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Recession: A Time to Innovate

January 13, 2010
By Dr. Amit K. Sinha, Rohit M Bagri, Dhaval Dave, Utkarsh Gandhi, Darshan Mehta, and Anand Maheshwari

Everyone has talked about the terrible recession we're mired in. But can you find a positive term in this dreaded,
negative term? Actually, this word does have an underlying positivity. It transforms into "recess is on." Recession
is a time to take a "recess" from the conventional. It is a time to get the gray matter thinking. This is a time of
umpteen numbers of opportunities. It is a time to be innovative. It's time to be cautiously aggressive. The use of the
terms, "cautious" and "aggressive" in the same sentence may sound paradoxical, but this paradox is the main
essence marketers need to master to tide successfully over the adverse economic scenario, and emerge leaders
when the upturn happens.

The cautiousness in a marketing endeavor is required at the strategic level, and aggressiveness at the tactical
level of implementation.

At the strategic level, recession calls for more than a generic knee-jerk reflex of cutting on marketing budgets and
cutting down on brand promotion. It calls for a systemic review and drill down approach in formulating a marketing
strategy. The consumer psychology has undergone a sea change during this recessionary period. Hence, the first
step in innovation is identifying a new way of segmenting, targeting, and positioning of the company's product.
Recession is a time to depart from the conventional way of segmenting based on demography and geography to
one that is more comprehensive and consumer-centric. Based on consumer psychology, the following
segmentation model may be structured for segmenting the market at the time of recession.

For the consumer psychology segmentation table, click here.

Marketers' strategic intent requires innovation in terms of the consumer psychology segmentation model to place
their product into the most appropriate category. They then need to assign the right resources and methods, to
target and position their products into the minds of consumers.

Horlicks, a nutritional drink for children, has been one of GSK's most popular products. Traditionally, it has been
regarded and positioned as a "pleasure" product in the consumer's mind, and has been specifically aimed at the
"penny-wise and buoyant" target audience. However, the pleasure product market for these two segments was
severely hit during the current economic crisis, as people belonging to these segments look to cut their spending
budgets and concentrate only on "necessities."

Thus, GSK developed a marketing strategy based on the above segmentation, and positioned Horlicks as a
"necessity" rather than as a "pleasure" product. It achieved this by positioning its product as an essential
component of the daily requirements of every child's nutrition. This was based on the fact that no parent would
compromise their child’s requirements. Appropriate advertisements highlighting this strategy backed the product.

It is said "Necessity is the mother of innovation." Answering the tradeoff between product visibility and tight
marketing budgets is the prime necessity of marketers. This has led to marketers designing innovative ways of
marketing in a recession. One of the best examples of this, is the implementation of affiliate marketing by the
Indian aviation company, Jet Airways. The significance of this step by Jet Airways becomes even more evident
when we consider points unique to the Indian Aviation industry.

For the table comparing aviation status in India, click here.

For the marketers' tradeoff diagram, click here.

Jet Airways is in the service-oriented business, with its consumer profile ranging from the buoyant class to the
blithe class. Its affiliate marketing technique mainly was targeted toward the blithe and in-the-money class, who
faced the impact of recession the most. This is because the service offered by Jet Airways is always categorized
by this segment of population as a superfluous expenditure. Affiliate marketing gave Jet Airways an opportunity to
tap into a varied and expanded customer base in a cost-effective manner.

Affiliate marketing is a digital marketing technique akin to creating a virtual field force. However, this virtual field
 force is paid only when it creates sales for the source company (Jet Airways). It is an application of crowd sourcing.

Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use
regular advertising methods. Those methods include organic search engine optimization, paid search engine
marketing, e-mail marketing, and, in some sense, display advertising. On the other hand, affiliates sometimes use
less orthodox techniques, such as publishing reviews of products or services offered by a partner.

Click here for a diagram displaying the features of Jet Airways’s affiliate marketing.

Have you heard about guerilla tactics? Marketers have adopted guerilla marketing to defeat the recession.
Guerilla marketing places ads in unexpected places, in the most bizarre manner possible. The successful
implementation of this technique was demonstrated by a luxury chain of hotels named Morgan Hotels. They mostly
serve the blithe class, with their services being categorized as superfluous. The successful implementation of
Morgan's "F@#k the Recession" campaign with the help of guerilla marketing, resulted in full house for its New
Year Bash in 2008.

Conclusion:

The current recession has left a heavy bruise on the entire world market, a bruise that will take its time to heal. As
suggested by the consumer segmentation model, consumer psychology undergoes a considerable shift, and, thus,
will require innovative marketing strategies to identify the right market for the right product. But using the most
innovative marketing ways to promote brands and increase product life in the market and in the mind of the
consumer, is probably the best way to come out triumphant, not only during, but more importantly after the
recession.

