Recession – A business survival guide (Part 3 – Portfolio Balance)

In past entries I have argued the point that recession is a time to crank up innovation – not to cut investment in it. In my last blog entry I referred to the “Aldi Effect” – in a recession customers will change their buying habits and preferences. The real danger is loss of customers that won’t come back when economic conditions improve.

The latest results from PepsiCo demonstrate this point. Sales of soft drinks and water are declining – due:

  1. To less money in consumers’ pockets and
  2. Greater environmental awareness – a drive to use less plastic for bottles.

The lesson is that PepsiCo’s sales have been partially saved by the breadth of its product portfolio – snack foods are appearing more attractive to cash strapped consumers.

So a core activity must be now to determine how your customers (consumer or business) will change their buying habits and to supplement, if necessary, recession resistant offerings to prevent a haemorrhage of customers that may never return.

Information Source: Wiggins, J (2008) US economic downturn makes life hard for PepsiCo’s soft drinks. Financial Times. July 24

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