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34 Managing Customers Through Economic Cycles

These structural shifts in consumer spending will likely
play out over a period of as much as 20 years. Long term,
the Chinese consumers will, with all their spending, be a
major force in the global economy as were the Americans
for such a long time. This will be driven by the simple facts
that there is a mass amount of Chinese consumers, that they
have the resources to spend, and that they will likely spend
those resources to improve their lifestyle. Conversely, the
American consumers have recently been burned into stock
market crashes coupled with a recent crash in home prices.
The fiscal message for the US consumer translates into “We
can’t count on home prices going up forever, we can’t bank
on the stock market exclusively, so we need to more con-
servatively manage our entire portfolio with an emphasis on
increasing our savings rate”.

Strategic lessons learned

Our research revealed six critical 20/20 hindsights where
reactionary decisions rather than sound strategic planning
caused significant market and financial pain following a
particular economic cycle.

“We cut marketing spend too far” Whatever you do, don’t
give up on marketing. When you cut marketing during a reces-
sion, you stop the conversation with your consumer. You are
out of sight and ultimately out of mind, putting your brand at
risk. The key is to rethink your strategy. Understand your
current target mindset to make sure your message is relevant.
Reallocate dollars to more effective mediums. Use this oppor-
tunity to build or strengthen your brand. A recession can be
a great opportunity to gain market share and position your
brand for the future. So don’t just weather a recession – seize
the opportunity to thrive. Continue customer development
activities or pay the price in post-recovery economies.