Revenues Operating Margins Customer GDP Projections … · Margins Revenues. Winning Strategies Amid Global Crises | 2 With the Covid-19 outbreak declared as a global pandemic, and

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Winning Strategies Amid Global Crises | 2

With the Covid-19 outbreak declared as a global pandemic, and its already significant impact on economic growth projections, unemployment rates, and market valuations, a prolonged economic downturn is imminent.

As countries, industries and companies adopt a slew of measures to minimize the impact on business, a peek into past financial crises offers interesting insights into how some companies navigated such events smartly, to successfully position themselves for continued growth.

Companies which emerged as ‘winners’, during and after the previous economic downturns, not only managed to maintain a strong line of defense (often through fiscal prudence), but also played selective offense by identifying and investing in growth opportunities.

They demonstrated patience and focused on a long-term path, while continuing to minimize damage in the immediate-to-short-term.

And, such companies preserved their brand equity with customers, employees and partners, to ensure they are well positioned to capitalize on economic recovery at the opportune time.




Marketing Blitz

Strategic M&As

Increased R&D and Product Development

Increased Community Engagement

Diversification and Divestments

Aggressive yet Sustainable Pricing

Unabated Focus on Customer Service

Naturally, the dynamic nature of each industry negates a “one size fits all” approach. Accordingly, the ‘winners’ adopted one (or more) of seven key strategies, based on

what was best suited for their industries and markets.




Increased Community EngagementSome consumer product companies have increasingly focused on establishing a

stronger bond with the communities they serve in order to increase brand loyalty, often by crowdsourcing customer opinions for key product decisions.

Witnessed low sales and customer retention, due to a decline in discretionary consumer spending

Increased community engagement efforts through social media and solicited ideas for improved offerings

2007-08 Financial Crisis

Staged a recovery in its topline in 2010, after a 6% dip in 2009

2007 2008 2009 2010

$9.4

$10.4

$9.8

$10.7

In USD Billions



Marketing BlitzConsumer product companies have also lent greater emphasis on increased yet

targeted marketing spend, to more effectively communicate their product offerings and positioning, thereby gaining mindshare and increasing brand recall.

Witnessed low sales during the economic recession even as it revamped offerings in line with changing

customer needs

Increased marketing budget significantly, including the sponsorship of ‘Britain's Got Talent’ (the country’s most watched TV show), in order to increase awareness about its evolving product portfolio


Witnessed an appreciable spike in revenue in subsequent years



Marketing BlitzConsumer product companies have also lent greater emphasis on increased yet

targeted marketing spend, to more effectively communicate their product offerings and positioning, thereby gaining mindshare and increasing brand recall.

Struggled to maintain sales volumes, as Americans cut down spending, even on basic household items

Leveraged new (at the time) marketing avenues, primarily commercial radio broadcasts, including sponsoring daily radio soaps aimed at homemakers, to increase awareness about its product portfolio

The Great Depression (1929)

Managed to position itself as a household brand, one which its customers could relate to, thereby reaping

dividends from its product diversification strategy



Diversification and DivestmentsMulti-industry conglomerates and/or services companies have focused on realigning their long-term strategy and prioritizing specific business units while divesting others,

and/or diversifying their offerings.

Similar to many Asian businesses, witnessed severe financial impact and was stuck with high

leverage on its balance sheet

Divested unviable business units (the most prominent one being Samsung Motors) and increased focus on the ones that it deemed critical for its long-term strategy, specifically LCD screens and semiconductor chips

Asian Financial Crisis (1997)

Fostered an era of sustained aggressive growth, as it eventually became a market leader in both segments

In USD Billions

1998 2000

$18.4

$38.5



Strategic M&AsSome companies have capitalized on the erosion of market value to acquire strategic targets at more attractive valuations and have demonstrated fiscal prudence and/or

divestments to better utilize and/or boost existing capital reserves.

Similar to many other commercial and investment banks in the US, Wells Fargo was on the brink of

collapse and had to be bailed out by the government

Expanded its portfolio of borrowers and didn’t open any new branches, allowing it to preserve capital reserves and acquire Wachovia (in December 2008), a key to expanding on the East Coast


More than doubled its revenue during 2007–09, and gained 2nd position (by banking deposits) in the US

In USD Billions

2007 2009

$39.5

$88.7



Aggressive yet Sustainable PricingSome service providers, in view of curtailed consumer spending, have cut service tariffs by optimizing costs. And, to ensure success, these companies have maintained quality

of service, while considering a shift to the volumes game a long-term decision.

