, benefits, delivery, information, extra services, customer satisfaction and relationship management. Now more than ever, companies need to assess how they can add value rather than merely competing on price.
Use all your learnings
Anyone who doesn’t learn from the past is destined to repeat the mistakes of history. While young blood is very important with their high technical knowledge, experienced leadership is critical to any business in this volatile environment. Many companies, especially market leaders, look to consolidate in declining markets, which can often lead to ignoring the needs of clients as they focus on internal functions and cutting costs.
This provides an opportunity for businesses to increase their customer base through superior relationship management. It is generally accepted that 70 percent of business is an extension of existing clientele, and the need for modern and cost-effective customer relationship management programs is highlighted in declining markets.
Volatility or uncertainty helps you unsettle your competitors and force your potential customers to trial new products and value propositions. See how empty the shelves are in the modern trade channel and other high end channels. These are opportunities to break into the competitor domain if you are smart and have a thirst to grow.
An aggressive marketing strategy doesn’t have to be costly, but it does need to be different, creative. It comes from truly knowing the needs of customers more than the competition does to create a sustainable means of competitive advantage and an understanding of how to effectively and efficiently communicate with potential clients.The message is clear.
Tough economic times create an opportunity for imaginative entrepreneurs who look for innovative and integrated marketing strategies that generate higher sales by increasing the loyalty of existing customers and attracting new ones.
While many businesses are seduced by the need to cut costs when the chips are down, the visionary entrepreneurs would be asking, what marketing strategies can I introduce to improve the customer experience, to grow despite adversity?
Don’t wait till the economy recovers – it will not be real. The economy is what it is and we need to play our game in the given economy. What we control is what we do and not what we see or experience.