Appreciative Intelligence

Appreciative Intelligence
By Tojo Thatchenkery and Carol Metzker

Charles Pellerin, the former director of NASA’s astrophysics division, displayed Appreciative Intelligence when a flawed mirror sent blurred images from the Hubble Space Telescope. Instead of viewing that as a failed mission, he reframed the situation as a project that wasn’t yet completed. He found a solution and gained the funding to implement it. In 1979, Rotarians, led by their president, Clem Renouf, decided to devote themselves to eradicating polio in the world. Instead of viewing it as a medical problem, they reframed it as an organizational challenge. They focused on Rotarians’ organizational skills, leadership, talents and resources as the key to a solution. They saw a positive solution — a world without polio — and envisioned a string of managerial decisions and organizational operations to achieve it.

Appreciative Intelligence is the ability that allows people like those to take new or challenging circumstances and turn them into golden opportunities and enriching experiences. Appreciative Intelligence has three components:
• Reframing.
• Appreciating the positive.
• Seeing how the future unfolds from the present

Reframing
The first component is the ability to perceive — to see and interpret, to frame or reframe. One of the most common examples of framing is that of calling a glass half-empty or half-full. Regardless of how the glass is described, the amount of water is the same — only the perspective is different.
Using Appreciative Intelligence, the person consciously or unconsciously reframes what’s in the present, thereby shifting to a new view of reality that leads to a new outcome, just as the Rotarians reframed polio eradication as an organizational, not medical, challenge. An editor with high Appreciative Intelligence can see the potential of a good book under a new line of literature in a few, short unpolished chapters of a manuscript. By framing reality in a new and positive way, people open their minds to seeing new connections between ideas, people or situations. When they suddenly see connections that previously elude them, they’re said to have a flash of insight, according to researcher John Kounios of Drexel University. Insight helps leaders find successful solutions to challenges and difficult situations. It helps them address problems, discover hidden talent and invent new products. Many people interviewed for the study into developing the concept of Appreciative Intelligence said that solutions came to them through insight, or described moments like Archimedes’ “Eureka,” when he stepped into the bath and realized in a flash of inspiration how to determine the density and composition of a crown.
Charles Pellerin, who found the solution to the Hubble’s flawed mirrors, said, “Get clear about the outcome and the path will show up.” Solutions were already there, but the insight allowed him to see them. “Focus your mind and the answer will appear,” he added.
How do you find the insight? Some people talk of letting their subconscious do the work. Research shows that people can (and do) deliberately prepare their brains to come up with creative answers or solutions. Research also shows that positive emotional states and the ability to make intuitive judgments are linked. A positive perspective makes a difference in flexible problem-solving. It must be stressed, however, that Appreciative Intelligence isn’t about seeing the world through rose-colored glasses. People with Appreciative Intelligence reframe a situation to see what’s positive, but they don’t deny that negative aspects or destructive possibilities exist.
They don’t bubble over with happiness all the time, but have a normal range of emotions. Their dreams and expectations are very high, but not ungrounded. They don’t try to create solutions through “pie in the sky” ideas. They see the oak, not a tropical mango, in the acorn.
Appreciating the Positive
The second component of Appreciative Intelligence is appreciating the positive. Through reframing, leaders and entrepreneurs see and select aspects of the present that are useful, valuable or desirable. They focus on positive aspects of a current situation that can generate a successful future.
