How to grow and profit during another economic downturn
Recessionary times are tumultuous times. Change abounds. Brands disappear. Consumers awaken to new patterns of thinking and buying. As a result, the market-aware, research-driven companies are best positioned to take advantage of the chaos and change.
When I ran across this article on Entrepreneur.com, I decided to create a market research mashup. So, I added 5 market research tips and recommendations for recessionary times:
1. Look for opportunities.
They said “As weaker players falter, you could see a chance to gain market share. Move into new markets, add new products, or consider acquiring a floundering competitor...”
How can market research help? First, product concept testing is the most obvious. However, you should consider testing new concepts that will really resonate with the struggling consumer. Remember, consumers don’t stop buying in a recession—they buy less, switch brands, buy alternatives, or buy completely new product concepts.
Second, invest in qualitative and quantitative research to understand your customers’ “Consumer Decision Journey” (as described by David Edleman in the Harvard Business Review). For this, an updated awareness and usage study can uncover new decision patterns and new market opportunities for you. It can also shine a light on some high risk areas you must quickly address.
2. Reconsider your products.
They said “Is what you're selling what customers need today? If not, it may be time for a change.”
How can market research help? Their recommendation holds true in any economy, but recessionary times can create radical (and often permanent) shifts in buying processes, brand preferences, and even consumer lifestyles. Again, product concept testing and awareness research applies nicely here.
In addition to innovative new features, many companies test new (often smaller) sizes, different (often fewer) feature sets, and lower price points. For example, companies can retain (and gain) market share and margins by reducing prices and their costs (size/features). This is a win/win for the manufacturer and the consumer.
3. Revisit your packaging.
They said “If you sell physical goods, ask yourself if your packages look appealing and current. If not, it's a good time to refresh your packaging. It gives you an opportunity to promote the product with a new angle.”
How can market research help? My job is getting easier: package concept testing is the winner here. Start with some common-sense evaluations of your packaging. Are there elements of your packaging that may discourage consumers in a down market? Are there slight modifications that, while staying true to your brand, may give consumers a better feeling about your product during tougher times? These answers are knowable. Rally your design teams and put some new package designs in front of your customers.
4. Reconsider your pricing.
They said “The ideal is not to cut prices, but to find ways to strengthen your offering at the current price. For instance, could you offer a bonus product or service to make the product more irresistible?”
How can market research help? I think their recommendation is half right. Adding more product or value is one strategy, but cutting prices—while nobody’s favorite strategy—is still an option that should be put on the table (and under the market researcher’s microscope).
Even if it’s not your proactive strategy to cut prices, you may be forced to respond to a competitor’s price reduction that’s aimed directly at your best customer segments.
Your pricing research should at least address the following:
- More product/features for the same price
- The same product/features for a lower price
- Less product/fewer features for a lower price.
5. Ramp up your marketing.
They said “Others will pull back, so you'll get more visibility for your advertising dollar.”
How can market research help? Once again, I think they’re half right. Simply adding to your marketing spend may be too blunt of an instrument. And in cases where awareness is not your problem, what you may need is different marketing, not necessarily more marketing. I’ll return to the trusty awareness and usage research to help us here.
The A&U study, especially when it includes some extra marketing science elements that may be slightly atypical, can tell you if your problem is awareness (in which case greater spending may just be the ticket) or if some other real or perceived barriers are driving the failure to purchase your products (in which case you’ll need to address barriers such as price, features, etc.).
As I mentioned in #1 above, your customers’ decision journeys may be changing as well. So, take extra care to understand how they think about brands, evaluate options and make purchases. Don’t make the mistake of assuming they are researching, shopping and purchasing in the same ways as before.
One final thought, consider filtering all of this research with your market segmentation lens. For example, your strategies may differ by market segment for all of the strategies I’ve outline above: acquisition, new product development, product redesign, package redesign, pricing and marketing.
Ultimately, knowledge is power in any economy.