By pretending there isn’t one. I don’t mean denial, but I do mean that a batten-the-hatches freeze -all-spending is not the only option.
During the 2001 Dotcom crash I worked with Infosys. As the marketing team pulled out lots of numbers to show that the market was shrinking, Narayana NR Murthy, the Chairman, asked us what our marketshare was. It was minuscule at the time. So he felt that we did not need to worry about the overall market contracting by a few percentage points as we could grow by being a more attractive proposition than the competition. If you are less than 1% of the market there is no need to expand the addressable market – just look for churn. Infosys revenues grew by 113% in FY01. The following year things got worse in the US, but Infosys still posted a revenue growth of 37%.
All companies do not have to shrink during a Recession.
Kellogg’s actually grew during the Great Depression at the expense of its competitors. At the time their biggest competitor was Post, which cut ad spends and expenses. Kellogg on the other hand, doubled its ad budget, pushed into radio advertising, and aggressively marketed its new cereal, Rice Krispies. By 1933, even as the economy continued to crash, Kellogg’s profits had risen almost thirty per cent.
This does assume that you are in a financially sound position with a nice cash pile to cushion your blow. Microsoft’s 2009 annual report is a good read. Despite revenue dropping 3% they continued to invest in products and markets.
New markets are not always geographic
But what if you’re struggling already, like say, Lego was in 2003? They just ploughed on though their transformation. In years that the US was going through a downturn they looked at overseas market expansion. But they also looked at newer “markets” like digital, movies and girls and increased their addressable market.
Netflix has thrived in recession as consumers see it as low cost entertainment. It has taken away money from theatres, cable TV, video-rental and YouTube. It almost lost the plot in 2011 when it tried to launch a new pricing scheme which consumers viewed as an increase. But it fought back and continues to thrive.
Expand your addressable market whether it be geographic, demographic or psychographic.
If you’re the market leader use your clout and financial reserves to thulp wannabes, buy out weaker firms, and expand to newer markets.
If you are a smaller player grow by targeting vulnerable niches of bigger competitors
Offer a more compelling proposition to newly price-sensitive buyers.
To do so you have to invest in those with the most propensity to buy. The investment is in terms of product innovation, relevance and of course awareness.
Want to identify which of your products and customers/clients are most fruitful in the current downturn? Use my DIY mapping tool to understand the Recession Relevance and COVID Context of your clients and products and find out what to sell in the downturn.
There is business beyond hand sanitizers and face masks.