COVID-19 has already sent the economy into a downward spiral. In a way our current circumstances are unique but they have a lot of resemblances to historic events like GFC, Great Depression, etc. In this post, we take a look at 3 companies who thrived during difficult recessions by innovating their value proposition.
Groupon
During recessions, consumer demand for non-essential services and products decreases. However, people will still be willing to buy non-essential services and products if they were available at a massive discount.
During GFC 2008, Groupon recognised this opportunity and came up with a business model to work with local businesses to offer discounted prices based on the bargaining power of large groups. Groupon became an instant success and it quickly spread to over 250 cities in its first two years. In April 2010, the company was valued at $1.35 billion.
Groupon saw an opportunity in helping consumers during a recession.
Lego
During a recession, toys were categorised as a luxury item. Many consumers chose to forgo toys as it was non-essential and an area where households could save money. In spite of that, Lego surprised the world when they came out of the recession posting a growth in profits of over 66% to €99.5 million.
Lego’s success was largely due to its expansion into the global market. While America was experiencing the brunt of the recession, Lego focused its efforts in Europe as well as expanded into Asia.
Lego saw an opportunity in the less affected global market and sought to capture it.
Hershey’s
Chocolates and candies are non-essential food items as there were much better alternative foods that households could purchase instead. The future looked bleak for Hershey. However, in the face of the Great Depression in the 1930s, Milton Hershey came up with a strategy. He launched the “Great Building Campaign” and hired Townspeople to bolster the local economy. These buildings would eventually become tourist attractions and allowed Hershey’s to strive during the recession
Hershey’s success was largely due to Milton Hershey’s strategic decision making. He took advantage of the cheap building supplies and readily available labor force to restart delayed building projects. This allowed him to help his townsfolk by giving them secure jobs.
Key questions to innovate your business
Current market situation is tough but there are opportunities in it. Here are a few questions that can help you identify opportunities:
- What are people looking for and what are their needs?
- What can you offer to your customers in the age of social distancing?
- How can your business help those in need?
- How can you reposition your business as a better alternative?
- How can you move fast into less affected markets?
We believe in the months to follow, the most common form of innovation for most businesses will be “digital”. A&H Digital Solutions is here to help you with your innovative digital idea. Book a no obligation consultation with us today.
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