In USD Millions

2011

$637

Was part of an adversely impacted aviation sector, as consumer spending declined and air traffic stagnated

Overhauled its entire fleet, reduced costs by adopting new technology, and improved operational efficiencies, in order to pass along reduced airfare benefits to customers; and coupled these efforts with aggressive marketing


Ensured better customer acquisition and lasting brand loyalty, as passenger base and revenue grew rapidly during 2007–11 (revenue CAGR of ~20% dwarfed the industry growth of 2.6%)

20092007

$889

$1,471

In Millions

201120092007

10.4 14.3 18.0



Aggressive yet Sustainable PricingSome service providers, in view of curtailed consumer spending, have cut service tariffs by optimizing costs. And, to ensure success, these companies have maintained quality

of service, while considering a shift to the volumes game a long-term decision.

In USD Billions

2011

$1.21

Saw increasing demand for more affordable forms of entertainment, as consumer spending on entertainment declined considerably,

severely impacting revenue from cinema halls, movie rentals and pay-per-view

Reduced its subscription cost, while significantly increasing the content available on its platform, to make inroads among a large section of the population that was earlier unable to afford it


Customer base increased swiftly, and revenue followed suit

20092007

$1.67

$3.20

In Millions

201120092007

7.5 12.5 26.3



Increased R&D and Product DevelopmentSome technology and consumer durable companies have demonstrated a clear long-term vision, and increased R&D/ product development spend to create superior products that

would be preferred once consumer disposable income recovered to normal levels.

Saw a significant dent in revenue and margins in 2001; NASDAQ crashed, severely impacting most internet/tech

companies.

Continued to invest in R&D and product development, crafting new products which were initially deemed expensive

The Dotcom Bubble Burst (2000-2002)

Each of those new products (iPod and iPhone) ended up creating a new market segment and were extremely profitable

in the longer run

In USD Billions

2007 2009

$8.28

$5.36




Lay the foundation for the future success of Azure, which brought in USD 38.46 Bn revenue in 2019, and allowed

Microsoft to command a 16% market share

Increased R&D and Product DevelopmentSome technology and consumer durable companies have demonstrated a clear long-term vision, and increased R&D/ product development spend to create superior products that

would be preferred once consumer disposable income recovered to normal levels.

Most companies resorted to cost cutting in order to survive the impact of the economic downturn

Continued to invest in R&D to develop its cloud platform, with a view to ensure success in a (then) new market, and staffed ~70% of its employees on cloud-related products and services in 2010



Unabated Focus on Customer ServiceSome service providers have responded to economic downturns by increasing their focus on customer service to limit churn, even as cost cutting and/or deteriorating

service quality at competing firms have allowed positive net adds.


Controlled churn among existing customers, while allowing the possibility of a future expansion of customer base

Many service companies focused on cost prudence, and dropped quality of service, leading to customer churn

Specifically focused on corporate clients (>75% of revenue contribution) and put together dedicated account management teams, while investing in infrastructure and new technologies



Retained most of its customers, acquired new customers from competitors, and became a more trusted delivery

company for high-priority couriers

Suffered huge losses on its next-day shipments

Unabated Focus on Customer ServiceSome service providers have responded to economic downturns by increasing their focus on customer service to limit churn, even as cost cutting and/or deteriorating

service quality at competing firms have allowed positive net adds.

OPEC Oil Shock (1973)

Continued to offer the service, albeit at a loss, even as competitors cut back on delivery costs or increased prices


There is no one-size-fits-all solution, but we think these strategies are useful guideposts for navigating your brand through the greatest crisis of our time.

Companies that emerged from past recessions focused their efforts on:

Market Entry Assessment

M&A Support

Market andCompetitive Monitoring

Concept Development

ProductPropensity Analysis

Brand Tracking

Segmentation

Buyer Personas

Purchase Process

Customer Experience

Strategic realignment of the domains/markets where they had to win

Innovation in the products and services they wanted to offer

Re-evaluation of the communities/segments they wanted to serve

Refine the positioning to connect with their target and hit the sweet spot on price

Ready To Rise Grail Insights is here to help.

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Documents

Revenues Operating Margins Customer GDP Projections … · Margins Revenues. Winning Strategies Amid Global Crises | 2 With the Covid-19 outbreak declared as a global pandemic, and