It was Winston Churchill who first said: “Never let a good crisis go to waste.”
Churchill’s words are perfectly appropriate considering what’s going on today with the Coronavirus and Covid-19. This could very well be the crises he was talking about.
According to The Harvard Business Review (HBR), “in studying the marketing successes and failures of dozens of companies as they’ve navigated from the 1970s onward, we’ve identified patterns in consumers’ behavior and firms’ strategies that either propel or undermine performance. Companies need to understand evolving consumption patterns and fine-tune their strategies accordingly.”
The HBR continues: “Although it’s wise to contain costs, failing to support brands or examine core customers’ changing needs can jeopardize performance over the long term. Companies that put customer needs under the microscope, take a scalpel rather than a cleaver to their marketing budget, and nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.”
The authors segmented consumers into four groups:
- Slam-on-the-brake consumers feel most vulnerable and reduce all spending.
- Pained-but-patient consumers tend to be resilient and optimistic but concerned about their standard of living. They economize in all areas, though less aggressively.
- Comfortably well-off consumers feel secure about their ability to ride out current and future crises but tend to purchase more selectively and less conspicuously. Finally,
- Live-for-today consumers carry on mostly as usual.
The authors also segment products and services into four groups:
- Essentials are necessary for survival.
- Treats are indulgences whose purchase is considered justifiable.
- Postponables are items whose purchase can be put off.
- Expendables are no longer justifiable.
From these breakdowns the authors suggest four courses of action for companies that want to weather the storm and emerge healthy and ready to prosper:
- Assess opportunities. Perform a “brand triage” to determine which of your products will die, which can be stabilized, and which could possibly flourish.
- Allocate for the long term. Don’t panic and alter a brand’s positioning. Instead, commit to reinforcing your core brand proposition.
- Track how customers reassess priorities, reallocate funds, switch brands, and redefine value and act accordingly, and
- Balance your communications budget. Do not spend yourself into oblivion but do not save yourself into irrelevance either.
Finally, the authors write that marketers should prepare for a long-term shift in consumers’ values and attitudes. They suggest “that the discipline around marketing strategy and research developed during the (crises) — and the ability to respond nimbly to changes in demand — will continue to serve you when the economy recovers.” As you do this, you “should prepare now for a possible long-term shift in consumers’ values and attitudes” when things start to get better.
Obviously none of us have ever been through a crisis exactly like this one before. Therefore no one knows exactly what will happen. But doesn’t it make sense to plan for the future by looking at the past and learning how to react by studying what has worked before?
As I see it, the advice I closed with last week is still the best advice I’ve heard to date: “Treat your face the same way you should treat your 401(k) and your IRA. Don’t touch them.”
Try to stay as happy, healthy, and as tranquil as you can. And when even that gets difficult, remember the Hebrew proverb “this too shall pass.”