During a recession, many companies are forced to make very difficult decisions. This has been especially true in the current recession, which has been not only been deep, but global.

Most recession decision-making is pragmatic. The future is not guaranteed and depending on your company's financial situation, short-term survival often trumps long-term strategy. But while surviving may be your priority, decisions made during a recession can have a significant impact on the future of your business well beyond the recession.

They can even impact how well your company will do once recovery begins. Companies that cut themselves to the bone may be ill-prepared to meet demand when it picks up. Companies that weren't in a position (or didn't take the opportunity) to gain market share at their competitors' expense may lose out to competition that did. Businesses that made fundamental changes to their strategy that they thought were temporary may find that those changes are much harder to reverse.

Case in point on the latter: a recent BusinessWeek article makes the point that luxury brands that lower prices too aggressively "could tarnish their glitzy brands". The article notes that, thanks to the recession, "brands from Chanel to Chloé have marked down items to entice customers through the door".

While this may be a pragmatic necessity, how it's done may have a huge impact on how these brands are positioned for recovery. Brands that discount too aggressively and publicly could very well lose the cachet that enables them to charge a premium in the first place. Brands that don't discount at all may put themselves in a financial straightjacket. Neither option is entirely appealing, which is why BusinessWeek notes that luxury brand "executives are well aware of the need to woo today's frugal buyers while trying to maintain tomorrow's prestige".

Executives in many industries are faced with trying to pull off similar balancing acts. From revisiting your pricing to analyzing your ad budgets, there are no easy answers but recognizing that many recession-driven decisions made today will have effects lasting long into the future is something every business owner should be doing.

Photo credit: aturkus via Flickr.

Patricio Robles

Published 28 July, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (2)


Paul Blunden

This is an illustration of why segmentation is so important as it helps drive the decision making process. If Executives make decisions about marketing tactics and strategy based on knee jerk reactions to market conditions it doesn't make any difference whether there is a recession or not, the impact will be felt long afterwards.

It is called a "decision making process" for good reason. The process piece is important.

almost 9 years ago

Rob Mclaughlin

Rob Mclaughlin, VP, Digital Analytics at Barclays

Segment and then target accordingly - it is important for businesses to understand how to implement price discrimination based on elasticity of demand - good old basic economics :)

almost 9 years ago

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