Phase I: Assessment of External Factors

Timing: When is the recession likely to begin and end? How long will the recovery take?

Industry Impact: Does the industry/business typically lead or lag the recessionary cycles? In past recessions, how deeply have the industry and the company been affected relative to other industries and competitors?

Technology: Historically, what is the industry’s commitment to technological developments? Might the company or its competitors gain a long-term advantage by emphasizing R & D during recessionary periods?

Competition: How have major competitors reacted to previous economic downturns? How will they most likely react to future recessions, given their strengths and weaknesses? How can the firm best respond to likely actions of competitors?

Customers: How are customers likely to change their purchasing behavior during economic downturns? To what extent are they likely to move down the consumption chain, postpone purchases, negotiate for concessions, or seek less expensive suppliers?

Market Segments: How is demand likely to vary across market segments? For example, which segments are more [or less] likely to be price sensitive or to opt for product offerings with fewer "bells and whistles"? Ultimately, are some segments apt to be more profitable during recessions than are other segments?

Value: How do customers define "value" in the industry? In what ways may value be enhanced without increasing costs or jeopardizing the brand/company’s image?

Phase II: Assessment of Internal Factors

Financial Resources: What are the firm’s financial strengths and weaknesses, such as profit margins, cash flow, access to capital, and cost structure? How might these be managed more effectively to minimize the impact of a recession? How might the financial resources be invested to leverage the firm’s future market position [e.g., in advertising to build market share while competitors slash their advertising budgets]?

Human Resources: How critical are employees to the firm’s success? Do their skills [or lack thereof] enhance the attractiveness of some strategic alternatives relative to other alternatives? What is the firm’s commitment to the work force? How difficult would it be to expand or contract the work force as market demand for the firm’s output fluctuates?

Physical Resources: How difficult would it be to expand or contract the company’s operations, if such is necessary? For example, if a strategy such as "build market share" is selected, will the firm’s plant and equipment be adequate to fill the demand both during and after the recession?

Marketing Strengths and Weaknesses: How strong is the brand or product line’s customer franchise? What are the company’s image and reputation among customers? How does market share compare with that of competitors? How may these strengths be leveraged and weaknesses addressed before and during a recession?

Phase III: Strategy Determination

Stance: Given the above considerations and the firm’s objectives, will the business take primarily an offensive stance to exploit opportunities and take advantage of competitors’ vulnerability, or largely a defensive stance in an effort to survive?

Offensive Options: If an offensive stance is selected, which potential options present the greatest opportunity: build market share, innovate, appeal to additional market segments, diversify product offerings, or enhance reputation for quality or service?

Defensive Options: If a defensive stance is chosen, which potential options will best satisfy the firm’s short-term survival goals: price cutting to maintain volume or cost cutting to maintain margins?

Phase IV: Review and Control

Relationships: How are vital business relationships with customers, distributors, employees, suppliers, and other constituencies likely to change during economic downturns? Are there mechanisms in place to monitor these changes, as well as an action plan to mend weakened relationships?

Damage Control: Have implemented recession marketing strategies met short-term objectives? If not, how might the plans be modified?

Position for Future: Have implemented recession marketing plans met long-term objectives as positioning the company for growth and prosperity during the post-recession era? If not, what modifications of the plans are most feasible?

Responsibility: Who is responsible for monitoring the implementation and success of the company’s recession marketing plan?
Other Valuable Advice

In 1998, looking beyond the continuing strong economy in the U.S. and the concurrent downturns in other parts of the world, DMB&B Communications gathered some of the best minds not only from U.S. but from France, Mexico, Hong Kong, Brazil, and Argentina. They were asked for their strategies for handling a recession. Their responses established three broad conclusions:

1. Manage your message. You must reflect the new customer mindset. You can not only shift your advertising message. You can also shift funds to product lines that are suited to a recession. Stress quality and value. Unveil new uses for old brands. The experts cited a 1991 review of recession advertising by NW Ayer, as well as other sources, that offered such examples as:

• A-1 Steak Sauce’s message that "A-1 Steak Sauce isn’t just for sirloin anymore." Indeed, its ability to enhance flavor applied equally to hamburger.
• Dow, maker of Ziploc food bags, shifted funds from Glass Plus cleaner to help introduce a new line of Ziploc freezer bags that protect the freshness of leftovers.
  
• Quaker Oats capitalized on two successful recession messages. First it reversed a long-term decline in sales by increasing spending for the message that its grain products are inexpensive sources of protein. Then it stressed value as actor Wilfred Brimley promised, "A bowl costs you one nickel and four pennies." That message worked so well that Quaker allotted half its budget to it. Result? Powerful sales.
  
• Lipton successfully promoted its Cup-a-Soup line as not only conventional but inexpensive.
  
• Wendy’s met the recession with a head-on message: "Look, I know you have less to spend these days, but that doesn’t mean you have to eat less."
  
• Ikea had a similar idea: "What recession? Sure the country’s going through a recession. That doesn’t mean you have to." It worked.
  
• Schweppes, as perhaps only Schweppes could, positioned its tonic water as an affordable extravagance.
• The DMB&B group concluded, "There is no more important time to be close to your customer and his/her attitudes and needs, and no better time to create trust and make your brand-even in the most image – and emotionally-oriented categories-an easy, reasonable choice."
  
• The group also endorsed a Fortune review that advised, "When faced with [penny-pinching] consumers, it helps to shift your ad campaign from messages like luxury and status-enhancement to efficiency and value."
  

• The "Labels for Education" campaign of Campbell’s Soups, which helped raise money for schools across America.
  
• British Airways’ "The Worlds Greatest Offer," which gave away thousands of free tickets.
  
• RCA’s contest to name the RCA puppy, which rejuvenated a long-standing corporate image.
  

3. Negotiate media deals. Keep all media doors open, all dialogue ongoing. Let your media reps know how much budget you have available, but don’t just wait for them to respond. As the market drops and media prices soften, you can seize the opportunities is a buyer’s market. Then, before the market bottoms out, lock in long-term deals. When the economy strengthens again, your deals will stand below market rates.

The 1991 AGB study cited earlier, and noted also by the DMB&B group, found that television prices dropped some 10 percent during the recession in the United Kingdom. In Mexico more recently, TV stations were enthusiastic about accommodating advertisers who showed a willingness to share current financial difficulties and who sought deals that helped maintain long-term relationships. And as recession-suffering advertisers quit such costly prime-time programs as "Seinfeld," others grabbed the availabilities-with no intention of giving them up.