“Make drugs for millions, not millions from drugs”
A prominent third-world leader made this startling statement to pharmaceutical industry executives decades ago. It caused much consternation at the time, but the thrifty consumer sentiment of 2008 prompts one to review the assertion in a new light.
Value for money is your best business bet during inflation and recession. Price elasticity is heightened in a stagnant market. Even luxury goods cannot escape waves of depressed consumer sentiments. Essentials of life are affected somewhat less, but all product and service categories will witness slides towards lower price points and generics.
Stock investors can use the following three signs to pick stocks of companies that retain mass appeals even in trying market conditions:
1. New brand launches to cater to revised gap analyses. Customer decision-making changes during economic downturns. People have to compromise with some of their preferences. Stripped-down models of mature brands will do relatively well during difficult economic times.
2. Value engineering exercises. This is an extension of the concept above, but has purchase and production perspectives. Shaving overages in product and packaging designs, and suspension of service that does not add sufficient value to customer satisfaction, are examples. Such actions can keep dividends flowing from stocks, even without appreciable top-line growth.
3. Switching focus from features to benefits. This is something brand managers should do all the time, but the importance is heightened when the going gets tough. Companies that are able to communicate the values they offer are most likely to ride out inflation and recession.
Let us hear your thoughts below:
