How to weather the economic storm
Marketingmag.com.au welcomes Andrew Wilson to the stable of guru bloggers on the
site. When hes not shouting from the soapbox perched atop his high horse, Andrew is a copywriter and creative with boutique Sydney agency The Other Dimension.
Unless you’ve been living under the proverbial rock, you’ll be all-too-familiar with the following synopsis: the world banks have no money and the individuals who do are busy stuffing it into their mattresses instead of heading down to deposit it in the cash registers of their local merchants. Or worse yet, they’re doing the unthinkable and simply paying off their credit cards and mortgages. Some countries (OK, only one that we know of) have threatened to throw you in jail if you even mention the words ‘credit crisis’ in the media. If you’re in business, it’s all gloom and doom… or is it?
Do you remember the good ol’ days? Just twelve months ago, average Joe punter thought ‘credit crunch’ was a brand of breakfast cereal, and every bank and financial group was offering him a card limit equal to the GDP of a small Eastern European country. Interest rates may have been up, petrol prices may have been sky high, but people were still spending money – and if they didn’t have their own, there was a smiling credit agency willing to lend them some. Now, it seems that each day in the press another big institution goes belly up.
And yet, some reports suggest average Joe Australia seems to think that it’s still a relatively good time to buy a new car (even a V8 one at that) or a plasma or LCD TV. So, there’s money being spent somewhere, which means it’s not all bad news for business. That’s why this blogger is affirmative in saying, with confidence rather than naivety, that 2009 can be a good year for your business.
Take last year’s automotive landscape, for instance. The number of new cars sold declined. But it was still the second highest on record (behind 2007), with over one million units moved. Certainly, margins were cut in order to maintain sales figures – particularly in the second half of the year – but nevertheless it’s an impressive result given the state of things. And yes, this year sales are expected to decline again. But perhaps of more relevance is looking at the big movers in the industry. Volkswagen, for instance, rose by 9%, while brand stablemate Audi will still be patting itself on the back after clawing back to gain a 30% increase on ’07 sales.
Of course, in a falling market, you can’t be gaining volume without someone else losing share. In this case, one might conclude that Audi’s sales growth came in part at the expense of rivals Saab and Alfa Romeo, who lost 38 and 35% respectively. At the same time, the ubiquitous Lexus lost 18% on the prior year’s share.
So, without offering to provide a detailed analysis of the various contributing factors of this particular example – such as timing of new model releases, favourable or fluctuating exchange rates, the influence of product life-cycles, luxury car tax implications, etc. – the point remains that whether the market is rising or falling, there will always be winners and there will always be losers.
To analyse the situation, and to apply an observation to businesses as a whole, let’s move from an automotive illustration to a nautical one.
The difference between the brands that are winners and those that are losers in this current market (as any) may be attributed in part to the attitude of those at the helm. Broadly, they may be classified into three types:
- The first manager is the naive type. Worryingly, this author has heard several comments by managers recently along the line of ‘this whole thing’s a media beat up, there’s no real crisis’. Yes, they are few and far between, but they are out there. They’re the ones sitting in the ship’s dining room, chatting about past glories and ignoring the fact that their red wine’s being spilt as the boat is tossed back and forth on the waves. If questioned, they may well stick their fingers in their ears and protest loudly that no action is required and it’ll all blow over soon enough.
- The second type is the sh*t-scared pessimist, the one who is convinced the ship is sinking and is more interested in donning his or her life-jacket than in moving the ship forward. It’s all about conservatism and justification, covering one’s own ass to ensure that when people are being thrown overboard, they’re safely lining up for the lifeboat. They’ll tell you that the only way forward is backward, reducing budgets, decreasing activity, and slashing R&D.
- Lastly, there’s the optimistic manager. They’re busying themselves trying to find the opportunities presented by the current storm – they like to remind people that the Chinese term for ‘crisis’ is represented by a combination of the characters for ‘danger’ and ‘opportunity’. They see the danger, acknowledge it, and adjust course accordingly. They dictate progressive action and will tell you that when favourable conditions return, their brand will be postured to dominate the space while their competitors are still trying to recover.
The outcomes of 2009 may well reveal which of the above styles you’ve chosen. To lead your brand through the storm, it’s about being sharp, focused, and willing to adapt in an uncertain climate, not the least of which means managing on a tighter budget. But it’s also about being bold, and being flexible in your tactics without abandoning your overall strategy. It’s knowing your customers and what they’re thinking because of – or in spite of – what the media’s saying. And on the subject of media, it’s about taking advantage of heavily-discounted media space to build a stronger share of voice and maintain your brand presence.
Certainly, there will be winners and losers on the rough seas. But once we’re all done being alarmed by the size of the storm, the eventual winners will be busy charting a course and building bigger sails, while the losers are either just being tossed by the waves or simply battening down the hatches. The winners will end up riding the very same waves which sink their competitors. True, no ship will have an easy journey – but as the old adage goes, you can expect fortune to favour the brave.