Currently, the whole world is fighting against the disaster caused by the coronavirus. It is not only affecting our health, but it is also adversely affecting our economy. These type of pandemic slowly kills the economy by breaking the global supply chain and lowering the consumption. People are not consuming goods and services at the rate they were consuming before. This leads to low sales for businesses. Businesses all over the world are reporting losses. If the present scenario continues for a long time, then we might see a recession too. Businesses are constraining their budget and are looking for a way to minimize their expenses. This makes the job of a marketeer difficult; now they are expected to increase their sales with a shoestring budget. In this article, we will try to look into various types of strategies that firms can adopt amidst a shoestring budget.
To understand the situation better, let us see how a crisis due to a slow-paced economy affects any firm? Well, a fall in consumption expenditure, escalates the economic crisis even more. If consumption spending falls, then it causes output and employment to fall too since consumption expenditure directly impacts the other two. And as a consequence, the economy stagnates, and the prices deflate. Lower prices (if unable to recover the costs) lead to halting the operations of any firm and will initiate the layoff process. This, in turn, reduces earnings further. Hence this vicious cycle keeps going, and if the firms don't play their cards right, then they might go out of business. Now coming back to the slowdown that India is facing, it is shocking to observe that if the trend continues for another year or so, it would be the longest stretch in more than two decades since quarterly GDP data for India are available. And the decline in consumer demand could further lower GDP for the third quarter, despite government reforms. Earlier this year, Moody's slashed India's growth forecast to 5.6% in 2019. Some are already searching for tactics such as lowering prices to deal with the tough times, which they believe are here.
However, despite the alarming situation, India continues to offer better and more exciting growth scenarios than most regions. India has a massive count of 1.4 billion people and a middle class that is proliferating. The McKinsey Global Institute predicts that by 2025 there will be 583 million people in India with annual disposable incomes between 200,000 -Rs1 million.
Firms on a shoestring budget amidst a slow-paced economy:
Research by Penn State's College of Business discovered that an economic downturn should prompt an aggressive rise in marketing spending. The study showed that businesses entering a recession with a pre-established strategic focus on marketing, an entrepreneurial culture, and an adequate reserve of underutilized workers, cash, and spare production capacity were better positioned to approach recession as opportunities to strengthen their competitive advantage. Companies that improve marketing during difficult times, when rivals cut back, can usually raise both market share and investment return. Aggressive marketing can boost demand from both new and existing consumers. But that doesn't just mean throwing cash into marketing campaigns. Smarter, more targeted marketing strategies need to be developed.
Some examples of great marketing decisions are – the launch of Ivory soap by Proctor and Gamble during the Great Depression, the launch of "Intel Within" by Intel during the recession from 1990 to 1991. During the turbulent period from 2000 to 2001, Walmart bombarded its competitors with Everyday Low Prices. These innovative and novel decisions helped the firms to survive during the worst times.
This is the 1st article of the series.