Consumers change too. You should too.
Change is not your enemy
You cannot turn on the TV, surf the Internet, or open up a newspaper without seeing something on the “economic slowdown” or whatever the media have decided to call it that day. Our current state of economic affairs has been described as a recession, “the aftermath of the credit crisis,” the “global economic crisis,” an economic downturn, and even an “economic retraction” among a whole host of other things. We are in the midst of tough times. Consumer change is quick.
The fact is that consumers have changed and companies and even governments around the world are feeling the ill effects of an economic machine that, in retrospect, was clearly out of control. When things were going along just fine, no one seemed to care that the economic machine was out of whack. Fast forward a couple of quarters, now EVERYONE cares.
Consumers have reduced spending; businesses have reduced spending and implemented numerous other cost-cutting measures such as idling millions of workers, while governments are operating in unprecedented shades of red. So what are companies supposed to do?
Many are cutting back, slashing, downsizing, and reducing. Business is worried about doing the right thing, the safe thing. Business is seeking comfort and is fearful of change. There are even some who would love nothing more than to have someone tell them what to do. The relatively wide net businesses once cast now must become a precisely tuned fishing pole with the ability to catch the biggest, best, and most flavorful fish.
What The Experts Say
You have undoubtedly heard marketing firms, consultants and business writers say that, “in these tough times, the smart companies will persevere and the smartest can even come out for the better.” One would be hard-pressed to find a CEO, CMO, or even a VP of marketing that said they did not believe they were “smart.” The need to be “smart” in these tough times is a given. Of course you have to be smart. Even in the best times, executives must also be smart. But they are slightly less risk adverse than most and typically have more room to maneuver.
Marketing dynamics are in flux. Being less risk adverse and wanting more room to maneuver are two of the biggest reasons why many companies choose to cut rather than change. Many organizations look at change, even changing the marketing message, as too great of a risk. Instead, cutting costs immediately satisfies the perceived need for “room to maneuver” and there is little uncertainty as to the outcome. However, this is a short-term solution only, especially in the current situation. It only addresses the current situation, which is unclear at this point to how severe these tough times will be or how long they will last.
Cutting can free up some cash in the short haul. However, as tough times continue, many businesses will be faced with the same decisions not far down the road. If you keep cutting a pie, pretty soon you run out of pie.
It would be foolish and naïve to suggest that evaluation of budgets and making changes where appropriate are not part of the solution. Being proactive in that way is just good business. But, especially in really bad times, it should not be the only change businesses undertake.
A Market Dynamic —Adaptability
In tough times, business cannot change what it does. The automotive industry (ahem) for example, must continue to produce automobiles. Macy’s cannot overnight become a discount store. McDonalds cannot become a steakhouse. But business can change how it goes about doing what it does and, more importantly, what it tells consumers.
What “smart” businesses understand is that the motivations for shopping at a particular store or purchasing specific products actually changes in these tough times. In addition, these companies know that they have a small window of opportunity and a small margin of error.
The window of opportunity closes because the changes to these purchasing motivations tend to emerge quite rapidly. As the worry of tough times increases, the movement in motivations exponentially speeds up. For example, in good times, consumers tend to look for the BEST things. In tough times, consumers flock to the RIGHT thing. In good times, consumers tend to look for EASY (remember Staples “Easy” button?) and in tough times consumers look for SAFE. There are a number of other such motivational axes that shift during tough times as well. However, all fall under the umbrella of an individual’s desire to move from Seeking Experience in good times to Seeking Refuge in tough times. As the perception of tough times increases, consumers sharply move from one polar end to the other.
You Must Be Smarter
There is a small margin of error in this shift, as, during tough times, most businesses will be attempting to lure consumers to offset loss in revenue. In addition, failure by an organization to understand the gravity of the shift in motivations will exacerbate losses in revenue as consumers look for companies that connect with them in a way more meaningful way in context of the current situation. In essence, failure to act does not keep the status quo. Rather, it compounds the reductions already taken place.
One company that saw the change in motivations and acted quickly was Wal-Mart. Sure, Wal-Mart has always been known as a low price leader, using the theme “Low Prices, Always” for years.
However, these current times prompted Wal-Mart to enhance its message to “Save Money. Live Better.” Is it still about low prices? Sure, but the language has changed to be much more about being the RIGHT (Save Money) choice in terms of price rather than the BEST (Low Prices, Always). Moreover, “Live Better” has more to do with the idea of being the SAFE choice, especially in the current tough times, than being EASY. The consumer changed. (Read how to beat Wal-Mart here)
Wal-Mart is an example of an organization that saw these tough times on the horizon, understood that motivations change as the economic climate changes, and acted quickly to take advantage of the shift from experience to refuge. Organizations that both understand that consumer motivations change and they must move quickly – and with great precision – stand to not only come out of these tough times as a survivor, they stand to come out of these tough times as a winner. (Read about our process on finding what is important to do to grow market share here)