What to Do in a Recession by Ken Bernhardt Regents' Professor of Marketing and Assistant Dean for Corporate Relations  Robinson College of Business, Georgia State University Atlanta Business Chronicle - April 4, 2008 The business press is filled these days with stories indicating we are currently in a recession.  So what should companies do if, in fact, we are in a recession?  The answer is, provide more value for customers. Value can best be defined as "what you get for what you pay."  During a recession, many companies pay great attention to the "what you pay" part of the equation.  For example, many quick service restaurants are promoting their 99 cent or $1 value menus, retailers are featuring their lower-priced private label brands, and many marketers have increased their discounting or are offering lower-priced, stripped down versions of their core products. But there are several problems with this strategy.  Discounting can be easily and quickly matched by competitors, eliminating any anticipated price advantage.  It typically squeezes margins, causing pressure on shareholder value.  Deep discounting increases consumer sensitivity to price and can destroy customer loyalty. In addition, it often erodes perceived value instead of increasing value. So what should a marketer do during a recession?  First, instead of focusing on your pricing, focus on other ways to reduce the "what you pay" component of your product.  For example, make it easier to do business with you.  This can reduce the customers' costs.  Are you using technology to make it easy for customers to order from you, communicate with you, bring problems to your attention enabling quicker problem resolution, etc.?  Second, are you paying enough attention to the "what you get" part of the value equation? The key here is innovation, providing increased choices, adding personalization/ customization, enhancing the customer experience, building the brand, and using new media to communicate with today's consumers. Let me use the quick service restaurant industry to illustrate: Innovate: Quizno's has added Sammies, snack sized, flat bread-based sandwiches for $2.00 or as a combo meal including 2 Sammies, a side item, and a drink for $5.99.  Sonic has added numerous innovative drinks including smoothies, slushies, innovative shakes, and flavor shots. McDonald's has introduced premium roast coffee and premium salads featuring Paul Newman dressings. Most competitors have added a number of new products to their menus including up-scale items, exotic and ethnic flavor items, and new healthy alternatives. Increase Choice: Responding to customer demands for increased choice, menu alternatives have proliferated.  McDonald's now offers fruit and vegetable options for kids' meals.  Wendy's offers a choice of side items as alternatives to French fries in their combo meals.   Customize/Personalize:  Burger King started this trend many years ago with their "Have It Your Way" campaign.  Starbucks allowed customers to specify how they wanted their coffee, adding value to the customer at the same time they added to the cost of the cup of coffee.  More recently, Sonic has increased their market share by offering what they claim is 168,894 beverage choices through the use of a variety of added flavors. Enhancing the Customer Experience:  Chick-fil-A has done this exceptionally well for years by hiring team members who can provide courteous, attentive service in a clean environment.  These are things that customers don't want to give up even in a recession.  Howard Schultz, former and recently returned CEO of Starbucks made headlines Valentine's Day last year by lamenting the loss of "romance and theatre" when the company switched to automated espresso machines and added egg sandwiches.  He is bringing in new machines to grind the beans, has eliminated the egg sandwiches, and retrained the companies 15,000 baristas to enhance the customer experience and "re-ignite the emotional attachment of customers." Build the Brand:  Consumers trust brands.  The temptation is to cut advertising and communication to save cost during a recession, but research has clearly shown that companies that do this suffer when the recession is over.  As Howard Schultz said in this week's Time magazine, "We haven't been as good at telling our story as we once had in the past."  Use New Media: Use of traditional media has been declining for several years.  Have you updated your media plan? Are you using the Internet for 2-way communications?  Go to Mystarbucksidea.com to view a great example. One other important and effective way to add value is to be a good corporate citizen.  Consumers today notice if you are environmentally friendly, act responsibly (such as removing trans-fats from the menu) and support local causes.  Some companies, perhaps determining it is necessary, cut back on this support during a recession, a time when many community-based organizations need it the most. Companies that step up during hard times are rewarded with increased customer loyalty. Attentive listening to consumers can go a long way to providing insights in each of the  areas described above.  Chick-fil-A and Starbucks for example have put people in cars or vans and driven them to restaurants to observe them ordering and eating followed by extensive in-depth interviews to understand what was observed. Finally, test, test, test before making major changes to ensure that what the customers are getting is significantly greater than what they are paying - - in other words, great value.