Marketing & Innovation

About
Clients
Services
   Strategy
   Innovations
   Marcom
Content
   LaZOOZ Newsletter
   Articles
   Books

Other Articles on Innovation

Is Your Company Innovative?
Systematic Innovation and Virtual Products
Adjustment to the Environment
Mouthful of Systematic Innovation

Other Articles on Marketing

Marketing Penetration
Connecting the Head to the Feet
ProductNet - Moving the World for You

Other Articles on Retail Sales

Identifying and Entering an Interesting Foreign Retail Chain Market
From Tefen to Wilkesboro and from Holon to Bentonville

Free registration:
LaZOOZ Newsletter
A Strategy, Marketing & Innovation Newsletter.

 

Home > Marketing & Innovation > Content > Articles

Marketing Strategy during a Recession
Preparing for a recession and recommended paths to growth

A synopsis of a lecture given at the Manufacturers Association of Israel, December 11, 2008
Lecturer: Ari Manor, CEO of ZOOZ

During a recession, is there any point in discussing marketing strategy? After all, markets shrink and customers don’t buy during a recession. Well, you can prepare strategically for a recession as well. But before you focus on a marketing strategy, it’s important to explore two preliminary questions.

The first question: Is your business in trouble? If it’s in trouble, meaning, there is a high probability that it will not be able to meet its obligations and creditor claims over the next few months, make the transition to crisis management. This type of management is very different from regular management, and there is no point in focusing on marketing strategy. Instead – prepare for pre-legal and legal action against your creditors. It is recommended that you use financial consultants that specialize in business recovery. A consultant that is well versed in law, finance, operations, and conducting negotiations will help the business recover or, at the very least, minimizes damages.

The second question: Are we in the right market? If not, we must find another more suitable market, for which we must develop a new business strategy (not a marketing strategy). Developing a business strategy is the stage where we choose our customers. We, as the business owners, decide. To do this, we must decide how much we want to earn (this is a personal and subjective decision) and then find a big enough market, where a 5-10% share will suffice to achieve the revenues that we want. It’s also important to check whether it is a growing market, and not too competitive. There are growing markets even during a recession, such as the cheap retail chain Wal-Mart and the financial consultant market… and if we operate in several industries, we must examine which of them to milk, and which of them to invest in because it is a Star. And when we say to milk, we mean to really milk, and not to invest. The milk we have extracted from one industry will be invested in another that is expected to grow.

If we are not in trouble, and we are in the right market that is suitable for us – we can adapt the marketing strategy to a recession, and improve our chances of success. There are two different paths that we need to explore for this purpose.

The first path is the competitive market strategy (Red Ocean – where cutthroat competition turns the ocean bloody). In a competitive market, you can earn if you have the advantage of size and price (for example: Keter and Teva corporations). Companies with the size advantage need to exploit the recession to expand and acquire other companies (to increase their market share, even if the market as a whole is shrinking), to improve agreements with their (stressed out) suppliers, and to invest in automation and internal optimization to increase their price advantage. Branded companies that have a prominent added value (prestige, safety, utility, esthetics, etc.) need to continue to advertise (because the advertising will stand out more when others have fallen silent), contribute to the community (to be conspicuous during a recession), to hire talented and creative employees (that were dismissed from other places), and to invest in innovation that lowers maintenance and usage costs for customers. Companies that are stuck in the middle without any price or added value advantage can take advantage of the recession to brand themselves. To do this, they must find an important added value that has not yet been taken - one that suits their capabilities, and then change their marketing mix accordingly and advertise radically to stand out.

The second path you can take is the noncompetitive market strategy (Blue Ocean – a market with no competition). This is an innovative and more daring strategy that mainly focuses on what most customers find important (for example – a good night’s sleep at budget hotels) by giving up other standard components. This makes it possible to improve without raising prices (for example – if a good night’s sleep is important – you can provide a good quality bed, exemplary cleanliness and quiet, but offer small rooms, no room service, no lobby and no restaurants). Blue Ocean strategy will prompt many “non-customers” to start buying (for example – couples that now come to the cheap, clean and quiet hotel). It has also been proven as the leading strategy even during a recession! And finally, examples were given of Israeli companies that grew because of it (FOX, Bagir and Tiv Ta’am), and an example of marketing cars to “non-customers” was also given (for example – Israeli drivers that have a hard time passing their driving test will agree to buy a specific imported car if the importer provides them with driving instructors, free of charge, that will help them pass their test).

 

__________________________________________________

Marketing Consultation and Assistance
Interested in growing, even during a recession?
Contact us: [email protected], +972-9-958-5085

__________________________________________________

The article was written by Ari Manor, CEO of ZOOZ Marketing & Organizational Consulting. ZOOZ conducts training for managers and employees. Send your comments to [email protected].




Back to top of page

Bookmark and Share              Terms & Conditions