How Businesses Can Utilize Market Research to Create Reactive, Recession-proof Strategies for Survival
Upfront planning for a crisis is vital, but it rarely works well unless internal and external factors are taken into account
Imagine that you hear danger is coming. Alerted, you rush to review your supplies and make sure to stock up on enough food, blankets and batteries. However, just the next day you find that the danger you've been preparing for is a flood—and your primed underground shelter will be of no use.
You were preparing for the wrong crisis, not because the right information was unavailable, but because you adopted a kneejerk reaction and only considered your personal situation. Upfront planning for a crisis is vital, but it rarely works well unless internal and external factors are taken into account. For companies, this translates to keeping a close eye on both business intelligence and market trends—the optimal matrix for navigating uncertainty.
The World Bank has forecasted a 5.2 per cent contraction in global GDP in 2020. With an imminent recession ahead, it's high time businesses design recession-proof strategies to be in the most favorable position. How can market research help?
Build a recession-proof strategy
When a recession hits, the first instinct is to utilize existing resources better. All business operations are carefully scrutinized to discover any opportunities to maximize efficiency and increase productivity. When market research comes into play, those unknown—yet critical—factors come to light. It's simple: The information is out there, it just needs to be found and used correctly.
Learning from past recessions: Market research can identify the best practices to confront recessions, which productive benchmarks to follow, and how these lessons can be replicated. A simple competitor analysis can help draw a baseline for the dos and don'ts and guide businesses toward their own optimal strategy.
Prioritizing the right products: Every recession shuffles consumer priorities. Market research can disentangle the changed fabric of demand and outline which items are reaching peak sales and which are facing a steep decline.
With data-driven market and product development, Walmart became one of the leaders during the Great Recession in 2008. The retail tycoon observed consumers' changed behavior and noticed greater investment in home entertainment and personal health. By doubling down on such products, Walmart registered great success.
Streamlining existing processes: The belt-tightening that comes with each recession inherently transforms business operations, with marketing departments usually being the first to feel the hit. To best understand, target, and engage their audience even with a limited budget, businesses can make use of demographic studies, brand recognition and sentiment analyses, customer profiling, and audience segmentation.
Expand business horizons
Recessions are traditionally associated with cost-savings. But as counterintuitive as it may sound, being recession-proof entails identifying novel growth opportunities. HBR found that 9 per cent of companies manage to grow during an economic downturn, and these master the fine balance between cutting costs to survive today and investing to grow tomorrow. So, apart from pointing toward optimization gaps, market research can also guide bold, strategic moves.
Companies all over the world are expanding their portfolios, engaging in mergers, and exploring new geographies. In fact, 45 per cent of businesses are proceeding with international expansion plans despite COVID-19.
In India, we're currently witnessing one of the biggest acquisitions during the pandemic. Reliance Industries has made a move to acquire the retail businesses of Future Group. It's clear that behind the scenes, this decision was supported by synergy analysis, retail outlook, refined expansion strategy, ongoing historic and forecast data on specific industries, and much more. Offensive moves help to secure growth in a recession, and market research mitigates the risks as best possible.
Constant support for strategic decisions
Market research isn't a miraculous panacea—it needs to be used strategically. Rather than utilizing it reactively to guide the immediate next step, it should serve to pinpoint a solution to specific business challenges and support its execution along the way. That means that rather than only discovering the unknown, market research directly guides businesses through it.
Think of companies like Bajaj. The world's third-largest manufacturer of motorcycles dominated the scooter market until the peak '90s. By conducting market research, it found that motorcycle demand would grow exponentially in future years with India's young population. Through insight-driven integrations, Bajaj gradually shifted production. It prioritized its expertise, rather than branching out to unknown domains.
The lesson here is that during recessions, companies don't need to look toward a far-fetched plan B to grow. Instead, they should stick to what they know while being attentive to the ever-changing needs of the market. While certainty can't ever be fully erased, by leveraging insights to resolve distinct business problems, companies can move from full ambiguity to a clear enough future. After all, when the information is out there, there's no excuse not to use it.