Recessions Are Opportunities, Or, Now is the Time to Bury the Competition
Whether the much-anticipated U.S. economic slowdown (dare we say, “RECESSION?”) will be a short-term or a long-term phenomenon is unclear. For senior brand and marketing executives, though, the slowing economy only heightens the need for smarter plans and for tighter execution. As Henry Ford said around the time of the last REALLY BIG ’slow down’:
“Obstacles are those frightful things you see when you take your eyes off your goal.”
This is critical: The best time, as we’ll show below, to bury your competition is when THEY are cutting back. When the competition is afraid of increasing advertising budgets or adding sales staff…that is the moment when you, armed with complete confidence in YOUR strategy, move in for the kill. Confidently. Decisively. Remorselessly.
Getting prepared to address the impending slowdown is neither easy nor painless. In the first place, it has simply been a long time since U. S. marketers had to face such a situation. Indeed, in doing research for a much longer magazine article on this topic, we found precisely one book that addresses the issue specifically – it is out of print, published in 1980. However, thinking back to – and researching – the era of double-digit unemployment, long gas lines, etc., (otherwise known as “the Seventies”) reveals a long list of marketing exemplars – real examples of companies building their businesses and brands. These would include Federal Express, Apple Computer, American Express Gold Cards, Dannon Yogurt, the whole category of Japanese cars, Stouffer frozen / convenience foods, generic products, Levi’s, Wal-Mart, Saturday Night Live, Owens Corning Pink Panther insulation, and Lite Beer. The entire beer category, in fact, underwent huge changes during the ’70’s: Budweiser finally won the decisive victory over Schlitz by focusing on the needs and purchase drivers of heavy beer drinkers, Lite invented and exploited a huge new segment, and super-premium & imported beers such as Heineken and Lowenbrau successfully built rapid, profitable growth in a previously under-leveraged super-premium market.
A quick glance at the list of “Slowdown Exemplars” from the ’70’s, above, reveals some common themes, such as “Offer new, compelling value propositions, exploit untapped segments / needs, and continue to invest heavily in brand-building among core constituencies.” This would be the case with Wal-Mart, Stouffer, Japanese cars, Federal Express, and Saturday Night Live, among others. It should be noted, as well, that these “Slowdown Exemplars” are not entirely composed of reduced price / value priced offerings. Federal Express, Apple, Levi’s, and Heineken were certainly not “value priced” versus competition. This was also the period when prestige brands such as designer jeans and the American Express Gold Card took off.
Finally, there are numerous examples of firms that “blew it” the last time around: Xerox had a well-documented inability to get its innovations out of PARC and into the marketplace, Farah pants (then the largest manufacturer in the world) essentially went under by pursuing too much value-pricing and mass distribution while Levi’s avoided mass merchant distribution, Atari Videogames so rapidly lowered prices and offered so many rebates that the product ended up with, literally, no value. As noted, Schlitz Beer, after decades of head to head competition with Budweiser for the number one slot, went into free fall when their loyal consumers found out that the formula had been changed. To a heavy beer drinker in 1978, “changed” meant “cheapened.”
[…] I am struck, as well, by how long we (especially the business press) have been anticipating a recession that somehow refuses to arrive. In fact, we did a post on this in mid-December, 2007: http://www.stopwatchmarketing.com/blog/2007/12/13/recessions-are-opportunities-or-now-is-the-time-to…. […]