Now is the time for businesses to prepare for the long-term.
Consumer debt used to be about 30 to 40 percent of the gross domestic product. It started climbing in the '80s, hit 65 percent in 2000 and is now a shocking $14 trillion, or 100 percent of GDP (the federal debt is $11 trillion).
By mid-2011, credit card companies are expected to reduce consumer credit lines by $2 trillion, or 45 percent. This, coupled with savings rate data, suggests consumer spending will be constrained for some time.
So what to do?
- Carefully analyze your business and eliminate low-value services or features that don't directly influence consumer choice.
- Remember, people still want to pamper themselves, but will do so more simply and judiciously.
- The downturn affects people differently – make changes selectively. For example, dropping price may not change the behavior of some buyers and may reduce your revenue instead.
A quick web search on "marketing in a downturn" provides some pretty obvious suggestions – ones you should do even in good times, such as spend smarter and outsmart your competition.
Others are of dubious value – don't cut advertising, but cut prices – but a good article about survival tactics in a recession is by Nigel Hollis at www.mb-blog.com/Images/POVMarketingDuringRecession2-0508.pdf.
Joseph Cote is a marketing professor at Washington State University Vancouver. He can be reached at cote@wsu.edu
