The examples given by Professor John Quelch show that even though  people cut down purchases in the crisis,  if there enterprises are really dynamic and flexible there is always “the light at the end of the tunnel.”. In the recession period, customers tend to look for the low cost products but still can meet their  requirements for quality. This proves to be the golden opportunity for enterprises to sell goods and compete successfully with their rivals.

“The most important thing is that you need to feel the pains of customers and understand their behaviors in the crisis. This allows you to classify customers based on their consumption behaviors,” the professor said.

The group of customers that businesses find it most difficult to access are the ones “who slam on the brakes”, i.e the biggest sufferers from the crisis, who decide to cut down or even stop purchasing. Though low income earners are the main subject of the group, high income earners may also be affected.

The second group includes the ones who “are pained but remain patient”. They also suffer from the crisis, but they still have the high hope that the economy will prosper in long term. They believe that the economy will improve, but they still cut down purchases in short term.

The third group includes the “comfortably well-off people”. They are financially secure, and therefore they do not change their spending habits, even though they become choosier in making purchases.

The fourth group is the one called “living for today”. They maintain the same spending level in crisis periods and they do not care about “practicing thrift”. They are mainly young people in urban areas, who go to bars every day to meet friends and spend a lot of money… until they lose their jobs.

However, no matter which group customers belong to, they always classify products and services into four kinds: 1/ the essential goods which they have to buy; 2/ the goods which they still should consider 3/ the goods which they do not need to buy right now and 4/ unessential goods.

Don’t panic, don’t lower prices

There are many ways for businesses to share difficulties with customers. However, according to Professor John Quelch, competing by low prices should not be the priority solution. He believes that sometimes, businesses should “sacrifice” the customers who only seek cheap prices. Especially, businesses should not compromise the quality of products. Vice versa, they should try to renovate products in order to attract customers.

Businesses can apply a second pricing mechanism designed specifically for customers who are “sensitive to prices”, but they should keep the prices of old products unchanged.

“For example, you can make a normal refrigerator, which does not have many functions and have lower prices. You can also provide multi-functional products. General Nivea was the cosmetic product line which once sold very well because in the crisis, women did not have money to buy different products,” he suggested.

Businesses should keep the prices stable, but they should offer sales promotions in order to stimulate demand. This proves to be a wise move, because businesses will not have to adjust the prices again when the crisis finishes, while they just need to end promotion campaigns.

“Don’t panic, try to understand customers, focus on the best customers and help them overcome difficulties. They will repay you with the bigger market shares in the future,” the professor said.