Recessions force consumers to choose between perceived needs and perceived wants.
Most companies default to competing for the wants. They cut corners, quality and common sense to offer the cheapest product on the market. They eat one another in a race to the bottom until the largest and most efficient supplier dominates and the rest file for bankruptcy.
A recession creates an opportunity for you to change the perception of the value you offer to meet your customers where they are. Let the rest of the market devour itself.
Facing the Great Depression, legend has it that Kellogg’s doubled its advertising budget and built entertainment value into its new Rice Krispies cereal. Featuring the animated and personable mascots Snap, Crackle and Pop, Kellogg’s made consumers aware of a problem they didn’t know they had. They were bored at breakfast. Kellogg’s just happened to offer an exciting solution and dominated the industry during the 1930s.
Stormy Kromer’s iconic red plaid hat with fold-down ear flaps found a new owner with new ideas during the 2001 recession. The previous owner finally discontinued the brand after years of declining sales. The new ownership broadened the hat’s appeal beyond northern Wisconsin and Michigan to become a must-have accessory in colder climates.
Apple in 2007 introduced its iPhone, which combined amazing features never before offered in mobile technology. Consumers thought cellular telephones could only talk and text until Apple swooped in with a wide touch screen, access to the internet and email all on one handheld device.
How do you increase your perceived value?
First, change the perception of your product so it becomes an experience. Kellogg’s didn’t invent anything new. Packaged cereal had been around for 20 years by the time Kellogg’s incorporated in 1906. It transformed the perception of breakfast meals from a centuries-old routine into a fun morning.
You see its model on grocery store shelves to this day. Consumers spend twice as much for Cinnamon Toast Crunch at ALDI than they will for Cinnamon Crunch Squares when they often can’t tell the difference.
Second, experiment with customers outside your traditional audience. Never changing its 120-year-old quirky design, Stormy Kormer engaged in an aggressive digital marketing campaign that targeted women and children with new colors and patterns.
After tinkering with strategies and identifying the right prospects, Stormy Kromer’s revenues are up 92% since 2017 and 20% within the past two years alone. Its new CEO intends to grow the company further into new regions in the U.S. and eventually overseas.
Finally, can you add more value to your existing solutions? Mobile phones largely provided the ability to call people from nearly anywhere since the first Motorola in 1973. Apple reimagined the portable phone and its potential. It continuously adds new features such as GPS, weather apps, cameras, video calling and so on to increase their value and price. Voice often is the least-used feature of a phone today.
Apple pulled in record-breaking revenue during the 2008-2009 Great Recession by finding solutions to issues consumers didn’t know they had. A phone that couldn’t videoconference, open your garage door or play your favorite songs on demand would be unimaginable in 2022.
Professionals around the world soon will don virtual reality headsets and join meetings as though in person. Are any architects thinking about the virtual office needs of the future? Is there an opening for manufacturers to craft new lines of furniture for the new virtual workplace? Will traditional office complexes even exist? If they don’t, what will replace them?
Kellogg’s, Stormy Kromer and Apple crushed sales in recessions and became top of their categories. They identified new problems and delivered the first new solutions.
Academics at the next World Economic Forum in Davos can debate whether the U.S entered a recession in 2022. Conditions always are ripe for you to create opportunities to hone your greatest attributes and innovate your way to success.
When your customers need something new or you can identify a new problem for them, be there to give them the most valuable antidote.
You never need to worry about recessions when you consistently offer the highest perceived value.