A culture of appreciatively framing others’ ideas into possibilities leads to more original and more rapidly generated concepts and discoveries than does one of pointing out gaps or deficiencies. Research suggests the possibility of an appreciative system in which people with higher levels of Appreciative Intelligence are able to frame everyday events into great possibilities. Such individuals, over time, become more mindful in their behavioral patterns and begin to see more and more opportunities and generative possibilities in everyday encounters. People with Appreciative Intelligence don’t limit their ability to see what’s positive to reframing situations or products. For many, Appreciative Intelligence is exhibited in a capacity to see other people and their talents in a unique way. Their ability to perceive, make connections and have insights about people around them results in revealing hidden talents or exposing the best in others. Ultimately, leaders with Appreciative Intelligence are able to bring out the best in people because that’s what they see.
Appreciating the positive — focusing on the aspect of the oak that’s healthy and thriving, not what’s withering or unable to grow — is a vital component of Appreciative Intelligence. It clarifies that Appreciative Intelligence doesn’t mean reframing to see what’s negative or to move backward through destruction. When we see what’s valuable, constructive or wonderful in the present, we open the door wide for a positive future.
Seeing How the Future Unfolds
People with high Appreciative Intelligence see how the future unfolds from the present. Many people have the ability to reframe and the capacity to appreciate the positive. Yet if they don’t see the concrete ways that the possibilities of the present moment could be channeled, they haven’t developed their Appreciative Intelligence. Coca-Cola’s Asa Candler saw the potential for a top-selling soft drink in a failing headache remedy. He re-framed the product as a beverage instead of a health product, focused on proving its great taste to people, and set in motion what became a multibillion-dollar business.
The story is told of how cosmetic company founder Estee Lauder saw a shoeless woman entering an up-scale store as a possible customer, and ended up selling two of each cosmetic product to her and more to her relatives the next day. Lauder saw beyond the woman’s outward appearance and reframed her as a potential customer, rather than a poor visitor to the store. This created a vastly different sales transaction than would have occurred if Lauder had listened to the employee who suggested ignoring her.
At W.L. Gore & Associates, founder Bill Gore sparked the idea for Glide Floss, shred-resistant dental floss, when he attached a ribbon of Gore-Tex fabric to his toothbrush and began to floss his teeth. Dave Myers, one of the company’s employees, had a flash of insight that led to Elixir guitar strings after coating his mountain bike’s gear cables with a thin layer of slick plastic material. By reframing the uses of its plastic materials, seeing the positive value in its products and people, and connecting technology and materials possible in the present with the vision of better products for the future, the company has enjoyed a long tradition of bringing original products to the market.
People with Appreciative Intelligence understand the environment around them and respond to it. But they also believe that the environment isn’t just something “out there” — it’s also created by their imagination and actions. People with Appreciative Intelligence believe they have a great deal of control in determining what environment they’re in or will deal with — a conviction that action matters.
They understand connections between themselves and the world around them. They see the circular process of their actions affecting people and situations around them and, in turn, their surroundings driving their actions as well. Imagination is an important ingredient in seeing how the future unfolds. Innovation can result from applying the imagination of a child to the knowledge and awareness of an adult. One individual interviewed in the Appreciative Intelligence research described the process as “zooming around mentally,” or seeing something new in one place and pretending that the trend or product was fully adopted in another place.
By weaving together knowledge about the environment and imagination, people with Appreciative Intelligence see a different future than others do. By actively experimenting and interacting with the environment they create new possibilities. They connect capabilities of today and the dreams of tomorrow by seeing the steps that make the former become the latter.
The Four Qualities

