Economic down turns are times when some businesses & brands win, and some lose – in fact some will disappear forever. It is Darwinian – the economic and social conditions change so much that only those businesses that can adapt will survive, some others whither, and some will disappear all together. We are already seeing that this recession is going to much worse than any before (a metaphorical comet has just hit the markets) and will result in a once in a century extinction event for the companies and brands that just can’t adapt (aka the dinosaurs). As i said at the blender session, this is bitter-sweet. It will be sad to see some businesses fail (especially for the human toll for those affected who lose their jobs) but it also means that what will be left will be fitter, more efficient, and stronger. Entirely new business models will emerge and new brands, products, retailers, and technologies will replace those that didn’t survive. That will be a good thing for consumers and ultimately a good thing for the economy. The pendulum will swing back the other way and we will know that all the pain we are going through now will have been worth it.
So what are some of the things to think about to ensure your business or brand doesn’t end up as one of the dinosuars? We discused several of these themes during the Blender – here is a bit more flesh on the bones……This week I am posting 5 thought starters and if you come back next week you will get the next five.
1. Do you really understand the internal & external business environment? Externally, get a handle on what is happening in your category, fast! Understand from the perspective of your suppliers, and of your customers. What has changed? Has demand dropped (probably). Is there oversupply (probably). Are resource prices in your sector going up or down – do you really have a good handle on your cost-structures? How much pressure is there on pricing? Are your customers de-stocking? What are your competitors doing? What do you expect them to do? Internally there will be pressures too – your CFO will be looking to reduce costs, conserve cash and squeeze your suppliers – all the while looking to maintain margins and hopefully attract new sources of revenue. The budgeting process will be endless – so be prepared to justify every part of your market budget and programs – to protect your programs you must be able to defend them and demonstrate ROI.
2. Do you understand what’s going on in your customers minds? This was one of the biggest themes we discussed at the Blender. I think everyone acknowledges that Australian’s have now woken up to the reality of 2009 (after a false sense of optimism pre-Christmas – see roy morgan consumer confidence scores) . How this affects your particular consumers or customers will depend on the category you are in – but what you can be sure of is that attitudes and behaviours are changing. Significantly any market research, especially around price elasticity, and consumer drivers of demand, done last year or earlier will be out of date. As Tracie Michael said at the blender, take the cost of one 30sec TVC and invest it in some fresh reseach and/or tracking – there will be negligible impact on your campaign but you will be a better informed marketer. We are seeing a complete seachange in people attitudes to spending – what has been called the “new age of frugality” or as the American Marketing Association called it: Austerity Marketing: which is defined as marketing to consumers who don’t want to spend.
3. Do you have an unbeatable value proposition? After you have answered the question above, how you create an unbeatable value proposition for your brand or business is probably THE MOST IMPORTANT thing you can do, to not become the T-Rex of 2009. These means shifting the focus away from price – but at the same time being price competitive. Remember – unless you are the lowest cost manufacturer in your category 
and you fight on price alone, especially in an undifferentiated market; YOU WILL LOSE. Of course that depends on how deep your pockets are and how long your business’s balance sheet will let you hold your breath under water for. Consumers are looking to shop smarter and will be definitely looking to save money – but it is not likely that they will want to sacrifice on quality. Consider bundling (or unbundling) to make direct competitive comparisons difficult. Maybe take away things that the consumer doesn’t want at this time so you can reduce your prices without taking a margin hit. Remember the other dynamic of this recession – price conscious shoppers can compare prices on the internet and are now doing it real time, instore, so to win you have to add value and shift their focus away from price. Crack this tough job and you are definitely up the evolutionary food chain. Hyundai USA has done an excellent job of understanding where their consumers heads are at – and have created an unbeatable value proposition: Buy a car and if you innvoluntarily lose your job in the next 12 months you can return the car. How could you say no to that?
4. Have you sharpened your brand & positioning? “In a recession products will have to be positioned far more precisely in terms of the competition” so said Philip Kotler, the prolific marketing professor at North Western University. Why? Well if you are trying to get the customer to consider all your other brand attributes rather than purchase your competitiors product which may be a few cents or dollars cheaper – you better have a very focused way of communicating this to them! Make authenticity a priority. A corporate culture and brand shift is underway – in part driven by the collapses and exposures over the past decade, the environment and also by the power of Social Media and the internet. There is no where to hide. It’s simple: be honest, care about your customers and your employees, the community and the planet, and don’t be greedy.
5. Are you still innovating & looking for new markets or segments?: Once you have bedded down 
your exsiting customers and product portfolio and value/pricing strategy you will probably be looking for new sources of revenue. It will probably be easier to develop new product offerings for your existing customers (you already have a relationship with them, right?) than to enter new markets with your existing products (but new geographies for example would potentially work easily). To innovate your existing product line up look to refresh them, customise them, add new benefits or services. Looking for new markets or near markets could be a growth strategy for your brand or business that will redefine your business and leave your competitiors behind. Recommendation: read Blue Ocean Strategy by W. Chan Kim & Renee Mauborgne which discusses strategiesto create new market spaces or a “blue ocean”, thereby making the competition irrelevant.
At the recent Blender session one of the top questions asked was “Who is having success with Social Media in Australia?” and again when I posted my Top 10 Smartest Brands in Social Media they were of course all Global brands and examples. The search for the companies doing it well here continues……
Social Media is creating a techtonic shift in the Australian media landscape (and indeed the Global media landscape). It is a phenomenon that is creating a whole new generation of “brand influencers” who are collectively influencing corporate perceptions and purchase decisions as more consumers turn to “peer-to-peer” Web communications as their trusted source of news information and opinions.