Take Advantage of Recession

Last Updated Apr 16, 2008 10:08 AM EDT

An economic downturn is a great time to go after competitors, who likely will be retrenching rather than advancing.

But you need two things before loading up. First, your financials must be in order, including a healthy balance sheet, cash, and little debt. Second, pick the right fights -- in other words, craft a recession strategy.

Several recent posts at Harvard Online talk to this subject.
Harvard Online blogger Michael Roberto identifies four steps to grow in a recession. Here's a summary:

  1. Invest in R&D. Innovation will propel you to the front of the pack when the economic environment improves.
  2. Raid competitors. The competition will focus on maintaining their best customers, leaving you to cherry-pick smaller but still attractive clients.
  3. Help suppliers and distributors. Build loyalty by offering your best partners a helping hand.
  4. Recruit talent. Downturns provide great opportunities to snap up high achievers at lower prices.
Harvard Business School marketing professor John Quelch provides another view in How To Market In A Recession. One of his key points is that customers redefine value when resources are drying up.
Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.
When planning a marketing budget over the next year, says Quelch, executives need to understand this shifting value proposition, rethink product portfolios, revisit pricing, and emphasize market share. Read his post for some great tips.

How will your strategic and marketing plans change if the economy continues south?

Related articles from BNET: Keep Your Company Strong In A Slow Market

  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.