The ability to reframe, appreciate the positive and see how the future unfolds from the present leads those with Appreciative Intelligence to display four qualities:

• Persistence. Because they can see their end goal is possible, they’re willing to persist. Persistence is influenced by the self-esteem of individuals. Overall, people with high self-esteem have a greater tendency to persist in the face of failure and obstacles. They’re also more likely to see the presence of alternatives, even when faced with failure. So while people with high Appreciative Intelligence persist longer than those with low Appreciative Intelligence, they don’t persist indefinitely. They know when to quit and look for alternatives.

• Conviction that one’s actions matter. Because they can see the end goal, they also believe their actions and abilities will take them to a successful conclusion. Furthermore, if individuals with strong conviction in their abilities fail, they assume they failed because they didn’t try hard enough or didn’t have the relevant knowledge. So in further attempts, they try harder after acquiring the knowledge they believe is necessary for success.


• Tolerance for uncertainty. Because people with Appreciative Intelligence can envision the way a positive future could unfold from the present, they can deal with the uncertainty that often accompanies a new venture, product development or crisis. While for many people the feeling of being “up in the air” is so difficult that they’d rather deal with a negative conclusion than not know whether the ending will be positive or negative, the leaders studied appeared to suspend those feelings of discomfort.

• Irrepressible resilience. People with Appreciative Intelligence exhibit irrepressible resilience — the ability to bounce back from a difficult situation — as a result of reframing, seeing what was positive in the situation, and understanding that a better future could come about despite a crisis or setback. They perceive that a positive consequence could be built even from the most drastic or devastating circumstances. Irrepressible resilience is more than persistence: it’s the quality some leaders have to bounce back higher from challenges than the place where they began.

Marketing Strategies in Recession

The very existence of organization depends on its marketing strategy. One size doesn’t fit all. In the same way same marketing strategies may prove ineffective in turbulent times. So the tool that was used to survive and grow needs to be changed with changed times. In recession, it is the innovation that plays a critical role in success. The Marketing strategy of an organization has to be based on sound research on consumer behavior. An organization will have to become more empathetic to understand its customers well. The strategies must address the changed values of customer to retain and build a strong customer base.

Tough times are ahead. There is a recession in the economy. This is the time which will determine who will survive and who will move out. It will also determine who will be the future market leader. Even if there are no opportunities, organizations will have to create opportunities for themselves because it is matter of survival and growth. But for that they will have to identify what are the areas for improvement, where they should focus to retain and enhance market share. Will it be appropriate for them to have same set of strategies that they had earlier? Can they survive with old tools? If not, what they should do. How can they change this crisis into opportunity and emerge as a market leader. That is what this paper presentation is going to talk about.

Objectives-
To study and analyze how consumers behave in economic recession.
How can consumers be persuaded to spend money?
Why should organizations change their marketing strategy in turbulent times?
How can organizations not just retain but enhance their market share and valued customers?
What would determine company’s existence in hard times?

Understanding the nature of the problem:

The challenge for executives is to gauge the implications of the downturn for their particular business and respond effectively. Senior executives should conduct a quick but thorough assessment of what has changed among customers, supply and distribution channels, and competitors, and work to understand the ramifications. Executives should also conduct scenario planning to identify key drivers of marketing performance and evaluate the implications of alternative scenarios with regard to the company’s financial position.

The key questions to be answered include the following:

· Is our company in a crisis situation that requires immediate intervention? If not, when do we need to act? By how much do we need to reduce our marketing and sales costs? What are the trigger points?
· What is the nature of our marketing and sales challenge: declining demand, a shift to lower price points, expensive supply, or a combination? Is the solution cost-reduction alone or is it also revenue enhancement?

· If we de-average the problem by market, product line, and customer segment, what are our biggest challenges—and our biggest opportunities to grow? Is this the time to refocus on certain products or brands, either because rivals have retreated or because the value proposition has become more appealing?
· Does the company have a common view on these questions? What are the open or unresolved issues?
Consumer Behavior during Recession:

For all businesses it is now a top priority to devise strategies on how to cope with the current crisis. Analyzing customer behavior is an essential part of this and, interestingly enough, consumers may not behave entirely as one would think.
Exactly what steps you need to take in your business in order to make it more recession proof, will naturally vary somewhat depending on your chosen niche and market. For example, companies dealing mostly business to business may find themselves in a slightly different position right now than those catering to the needs of household consumers. B2B businesses may be better or much worse of, depending on how much their primary industry is affected by the economic downswing. Selling to businesses might be better as there is generally much more money circulating in that market. But on the other hand, if your main business is supplying components to a bigger company that is now having great difficulties, you are going to be in for a rough ride.
The analysis of consumer bahavior found that the consumer mix varies across categories and across brands within categories, with stronger, trusted brands being less vulnerable to downward pressure on prices and margins:

· Naysayers are frightened consumers who have stopped buying any discretionary purchases and are trimming their daily purchases. They are, for example, trading down from fresh to frozen vegetables, sharing a single tube of toothpaste among family members and switching from single purpose, specialised cosmetics to multipurpose products. They are either out of work, in fear of being laid off or know people who have been.

· Short termers are younger, urban consumers with few savings who have, therefore, lost little in the financial meltdown. They will carry on as normal unless and until they lose their jobs. They will then have to adjust their consumption behaviour almost overnight, as they have no savings cushion.

