Since 2008, its been a struggle across the globe for leading brands- those providing cutting edge services and great products are on their edge trying to figure out strategies that will not only help them tide over this global recession and depressed demand, but also enable them to make decent profits.
Not an easy as it sounds.
The US markets have been sputtering at below par GDP for over 4 years, the Nigerian market, largely unaffected by global money markets has managed to delightfully buck the trend and has grown at over 5%, and growth in India currently stands at 5.5%, well much higher than that in the US, much lower than that seen in China, BUT well below its real potential.
Those who wish ( or wished ) to invest in India are cagey at best, or have already given up on the India story “fairy tale”perpetrated by the Indian Government and their spin doctors!
Business leader after another has painted an abysmal picture of the Indian economy and would rather take their investment plans overseas than sit on piles of cash here, with no returns.
So what are the facts-
The current economic climate might be the worst some managers have yet seen. With customers so jittery, the stakes for getting pricing right are high, and managers may be unprepared to avoid common pitfalls of pricing in tough times.
Based on my assessment of strategies used by successful businesses in past economic downturns, I have put together 3 generic strategic directions that the enterprise may want to consider before formulating and deploying a strategy that works in this downturn
- Understand how price-sensitive customers will behave – and act on that knowledge more quickly than competitors.
A recession, is an opportunity to learn faster about changing customer behavior and gain advantage through this insight. You look not only at the taillights of the car in front but the car in front of him (and in front of him). By paying attention to your customers’ customers (and their customers), you can identify problems before your business crashes into some unforeseen pricing reality.
Essentially it entails that you need to develop client/consumer insights beyond your nose. This requires first class grip on analytics ( big data need of the hour!!), practicing DILO (Day in the life of) and spending more time with trade channel partners, with THEIR clients and comprehending their needs.
- Consider the longer-term strategy before changing prices.
“The great danger is you take sensible short-term decisions that screw up your long term brand value,” says Cram.
What this means is this- dont get pressured into taking decisions on impulse- if the board or the CEO (under pressure from the board) starts breathing down your neck, action AND NOT reaction may be the best strategy. You need to understand that in times of crisis and pressure, anger and reactions are normal- problem is, that if it starts to impact the board and the CEOs behavior, some where down the line, the reaction needs to stop; better it starts with YOU and you put your head down to really think hard and think through and then put your well thought case to your CEO or the board. You will be better served when you are seen as a sane voice in a room full of senior executives gone insane with pressure!!
AND dont forget- your logic and a long term perspective has to be the underlying theme for your pricing strategy.
- Be sympathetic to cash-strapped customers – and take care not to start a destructive price war by accident.
Make sure your price cuts don’t appear to be panicked reactions to falling sales. Your rivals will be watching you closely, and you don’t want to start a price war. If that’s a possibility, it’s better to promise to match competitors’ prices. And if it’s your competition that’s slashing process, think carefully before following suit. Your rival’s decision, might be ”the idiot decision of one manager who is going to get fired.”
I could not agree more on this. Panic an knee jerk reaction to a competitors pricing policy is NOT the answer for ensuring long term sustainability of the business, the top line and the bottom line.