By Kevin Flynn
As the American economy sputters again, many companies are reducing spending and protecting cash flow. They are delaying large capital projects, trimming staff or slowing hiring, and generally tightening their belts wherever possible. This can be a wise move in the short term, but it may have long-term negative effects on the overall value of the company or its brand.
Although many people believe that consumer confidence will not fully return until after the next presidential election, now is the time to prepare for the post-recession economy. If you look ahead 12 months, will your company be positioned for growth? Do you work at or operate a company that is taking a hiatus during the second recession or is your company repositioning itself during this tumultuous period, ready to grow when consumer confidence returns? There will be new definitions of value, higher customer expectations, and smart competitors who do not sit idle and wait for the sun to shine. These competitors
will emerge from the soft economy with new products or services and the attention of your customers.
There are countless examples of companies or brands that have broken the mold or come from behind to change their category. Netflix reinvented the DVD rental business when video stores like Blockbuster sat back and watched their market share disappear. Then Red Box did the same to Netflix, not counting their own difficulties by trying to raise prices when their
customers where not open to the change. In their book “Accelerating Out of the Great Recession: How to Win in a Slow-Growth Economy,” authors David Rhodes and Daniel Stelter cite numerous examples of companies that found ways to grow during the Great Depression, including giants like IBM that developed many new products during that time. What can you do to reinvent your category during this second dip? How long does it take your company to develop a new product or service and get it to market? How long does it take to reposition a brand? The presidential election is not far off and if you want to aggressively grow your business in the long term (not just this quarter or fiscal year), then now is the time to do something about it.
Start by talking to your customers and potential customers. You will likely find that what they wanted or needed before this recession may not be what they want after the recession. While they will not have a crystal ball into the future, they may tell you about an unmet need that could lead to a new product or offering. They may tell you about flaws with your current products or service; now would be the time to fix them. They could tell you about what they think of your competition; this will allow you to sharpen your positioning or change it to grow when the time is right. I recently met with a company owner who saw no value in talking to customers. He had been in the business for so long, he said he already knew what his customers think and want. I believe this company will have a harder time finding and adjusting to new trends in its industry without listening to their customers and prospects.
All consumers, from housewives to multi- billion dollar conglomerates, have tightened their spending during this economic down turn and are likely to be more select about future spending. Their sense of value may have shifted to include higher quality, a higher emotional connection, or a third-party endorsement by a friend or peer. Some consumers will only seek a lower price, and that will never change. You just have to ask if that is where you want your product or brand to be in 12 months or beyond. Every category has a low price leader, but there can’t be two. That will lead to even lower margins and a downhill slope that does not have much upside.
So, what is it going to be? Sit back and wait or take market share from your competition by repositioning your existing brand or creating new products or services that post-recession consumers actually want to purchase?