· Long termers are consumers who see the reduction in their retirement accounts as an unfortunate bump in the road. They are worried but not panicked. They are adjusting their purchasing behaviour by searching out the best deals, emphasising functional over emotional benefits, trading down to simpler versions of products they need, making fewer impulse purchases and foregoing some luxuries. However, they remain broadly optimistic and are not shutting down their consumption.

· Simplifiers are baby boomers who have lost a significant percentage of their savings, and, as a result, have become more risk averse and are reassessing their values. Some will conclude that they must postpone retirement to recover their net worth. Others will decide that they can make do with less, reduce their consumption and simplify their lives.

· Sympathisers are savvy consumers who switched into cash ahead of the crash but who know others who did not. They could afford to buy a new car but they do not want to appear ostentatious. They are continuing to spend at near-normal levels but more discreetly.

· Permabulls are relentlessly optimistic. Their “here today, gone tomorrow” attitude has them looking for opportunities to make up for lost ground and find the next million dollar idea or stock pick. Their appetite for consumption remains constrained only by the availability of credit.

Marketers must understand how these six segments overlay their existing customer mix. They must understand the shifting price sensitivity of their current and potential customers and how it is affecting where and how often they shop. They must adjust accordingly the mix of marketing devoted to brand franchise building versus short-term promotions, such as coupons and rebates that can sell products quickly, albeit at lower margins.
During bad times it is only natural for people to be more worried about their personal finances, and as a result spend less money. But that is not the whole story. It is not just that people buy less and save more, how they behave as consumers also take on various other characteristics.
Here are some of the things that have been known to occur during a recession.

· People DO tighten the belt and ponder every purchase with extra care.
· People DO worry more and tread more cautiously, even if they are in fact doing quite well.
· People DO put off buying that new car and may think twice before dining out.
· All that was probably what you could expect, but people also most often do not want other people to see that they are struggling.
· They will what they feel they have to for maintaining the public impression of wellbeing.
· They will seek out affordable pleasures that aspire to premium perceptions.For the above reasons, articles such as beer and various forms of entertainment can be top sellers during a downturn.
The above are obviously only broad principles that apply best to the broad middle class. Still, the trick to having your business outlive hard times like we're experience right now is to market in a way that will appeal to people even when they aren't likely to go on a spontaneous shopping spree.


Product:
Strengthen the positioning of your products and services using marketing innovation. Customers need the assurance that you are the best possible supplier to meet their needs. Are your products and services differentiated enough so that customers can see the advantages you offer? Make sure you clearly understand how your key customers determine value, and align your products, services and marketing with that value. Focus on your key customers and how their needs have evolved, but don’t neglect markets complementary to the ones you serve. As competitors pull out, you may find new opportunities there, too.

Consider adding value-added services to your products, and brainstorm ways to provide new customer experiences. Think in terms of other uses for your existing products. If your customers know that your products provide greater utility than those of your competitors, you’ll be more likely to win their business. Also, look for incremental improvements to your products that can significantly increase their value, at a minimal additional cost. Finally, take a fresh look at some of the incremental improvements or R&D projects you may have shelved before the downturn because the timing wasn’t right; some of them may do a great job of meeting customers’ current needs.

Pricing Strategies:

When sales and profits are plummeting and customers are demanding better deals, the instinctive response is to cut prices. This silences customer complaints, helps cover fixed costs and buys time until the economy rebounds. A price cut can also boost sales quickly, especially when there is no money for advertising or other promotions.

Pricing decisions should not be viewed as short-term phenomena. Rather, they should be part of a long-term strategy for fiscal fitness. When economic storm clouds gather, trim your production levels, postpone expansion plans that aren’t absolutely vital for your future growth, and slash nonessential costs wherever you can.

To bolster sales while avoiding a price cut’s dampening effect on long-term profitability, keep the following advice in mind:

Remember the big picture
Profitability is not the only prism through which you should view pricing. Other important perspectives include:
· Volume: Too many firms fail to account for the effects of price on volume and of volume on costs. In a recession, trying to recover these costs through a price increase can be fatal.

