The strategies to be followed during the times of recession are something that has to be given a lot of thought before jumping in. This is because of the fact that recession times are the hardest of times for any business whether big or small, local or multinational. When it comes to the economic meltdown like the one that we are recently facing, we can see that companies are having a tough time in getting business. Some companies have even gone to the extent of laying off workers and cutting down production in order to cut any costs.
Businesses thrive on customers and in the recession period, these customers are few and hard to find. It is at these times that the companies have to look into various different measures in order to attract new customers and retain old ones. The 20-80 rule of marketing should be kept in mind, 20% of the customers bring in 80% of the revenues. Therefore, these 20 % of the clients should be concentrated upon since most clients would prefer to go for a trusted source rather than a new one.
There are instances when old customers may turn into potential customers by properly communicating with them but not pushing the product. The main aim should be to make the customer understand that the company wants to do business with them rather than just pushing the product.
The company should also keep in mind that it’s not just the company that is doing bad but the entire economy as such, this means that due consideration should be given to the customer as well. Existing customers are an excellent source for finding new leads. Existing clients should also helped in making business for the company by keeping informed on the various activities of the client and the requirement s that the client might come up with.
Business should also try and go in for diversification of the existing product portfolio. Innovative thinking is the key here. The more innovatively the company diversifies into related businesses with minimal amount of spending, the more no. of clients that could be attracted. This can be easily understood since with a larger product offering there are more no. of customers.
When money is tight, the company tries to bring about products that would be in the price range of the budget client. For this the company may be forced to change its client profile somewhat but only for a limited period of time. But this strategy should be avoided since this confuses the existing customers on where the company is trying to focus. Therefore the company should rather understand where it stands in the minds of the customer and act appropriately.
Even while bidding for projects, the money matter should be kept in mind and the bid should not be too low or too high. Another matter to be considered is the fact that customers would not part with their hard earned money when there is low liquidity. Therefore, the company would have to offer better customer service both pre and post purchase. The service provided would also ensure whether the customer would come back for repeated purchase. Cutting costs may be the need of the hour but not at the cost of the customer satisfaction.
Technology changes every moment and proper utilization of such changing technologies can be the difference between getting a client or not. Utilizing innovative technology would ensure that the customer would be able to use the product not only for the main benefit but also for some augmented benefit. And these augmented benefits can prove to be helpful in attracting clients. Companies should think of innovative ideas of not only using the product but also in promoting the product. This is usually undermined by most companies since as a part of cost cutting measures the advertisement department is the one that usually gets the axe first. The marketing team will have to come up with better ways of making the product more attractive to the customer.
This current scenario is one where the customers should be able to understand the value and benefit that they would receive from the product rather than the product itself. This factor should be the main key in the advertisement campaigns and the integrated marketing communications.
When the going gets tough only the tough get going – the old saying goes, and this can be applied in business as well. Here, what it means is that recession times are the best times to buy assets and strategic investments that would prove to be helpful for the company. This is because there will be other organizations that will not be able to cope up financially and they would end up selling assets at cheap prices. But this strategy should be followed only by companies that have a strong financial record and will not be affected by the purchase.
Various other strategies like the pricing strategy and the cost reduction strategies should be revised and reviewed. Cost cutting measures should be done in a systematic and planned manner and should be in line with the pricing strategies that are being followed by the company. Employees must be pushed into thinking on ways to cut costs and lay offs should be the last resort that the company has to perform.
Employee morale should be also kept up and no loose talk that would create panic should be allowed. The management should therefore keep the lines of communication open with the employees. Not only employees but suppliers should also be looked into while the recession times. A good supplier partnership would ensure that the organisation will be able to cut down unnecessary inventory and holding costs as well.
Be it recession or not, any business, product or service industry, should work on the motto that there are always customers to sell and this is the only thing that is most important for the business. Selling here does not mean dumping the goods alone, but rather it encompasses the goodwill that is generated amongst the public while using the company’s product. The business will only run on its customers both internal and external and therefore both there needs have to be taken care of.
Once an economy is in recession, does not mean that it will stay in recession for an extended period of time. One of the most common mistakes that companies actually do is that they would reduce the marketing effort all together during recession. Companies should actually utilize this time to communicate with potential customers. Marketing and prospecting should be increased and newer clients should be found out. This would not only increase the business during the hard times but also will give a data base for the business when it comes out form the economic crunch.
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