1. HUMAN RESOURCE AS A PROFIT CENTER AT THE TIME OF

RECESSION.
Human Resource management is the process of acquiring, training, appraising
and compensating employees, and of attending to their labour relations, health
and safety, and fairness concerns.
Business is done for the people, by the people and of the [Link] man
Resource is the most strategic field in the organization. It plays a supporting
role for the organization as it manages the most important asset in the
organization i.e. Humans or individuals. It performs the activities like hiring,
training, compensating, appraising and developing employees which is the part
of every manager’s job. By performing these activities the organization achieves
its objectives and fulfils the needs of the individuals working in the organization
and society.
Change is the rule in the present environment. For any business to grow change
is like a religion. This happens with the changes in the environment like boom
or recession. In both the time periods HR acts a profit centre for the
organization. In the boom period in the economy it hires more number of
people, creates new opportunities in the market, provides best talents to the
organization etc. But in the period of recession also it acts as a profit centre.
This we have discussed in detail below:-
If we analyse the current market situation it is in the recession period. Most of
the organizations are following various strategies to face this period of
difficulty. This can be clearly seen in recent happening in JET AIRWAYS 1800
EMPLOYEES RETRENCHMENT. The Aviation Industry is the worst hit
industry in this period. Jet Airways retrenched its 1800 employees but later on
due to political pressure it took back its employees to ease the situation. By
doing this the HR department is trying to balance the situation with the current
situation. At the time of recession HR mainly reduce its operations in hiring the
new employees, compensation given is less, trains the employers to cut down
the costs etc. Through these measures it tries to maintain the profitability in the
organization in terms of cost of employees, production, working etc.
HR makes changes in the existing policies of the organization which copes up
with the situation in the market and can be able to make profit with the best
utilization of the available resources.
Moreover, HR prioritises the activities in the organization accordingly. The
most important and essential resources are planned and implemented properly in
the organization. Activities which are of less importance or can be avoided are
either lowered down or cut down from the group of activities. Through this HR
mainly saves the costs and helps in maintaining the edge over competitors.
So , these are some of the steps which are taken by the HR department in the
time of recession.
ALIGNING HR WITH THE STRATEGIES IN THE ERA OF
RECESESION.
At the time of recession most of the companies follows various strategies to
keep edge in the market. These strategies mainly come from HR department and
few from other departments in the organization.
In many organizations the HR strategies are changed to cope with the situation.
At the time of boom in the economy most of the organizations hire the new
employees, trains them with the objective of growth and maximization of
wealth and resources of the organization.
But opposite is what happens at the time of recession. Their focus changes
towards the flatter and narrow scope of management. The most common
strategy is the cost cutting strategy. They cut down upon their cost of
recruitment, training, compensation etc. Moreover they retrench some of their
employees. It is mainly done with the employees who are in the probation
period.
In this period companies focus remains towards increasing the productivity and
efficiency in the organization. They try to retain the best talented and most
productive employees in the organization.
At the time of boom, companies add new products acquire new companies in
order to get the edge over competitors. But in recession companies instead of
expansion or addition of new products, focuses on the performance of their
existing products. For this the HR departments analyze the performances of the
people and trains them accordingly. They are trained towards cost cutting and
effectiveness.
So by following some of these strategies, organizations achieve their objectives
in the era of recession.
BEST HR PRACTICES AT THE TIME OF RECESSION
There are various HR practices which the organizations can follow at the time
of recession. These are discussed below:
Most of the time, economic downturns are short-lived so keep the bigger picture
of long-term growth in sight. It's easier to invest training time for new recruits
during slower growth periods. It's also worth remembering that if you dismiss
employees during a recession, not only is there a cost, you will have to appoint
someone to take their places when times get better - and that can cost a lot more
money in the long run.
Don't recruit a problem
In the first instance, it's essential, in tough times, to ensure that you've got the
right people working for you. The recruitment process should be conducted with
rigorous thoroughness.
There are three key areas to note:
- Legal requirements
- Best practice
- Collect facts
Do make sure that you ask questions that are relevant to the job being recruited for and
don't be afraid to build in some testing. Some excellent CVs don't hold up under
scrutiny. Once the candidate was tested and evidence collected to see if he/she could
deliver the skills claimed, the results were both surprising and disappointing.
Apportioning the resources wisely
Limit activities with limited business purposes. Instead, organise a sales or other
company meeting with a clearly defined profit purpose. You can make it fun, for
example, using a suitable speaker. Create specific individual performance
requirements from the meeting.
Reduce expenses that don't add value. Instead include low-cost but high-impact
benefits at a time when the rest of the business world is cutting back.
Be honest with employees about difficult times. Let them know how you're
doing so that they understand the true financial picture. Often employees are
willing to make cuts and changes when they understand the facts. There are no
winners if the business goes down. Talking clearly and honestly with your

employees also helps to reduce the rumours flying around the workplace.

See the silver lining

Give employees positive feedback whenever you can. Acknowledge when a job
is well done, and consider non-cash incentives. It can make a big difference to
employee motivation.
Irrespective of the financial climate it's reasonable to ask employees to do their
best. If they're not performing to their full potential, a suitable performance
appraisal, encouraging input from both parties, can be useful.
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and subscribe to great value products or services which cut your costs, but still
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of the ever changing employment law.
Keep on training your people
All the research shows that the companies who weather the storm best perform
better because they keep up their training. It doesn't have to be expensive
classroom training. There are so many cost-effective alternatives - buy a book
(or series of books), arrange virtual classroom or online training, encourage
employees to be seconded on to other projects or work outside their usual
sphere of activity