· Impact on customer relationships: Sucker pricing” is the term that Eric Mitchell, president of the Professional Pricing Society (PPS) uses for the excessive pricing that occurs when companies have locked in customers through contracts or proprietary implementations. This creates ill will and tarnishes your brand.

· Impact on the industry: Price cuts not backed by cost reductions often lead to competitive counterattacks, which erode profitability.

Adjust Sales Goals

Don’t fight today’s sales wars with yesterday’s pricing strategies. Sales goals set when checkbooks were open may no longer be suitable for a recession. Instead of sales goals, set Rupee contribution goals for products, market segments, and individual customers. To do this you may have to invest in financial systems that can track process costs as well as direct costs. Moreover, setting profitability goals may mean abandoning market -share goals. After all, a large market share doesn’t necessarily mean increased profitability. But switching to profitability bench markers can help you pursue other low-price business.

Understand Competitive Advantage

In a recession, pricing should be shaped by industry position and long-term strategy. If you competitive advantage derives from a low-cost structure, cost cutting can pump up your market share, positioning your firm for a payoff when the economy improves. Dell Computer, Southwest Airlines and WalMart all use price as a weapon to leave weaker rivals at the wayside. But a common mistake is attempting to use price as a competitive advantage for high-value products by giving away services or discounting to your best customers. You erode the base of profitable customers and reduce the potential for profitability when the downturn ends.

Leverage Segmentation Strategy

Especially if you have high fixed costs, use pricing to generate incremental revenue from your segment customer base. Strive for “first -class,” “business class,” and “economy” pricing, the way the airlines do. First -class customers receive extra value with minimal discounting; economy customers get minimum value. Such segmentation base on price sensitivity creates sales opportunities that can offset losses in other areas, especially since there is often little difference in production costs among the offerings. In addition, a premium offering such as Nokia’s new line of luxury mobile phones can motivate price-sensitive customers to move up to midrange offerings in the pursuit of additional vale.

Offerings can be segmented not only by value added but also time (for example, peak -load purchasing). Location, or purchase quantity. “The more you can slice and dice your prices and offerings without affecting your brand, the more you can sustain profitability,” says Mitchell. Dynamic pricing represents an extension of such a segmented pricing strategy; here, prices shift instantaneously in response to changes in supply and demand. Although the practice doesn’t suit every company, early testers of dynamic pricing software have been pleasantly surprised to discover how much more they can charge without affecting sales volume. The consulting firm Accenture reports that a price increase of just 1% can improve operating profits by 11% if sales volume remains constant.


Pamper Loyal Customer

Losing a customer now represents a double whammy: it drains customer equity and raises the cost of acquiring a replacement. Keep your best customers happy by bolstering loyalty programs or providing additional services. For B2B customers, consider offering product training or other classes for your B2B customers —not only will it augment the value you offer customers, it will also make it more difficult for those customers to switch to another provider.

Plug Revenue Leaks

Companies can run aground on pricing gaffes once covered by the high tide of a good economy. A common oversight is not recovering all the costs involved in services, delivery, or other processes. Set minimum order quantities so that processing costs won’t eat all the profits. Strengthen your collection efforts to shrink the time between orders and receipt of payment.
They should also be based on the value to the customer. But sales forces often oppose value pricing because it usually means higher prices and a greater willingness to walk away from price-sensitive deals. To encourage the desired behavior, compensate your sales force based on its contribution to profitability and/or customer equity, not just on sales volume.

Shift the Battleground

When you negotiate with customers, include other factors besides the payment amount —for example, payment terms or ongoing training in the conversation. Some additional suggestions:

· Change the volume requirement to raise revenue and lower unit costs.

· Bundle products that increase customer value. For example, Cadillac’s OnStar global positioning system is a standard feature on all its cars.

· In exchange for a discount, ask for a multiyear contract to smooth out your revenue and production variability.

Protect Your Brands
Brands become more valuable during a downturn because they offer defensible margins. Sales of cosmetics often rise during a recession, notes Harvard Business School professor Nancy F. Koehn in Brand New. The reason: they represent affordable luxuries or offer a psychological boost. So don’t cut prices on your premium brands during a recession; they can be sold without discounts through word-of-mouth or channel promotions that increase visibility and appeal.

