Why recessions make people SOB

Recessions make people Slam on the Brakes (SOB)!

In one of Olivia O’Leary’s contributions to Drive Time at the beginning of the recession, she talked about some of the good things that have come out of the recession. One was that you can now tell your kids that “you can’t afford it” when they demand a new phone, a new pair of runners or something new to wear.

That is what we are saying to ourselves about so many potential purchases: we can’t afford it. If you’re in the business of selling stuff, this isn’t good news. In an article in the Harvard Business Review on ‘How to Market in a Downturn’* a new and very significant segment was identified, called simply ‘Slam-on-the-Brakes’. People who are in a SOB frame of mind are likely to deeply reduce or eliminate any treats and look for lower-cost substitutes. Little wonder that Lidl and Aldi are among the beneficiaries of the SOB movement.

But  you can also see some high quality brands doing very well in the recession too. Like many other people, our household has cut back on dining out since the recession kicked in. But last week we managed to dine in one of Dublin’s premier restaurants and enjoy wonderful food at great value.  Roly’s Bistro Café offers the most incredible value without compromising on quality. Not surprisingly, the restaurant was packed.

Essentials Treats Postponables Expendables
Emphasise price and watch your price points.

Introduce fighter brands – as Roly’s new Bistro has done.

Identify small luxury treats that people will buy as a small indulgence. Our new mania with cupcakes is a good example. Challenge penny-wise, pound foolish behaviour. Yours truly put off getting a filling replaced and doubled her dental bill in the process! Offer do-it-yourself alternatives to doing without. Or see if you can identify and extract an expensive part of your offering to make purchases more affordable.

 

*How to Market in a Downturn, by John Quelch and Katherine Jocz, HBR April 2009