It is the winter of our discontent again, as the pendulum of consumer demand journeys from the ‘there’s lots more where this came from’ end to the ‘Wonder where it disappeared’ end. For many of the A league companies, even the game of maintaining bottom line growth, despite flagging top line growth, has been played out. There is a limit to which the costs or operational efficiencies can be extracted from a given business system. For many less agile companies, the red ink is happening, as the overall growth of their market slows down, and their more aggressive competitors gobble up market share.

There is bad news affecting all our four consumption sectors. Negligible agricultural growth affecting rural consumption, stock market crash and slow industrial growth affecting urban consumption, the US slowdown affecting the infotech dependent consumption sector, the belt tightening that the Government is doing affecting government job dependent consumers. The words of the song seem to have moved on from “zindagi ek safar hai suhana” to “yahan kal kya ho, kisne jaana”.

Prof SL Rao had once said that the Indian economy is like the walk of a drunken man. You know that he will eventually get home but it will be a few steps forward, a few backward, and a few sideways. We do know that the long term holds a lot of promise – but we need to weather the short term to be there when the long term happens. So perhaps this is a good time to reflect on ways to hang in there, or even use this time to get into fitness training, in order to hit the ground running, when the pendulum swings again, in the right direction.

In an India Today experts poll, 5 out of 7 experts said that the global slowdown will not affect us because we are not an export dependent economy. The sixth talked of the IT industry bearing the brunt of it and the seventh listed ‘petering out of the consumption boost from the Pay Comission, last year’s poor harvest, and WTO mandated opening of imports from April 1’ as cause for an economic slowdown. So even if I sound like I suffer from a bad case of selective perception, I would venture that we are, in a sense, in better control of our own demand destiny.

There are three broad thrusts that companies can follow during this ‘hang in there’ period, the power of each being different for different market situations. One, aggressively expand the served market through manipulating the levers of price, availability, and product segments they play in. Two, find ways to eat the competitors’ lunch by improving the value proposition to customers either through product improvement or operational efficiency improvement resulting in better and cheaper service to consumers. Three, by focusing the business on to those segments where their ability to compete is better and where the ‘vanilla’ or mainstream belly of the market lies.

Lowering price and improving ease of availability are levers which, ironically, work best for those sectors and companies which have just started responding to the changing world. The FMCG and durables sectors have been at this for a long time, and the leaders are in the zone of diminishing returns for every unit of effort to improve along these dimensions. However pharma and health care do have potential for quick wins here and are consequently optimistic, as are select financial services.

The challenge of playing the price (or margin) – volume game is that if done badly, it could benefit the consumer but not be sustained by the providers, as the foreign travel wars have shown. Products and services where consumers have always had a desperate desire to consume, but have not been able to afford to do so have, are hugely responsive to price cuts. Example education, health, communication, entertainment. And it works far better for attracting first time consumers (the aspirants) than for upgrading existing users (consuming class / climbers).

Lets move from market expansion to market share improvement as a means to survive the short term. The levers of doing this, whether for B2C or B2B are sharper identification (more precise targeting) of high potential customers and improving the consumer perceived value equation relative to competition. Many marketers are unable to articulate, from a consumer perspective, their ‘rivalry proposition’ and answer the sharp question “why buy me and not anybody else”. Products and services that are at a (consumer perceived) value disadvantage compared to competition will get gobbled up first in tough times. It may not be possible to improve value via bettering the core product or its price in the short term. However in many cases, the value equation can be tilted via the augmented product, i.e. the whole basket of purchase and usage services that form a major part of the consumer experience, where huge room for improvement exists. Today, it is easier to achieve better identification of prospects and create the service edge cheaply using technology. Out of work dot commers are an interesting lot to hire – they are trained to think ‘augmented product’ and ‘web enabled services’. I believe that improving value to the customer via the augmented product is also the best insurance against imports.

Finally, bad times are not a good time to hang on to products / brands that are clearly perceived as value disadvantaged by customers. Tactical marketing pressure will merely place the patient on a heart lung machine, and if the machine is powered by discounts and financial incentives, then it will haemorrhage to death in an expensive way. This is the time to rationalise the portfolio and improve the quantity not the qauntity of volume sales, simplify choices for the depressed consumer, decrease your own cost of managing complexity and put your weight behind those products / product-markets in your portfolio which are the hardiest.