Despite the risks associated with poor decisions, only 11% of the respondents to the PS survey of 124 of its members said that senior management is primarily responsible for pricing.

Advertising in recession

Indications of tough economic times ahead for consumers, businesses and other organisations can easily lead to a mentality of battening down the hatches and cutting back on “non-essential” services. In the business world, two of these services are often research and marketing/advertising.

The reality is that without research a business can easily lose touch with their customers. The pressures of an economic downturn or recession will impact on customers in different ways and a business that does not research this will not understand the customers changing needs, issues and aspirations. Without this knowledge, it can lose its competitive advantage. Equally, as a downturn or recession bites, the market becomes even more competitive and those that don’t continue to communicate with their customers through these tough times can be left behind.

The Consumers View
There is no doubt that as coverage of recession and increases in the cost of living continue, consumer spending is tightening and household budgets are under greater pressure. In this environment it is not a major leap to assume that consumers will be even more conscientious in the way that they spend their money to make their budgets go further. As consumers have to make tougher choices, including looking for better deals, buying higher quality products that last longer, assessing health and environmental impacts and aligning with brands they can trust, they will seek information from a range of sources. These sources will come in many forms; from their immediate network of family and friends through to online networks, the media and of course “mainstream” advertising.

Advertising enables them to make informed decisions and connects them to their community. Both of these are crucial aspects that are likely to increase in importance as household budgets tighten and consumers will become more selective in their purchase decisions.

In addition, the sense of control that many consumers show around the way that they see and filter advertising based on their needs is likely to be exercised even more in tight economic times. There is now a very real need to get value for money which will not have existed for many in better economic times. In terms of social marketing, a slowdown in economic activity potentially highlights societal issues that need to be addressed and ways for people to seek help and assistance if needed.
It also creates opportunity for the communication of ways that people can make better choices around aspects of their lives. This may include finding ways to reduce energy costs, improving their health and wellbeing plus information on how they can help in their community.

Based on consumer behavior and market conditions following things are suggested.

• Maintaining advertising spending in a recession or downturn has medium and long-term benefits.

• If an organisation stops communicating with their customers their competitors will grab the opportunity and make recovery very difficult.

• Recessions reward the organisations that take a lead and continue to tell consumers their story and provide them with information they need for making informed decisions.

• Recessions can create new markets for “better value” products and services.

• Organisations need to review their thinking and approaches in a recession.

• Organisations need to be clear on what they stand for and how that relates to the beliefs, needs and issues of the audience they are communicating with.

• There is a need to monitor and manage the relative price and effectiveness of media.

• Beware of the lure of short term benefits against the time it takes in the longer term to recover

• Keep a watchful eye on your consumers to ensure you continue to understand their changing lives.


Distribution and Supply Chain:

Combine lean and green:
Lean means less waste and less waste means using fewer resources. Any company can make small improvements in its supply chain that collectively can lower costs and improve supply chain sustainability significantly. Marks and Spencer, the UK retailer, has taken a leadership role in sustainability among its peers with its “Plan A”, which is intended to reduce energy consumption by 25 per cent for all its operations by 2012. The implementation comprises many small efforts including replacing 90-watt light bulbs with 75-watt bulbs in its food stores in the UK. This not only reduces energy consumption by 17 per cent for lighting but also reduces refrigeration and air conditioning needs.

Packaging is another area to explore. Tetley Tea developed new packaging materials to increase the density per pallet of its products by 50 per cent, thereby reducing the number of vehicle loads between factory and warehouse by 28 per cent.

Integrating pricing to supply chains

This is important to improve margins, not only in the present economic downturn but even more so in the long term, when developed markets face the prospect of zero growth for an uncertain period of time. Airlines and hotels, for example, use dynamic pricing to their advantage for individual customers. Similarly, manufacturing companies can use dynamic pricing by customising and delivering bundles of products and services for individual customers with different prices. Companies can also rethink what they are selling. Bundling products and services enables organisations to differentiate themselves: for example, IBM’s acquisition of PwC’s consulting.

