Feeling the crunch?
As the sharp decline in economic growth hits most of the developed world and government bailouts attempt to ease tension, the smart and the entrepreneurial are sitting quietly, about to make their next move.
The slowing global economy can actually present many opportunities if you know how to spot them, but winning in this climate depends on how well you strategise and play the game.
As the economy slows, first reactions are commonly based on fear and emotion, driving changes in the key areas of:
1. Consumer behavior – the world doesn’t stop so nor does consumer spending. However, decreasing consumer confidence means they will be more cautious, gearing towards lower value items and cheaper alternatives or delaying high ticket purchases.
2. Business behavior – initial responses are to preserve or downsize rather than grow. Reductions in budgets and activity are commonplace.
As a result, business development, innovation and marketing are minimized and many businesses will try to source cheaper inputs.
Next, businesses are likely to want to get rid of excess or slow moving stock via heavy discounting and “just-in-time” processes will become more pertinent.
3. Market forces – As property prices, currencies, commodities and stocks, begin to tumble, just trying to keep abreast of what’s going on will further perpetuate caution and confusion. Thus, it’s important to pre-empt the actions of your stakeholders including supply chain members, investors and competitors. The silver lining in an economic downturn.
As competitors scale back their activities, there has been no better time for your business to achieve marketing success. However, you need to act with logic (not emotion), using a clear strategy and be ready to pounce quickly on opportunities as they arise. This sentiment is echoed in a recent UK study by the Small Enterprise Research team at the Open University. Small business owners responded to questions about the slowing economy and most believed that “increase(ing) marketing spend” was a sound investment to drum up business to get through tougher times.
Furthermore, when times get tough, people get creative. Another silver lining is the possibility of new innovations resulting from a necessity to be smarter. Take for instance the dotcom crash of the late 90’s and early 2000. One of the many lessons learned from this disaster was how to reduce the cost of acquiring new customers and hence, today we have web 2.0 technologies.