What should companies do in this circumstance given the state of the economy, how people feel, and how they are behaving as customers? From our prior mistakes, we can gain some valuable insight.
1. Consumer mood is the most significant factor of all macro variables in the country. Consumers are gloomy at this time, and every household is more cautious. It reduces some of its expenditures and eliminates others entirely. Consumers strike a new balance by opting for a smaller amount as well as a lower price for the majority of their purchases. This suggests that demand is both decreasing and shifting toward cheaper items (down trade). Those who previously consumed more costly products reassess their personal budgets and switch to lesser ones. During this time, each brand loses some clients, but gains new customers who turn to them for the first time.
2. Economic contraction periods are times when overall consumption falls but demand for particular items rises. While the customer normally spends less during these times, he/she picks particular things as a treat for himself/herself and eats them more. The car industry, for example, is more affected by the downturn, while demand for items that give leisure at home is increasing. Because those who control practically all of their spending compensate for what they eliminate elsewhere. Each contraction era has its own set of "reward items and brands."
3. Consumer purchasing induces a sense of shame during economic downturns. On the contrary, spending their money on valuable items relieves customers' guilt. As a result, in times of economic downturn, it is more crucial than ever for brands and merchants to provide "good reasons" to their customers.
4. A negative attitude occurs as people's yearning to belong grows stronger. During this time, the importance of family and friendship strengthens. While the desire to be "me" diminishes, the desire to be "us" based on solidarity and sharing increases.
5. During an economic downturn, management decide to slash expenses, with marketing being the first to go. Companies who do not make this error, on the other hand, are the quickest expanding following the contraction phase. Of course, it is vital to analyze and preserve every cost, including advertising expenditures, but it is absolutely incorrect to fully eliminate them. Because advertising is a "must have" marketing activity for businesses, not "it occurs whether it happens or not." Furthermore, when the competition promotes less, the voice of the brand that advertises is heard more clearly.
6. During periods of economic recession, organizations should minimize inefficiencies. However, these are the moments when staff morale is poor, paralleling the low morale of society. When implementing measures such as rearranging pay, integrating functions within the organization, and firing, care must be made to be open and fair. Companies that create trust through challenging times will win in the long run.
7. In times of economic downturn, customers are particularly concerned about receiving their money's value. During these times, companies should clarify clearly what benefits they guarantee and how much they seek for these benefits, and they should highlight this in their marketing.
8. During this time, firms who undermine consumer or customer confidence will profit. For example, if a corporation selling packaged goods decreases the price by placing 850 grams instead of 1 kilogram, it works in the short term, but the buyer notices and abandons the brand. This period benefits principled companies that do not accept such "evil notions" while competing. Making fun of the consumer's intellect at a moment when he is trying to be the most sensible would be irrational conduct on the part of the brand. As a result, the need for smaller, lower-cost solutions in each category grows. This era benefits brands who recognize the consumer's desire to conserve and provide acceptable alternatives.
9. This is not a time for businesses to develop solid budgets since every budget is a plan based on a set of assumptions. These assumptions alter extremely fast in unusual times. Budgets spanning a single year would be unrealistic in this context. During such times, the most appropriate budgeting approach is to create monthly budgets.
10. During this time, the firm must examine its market divisions with fresh eyes. Every organization has consumer categories that it has not before targeted. The firm must assess these and determine whether new opportunities exist. Contraction times provide a chance to reach out to untapped customers. These are also the best times to introduce new products and services. Innovations developed by people with an entrepreneurial spirit provide tremendous value to the firm during this era.
Every shift brings with it new opportunities. This phase of stagnation will likewise end, and the economy will resume its upward trajectory.
Companies who adapt to change the fastest and best become the most lucrative throughout this era.