Once-in-a-lifetime changes have resulted from what Charles Bean, Deputy Governor of the Bank of England, called “possibly the largest financial crisis of its kind in human history”.
Although companies have been remarkably successful in cutting costs in the wake of the crisis, revenues have not recovered to the same extent. Moreover, there is reason to expect subdued growth for the foreseeable future, as a result of long term-changes in employment and consumer confidence and “deleveraging", all of which have helped to change customer perceptions and behaviours.
To win in the market that is emerging after the financial crisis, companies must find new ways to reconnect with customers. That means understanding their needs, creating the propositions that will meet those needs, and sometimes reinventing their organisations to deliver those propositions.
Understand the needs of the new consumers
Unemployment, low or negative growth in personal earnings and high volatility in asset prices and the economy generally – all these influences make customers feel differently about their spending, a change encapsulated in these 4 P's:
Prioritising what is really important
Postponing major purchases
Paring down expenditure
Pouncing when bargains appear
Create a proposition to meet the new needs
Agile companies have already reconfigured their customer proposition and experience to target the priorities of the new consumer. For example:
Big Lots, a US retailer of discounted household products, opened stores in traditionally up-market locations to target affluent customers looking for a bargain
Waitrose launched the ‘Essential Waitrose’ line – high-quality products at mid-range prices to ensure that trading down does not take customers outside the store
In the US, Hyundai offered cars with a money-back guarantee: if the customer loses their job, Hyundai will buy the car back.
Systematic exploration is a more reliable way to find opportunities like these than luck. We recently helped a client to identify their best pricing strategy through data analysis of customers’ price elasticity.
Reinvent the business model to deliver the new proposition
Radical changes in customer proposition and experience are not easy to deliver. A fundamental re-think of the business model may be necessary. Striking examples of innovative thinking here include:
ARM, the Cambridge-based chip designer behind many iPhone components, succeeded by focusing on intellectual property rather than on manufacturing
PA helped Nissan in Sunderland work out how to sequence production so as to push three models of car down two lines, avoiding hundreds of millions of pounds’ expenditure
PA has also helped major industrial firms engineer their R&D processes to take advantage of external communities of interest through open innovation.
Companies seeking to generate these outcomes must deploy new ways of thinking in a concerted effort – it’s hard to achieve a breakthrough gradually.
To find out more about how PA can help you meet the needs of the new consumer click the contact us now button.
 Reuters, Financial crisis may be worst in history - BoE's Bean, 24 October 2008