RECESSION

AND

INNOVATION

Munish Malhautra

Youtube1

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THE CRISIS

Markets will select the best adapted varieties of brands to survive and to develop. This process is well known as

natural selection.

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WHAT´S THE FIRST MISTAKE BUSINESSES MAKE?

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DONT LEARN FROM PREVIOUS CRISIS :

IN TIME OF CRISIS, WHILE SOME CRY, OTHERS ARE SELLING TISSUES

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Recession kills customer loyalty.

68% of consumers are brand-switchers!!!

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1. Consumers are more rational - They go more often to the supermarket but buy less.

2. They put off major purchases3. Use social-media as a source for

making product purchasing decisions.

4. And trade down to cheaper alternatives!!!

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“Maybe, instead of cutting it is necessary to find a cheaper product”."Those who do not innovate, stagnate”.

Philip Kotler

What is Recession? In economics, the term recession generally describes the

reduction of a country's Gross Domestic Product (GDP) for at least two quarters.

GDP = C + G + I + NX1. "C" is equal to all private consumption, or consumer

spending, in a nation's economy.2. "G" is the sum of government spending.3. "I" is the sum of all the country's businesses

spending on capital.4. "NX" is the nation's total net exports, calculated as

total exports minus total imports. (NX = Exports - Imports)

RECESSION = WHEN YOUR NEIGHBOR LOSES HIS JOB

DEPRESSION= WHEN YOU LOSE YOUR JOB

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CAUSES OF RECESSION:

Currency crisis Energy crisis War Situation Under consumption Overproduction Financial crisis

EFFECTS OF RECESSION:

Bankruptcies Credit crunches Foreclosure Fear Factor Unemployment

Example: September 11 Terrorist Attack in US ; India-Mumbai Got Attacked ; Pakistan Got Attacked ;

Series of such incidences lead into

war situation

Terrorists’ Attack on 11th September in US

Created fear in people

People cancelled their travel plans

Airlines & Hotel Industries badly hit

Resulted in low occupancy rates

Airline & Hotel Industries offered discounts, gift coupons, to attract people

But, still, no improvement in occupancy rateAirline & Hotel Industries started “Cost Reduction” activities CONTINUED

IN NEXT SLIDE

Terrorists’ Attack on 11th September in US

i] Reduce No. of flights ii] Lay off peopleiii] Salary reduction to“Not laid off people”

In flight meals reducedLow or No income to spend and buy goods

They became careful dueto the fear of loss of job

Meals supplying companygot the hit

Catering company now,lays off people

Demand for other goodscome down

Started saving moneyinstead of spending

Demand for other goodscome down

Airline & Hotel Industries started “Cost Reduction” activities

So, you can see how the hit on Airline and Hotel

industries can affect “Un-related” industries in the end;

One industry can hit many other industries when the confidence level of millions of consumers & producers drastically comes down;

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Is your company “Chasing Its Tail” or experiencing the "Fatal Five" danger signs:

– Slowed growth– Decreased revenues– Increased costs– Lower profitability– Unpredictable cash flow

Companies facing: Uncertain times Political

uncertainty Recession Stock market down Housing market

bad No succession

planning

Companies want: To save money To make money Employees to be

more productive Succession

planning To Grow To Innovate

Recession and

our Role

You tube-2

• "Organization doesn't really accomplish anything. Plans don't accomplish anything, either. Theories of management don't much matter. Endeavors succeed or fail because of the people involved. Only by attracting the best people will you accomplish great deeds."

General Colin Powell

Training the existing human Resource and enhance their skill set to get more revenue in other fields.

Improve loyalty and moral of old employees.

Improve leadership skill by training

Motivate old employees and help them match their

individual goals with organizational goals.

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COST EFFECTIVE METHODS OF COST EFFECTIVE METHODS OF TRAINING TO BEAT RECESSIONTRAINING TO BEAT RECESSION

The employees should be motivated so as to link their personal goals with the organizational goals.

People without personal goals tend to move towards negativity.

If Negativity is the lock, Motivation is the key

MOTIVATION

Move out of the overcrowdedmarket space.• Move into a new market spacewhere there is no competitor –wide open playing field ofpotential revenues and profits.• Forward thinkers are shifting their focus from recession to recovery… and they will be poised forgrowth when the economy turns around.

They all expanded their sales, profits and market share in a recession, and most went on to dominate their category.

They maintained or increased their advertising and promotions while their competitors were cutting back!

They focused on opportunity, not fear.

They saw a vacuum left in the market and filled it.

“The company courageous enough to stay in the fight when everybody is playing it safe can bring about a dramatic change in market position.”

During the 1920s, Fords were outselling Chevrolets by 10 to 1. In spite of the Depression, Chevrolet continued to expand its advertising budget, and by 1931 Chevrolet took the lead.

1933 Ad

1927

Models

In 1990 Nike and Reebok were virtually tied for first place in sales.

“During the 1990-91 recession, Nike tripled its advertising spending, while Reebok cut back.”

“When America emerged from the recession, Nike's profits were nine times higher than they were going in – and Reebok has been eating dust ever since.”

Wal-Martfounder SamWalton, on the1991 recession

“I’ve thoughtabout it,and decided notto participate”

Two years later,Wal-Mart’s shareprice was up200%

1. Reassurance and confidence2. Purchases that minimize

risk3. Familiar brands that reduce

uncertainty4. Extra value5. Improved service

Thank You!