Shorten supply chains

Shortening supply chains means not only moving manufacturing or sourcing closer to existing markets but also developing markets in the low-cost countries where manufacturing or sourcing take place. Shorter supply chains mean more agility, more robustness against disruption, lower exchange rate risk and, in the long run, lower costs.

Selling in China and India means having different types of supply chains for different market segments. The best example is Hindustan Unilever Limited (HUL), the largest fast-moving consumer- goods company in India. The company’s brands span the affordability spectrum, from top-end cosmetics to low-priced shampoo sachets. The HUL supply chain has adapted itself to meet customised requirements at the top end while driving cost-focused efficiencies to deliver and sell several billion sachets a year.

Reassess outsourcing and external partnerships
Companies are becoming more open to ideas and solutions from external parties. Procter and Gamble’s so-called “Connect + Develop” business innovation model, which was launched in 2002, reduces the time and cost of product development by reaching out to other companies and academia for ideas for new products. For example, when P&G wanted to print text and images on Pringles potato crisps, it partnered with an Italian professor who had developed the relevant technology. This approach to innovation has enabled P&G to achieve phenomenal double-digit growth in sales and profit over the period since 2003.

The way out:
1. Understand the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the recession. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, trade down, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully, but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.
2. Focus on changed values. When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends.
Now may be the time to drop your weaker distributors and upgrade your sales force.
3. Maintain marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favorable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting from 30-second to 15-second advertisements, substituting radio for television advertising, or increasing the use of direct marketing, which gives more immediate sales impact.
4. Adjust product portfolios. Marketers must reforecast demand for each item in their product lines as consumers trade down to models that stress good value, such as cars with fewer options. Tough times favor multi-purpose goods over specialized products, and weaker items in product lines should be pruned. In grocery-products categories, good-quality own-brands gain at the expense of national brands. Industrial customers prefer to see products and services unbundled and priced separately. Gimmicks are out; reliability, durability, safety, and performance are in. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced, but advertising should stress superior price performance, not corporate image.
When economic hard times loom, we tend to retreat to our village.
5. Support distributors. In uncertain times, no one wants to tie up working capital in excess inventories. Early-buy allowances, extended financing and generous return policies motivate distributors to stock your full product line. This is particularly true with unproven new products. Be careful about expanding distribution to lower-priced channels; doing so can jeopardize existing relationships and your brand image. However, now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.
6. Stress market share. In all but a few technology categories where growth prospects are strong, companies are in a battle for market share and, in some cases, survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies such as Wal-Mart and Southwest Airlines, with strong positions and the most productive cost structures in their industries, can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors.
7. Emphasize core values. Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners, and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees. Economic recession can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a recession; they adapt them.

Strategies in nutshell

The critical success factor for any organization would be innovation.
Consumers start behaving rationally. They take more time to purchase any product or service. They spend more time on searching for the right product. They also postpone their purchases. They are required to be convinced that they are getting the best bargain.
The consumer values changes as the economic environment changes. He becomes conservative in his approach and looks out for products and services having value for money.
The organizations will have to come up with innovative pricing i.e. only cost cutting would not help, they will have to opt for maintaining the existing price but offering discounts to customers.
Adjusting the portfolio mix- Rather than focusing on luxurious and premium products, they should focus on products and services that are necessity i.e. price elasticity of demand for those goods and services is inelastic.
The advertising must reflect the changed values of the customers. As consumers look out for security and safety, organizations will have to communicate those values to attract them.
Organization should also look out for blue-oceans. They can look out for people at the bottom of pyramid.

Conclusion-

Consumer is the king. They behave differently in different times. Their values change with the change in phases of business cycle. The key for any organization would be to stepping into the minds of the customers not just putting themselves into the shoes of the customers. Hard times are meant for excellence. This is the time when only the fittest can survive. So only organizations with innovations would be able to weather the tough times. Coming up with innovative ways will help organizations to retain and enhance market share and their valued customers. Organizations will have to address the needs of the customers to attract them for purchasing goods and services.

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