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Painful Economic Contractions Can Be a Good Thing
by Claire Ratushny


No doubt about it. The economy is contracting and it’s a painful process. Businesses, large and small, are going under, impacting jobs and revenues in communities. Brands, even well-established ones, are vanishing from the map, leaving us to wonder what’s coming next.

Maybe this isn’t such a bad thing. Over the past few decades, we’ve seen unprecedented economic expansion. Businesses and consumer brands popped up everywhere. Knowledgeable consumers, flush with cash and limitless confidence, spent increasing amounts of disposable, and not so disposable income on “stuff”.

Everybody just had to acquire more and more stuff. Better and better stuff. In fact, designer brands and aspirational brands seemed to be within reach for many consumers and they went for them with real gusto.

All of a sudden, consumer spending accounted for a whopping 70% plus of the national GDP by the 1990’s. That may not seem like such a bad thing, but we all know that every balloon can be blown up just so big before it pops. With the pop, comes the pain. As consumers, who have learned some hard lessons spend less, pay off debt and save more, companies and brands are struggling. Many are just plain disappearing.

Here’s where we need to take the long view of things. Look at nature. Survival of the fittest is written into the DNA of the entire natural world. In this environment, stronger, healthier specimens survive and thrive, strengthening their species.

So, too, with brands. The inevitable downturn of every economic cycle is underway. So let’s look at the positive. Periodic recessions enable businesses to slow down and take stock of their brand health. Smart companies will. If they analyze and act on their findings, they’ll give themselves much stronger odds of survival.

A Smarter, Tougher Consumer

Consumers are now asking harder questions of themselves. “Do we really need it?” “If we need it, do we need it right now or can we wait to purchase it?” And this: “Do we even want it?” These are questions that haven’t asked for some time.

It’s wake-up call for consumer brands. Is it being heeded? Tip: while lowering prices seems to be a universal response, it is not a panacea in a tough economy. The new mantras that have popped up in our vaunted consumer culture: “Less is better” and “Excess is a dirty word” don’t have much to do with pricing.

This recession is pushing consumers to conduct deeper gut checks than ever before. We’re seeing the emergence of new thought processes that couldn’t happen when consumers were in a feeding frenzy of acquisition. Result: they’re asking new, more probing questions.

  • What is the real cost of goods?
  • That is: How much is it really costing in energy, materials and in terms of the environment?
  • Shouldn’t we buy fewer items from now on? Weren’t we a bit too materialistic?
  • Should we be defining ourselves by our possessions?
  • Shouldn’t we wait until we can afford to purchase fewer and better quality items?

It’s time for business executives, including marketers, to stop lowering prices as their only solution to encourage consumer purchases so they can stay afloat. It’s time to do the hard work of analyzing the very core of their brands—their reason for existence, the quality of their products and every aspect of their interactions with the customer.

Businesses need to do some soul-searching as they ask the following questions and answer them truthfully:

  • Why does our company exist? Is it worthy of survival?
  • If we have a viable, but weakened brand, how can we reposition for the here-and-now and for the future?
  • Are our employees true embodiments of our company brand? Do they live the brand and present it to the customer or do they fail to?
  • Do our employees even know what our company brand is so they can embrace it?
  • Since our products can be purchased from myriad competitors, what would induce customers to continue to come to us?
  • Does our business offer greater value than our competitors? Are we unique in the eyes of the customer?
  • What would induce new customers to switch to our brand? Especially in a new, more discerning consumer environment?
  • Is our service consistent and excellent at every customer touch point? If not, how can we recommit ourselves to offering unparalleled customer service in our industry?

Tough questions for tough times, demanding serious introspection, honest answers, and decisive action.  

Fact: many businesses have sprung up that really have no reason to exist. It’s hard to write this and hard to read, but it’s true. Entrepreneurs can’t be faulted for taking advantage of recently growing consumerism, can they? Easily obtained loans enabled new companies to spring up. Or existing ones to nonchalantly go along, or expand far too quickly losing sight of their core along the way.

Fine when consumer spending was free and easy. But with the recent crash, comes the realization businesses sprang up on less than firm foundations. Recession inevitably brings these kinds of businesses down.

Tough times don’t mean that ailing businesses can’t find their core purpose again, re-ingrain a deep sense of ideals, a mission and real meaning. They can turn things around with conviction and commitment if they deliver on their promise. In order to do that, every employee has to be on board. Every customer has to be valued, well-serviced and treated with respect. Consistently.

Smart marketers will see opportunity and act on it by strengthening their brands to take advantage of the contracting economy. Success will come to those who refocus and recommit themselves to deliver what their customers truly value and want. Core brand values served up by every employee with honesty, transparency and an unflagging commitment to customer service will win out.

Some businesses will rise to the current challenge and they’ll survive. The good news: consumers are still buying. The bad news: they’re buying much more discriminately; turning away from companies that don’t give them a reason to believe, and going to ones that do. Weak brands just won’t make it.

At the end of the day, painful contractions are a wonderful thing. Without them, there is no birth. Existing businesses can be reborn with real purpose. New businesses can be launched, in spite of—even because of--the current environment.

Brands can survive and thrive, giving birth to a new economy on a more solid foundation. One that ensures a stronger future.


The Author

Claire Ratushny

Claire Ratushny is the principal of, a resource created to assist businesses with their positioning, marketing and PR communications needs. Reach Claire at 860-974-1688 or
Many more articles in Marketing Insight in The CEO Refresher Archives
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Copyright 2009 by Claire Ratushny. All rights reserved.

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