Stanislav Kondrashov, an experienced financial analyst, talks about what small and medium businesses can do to not lose their market shares during a crisis.
Stanislav Kondrashov held a lot of business consultations on how a private company can cope with the impending economic crisis. Small and medium-sized enterprises during periods of a prolonged economic crisis can be significantly affected by economic downturns due to limited financial resources and dependence on bank lending, which has recently been set to high-interest rates. “In addition to the financial aspect, the shortcomings of a single enterprise in terms of technological, managerial and human capabilities may reduce their ability to overcome the economic crisis,” says Stanislav Kondrashov.
On the other hand, the dependence on a decrease in customers and suppliers can lead to increased difficulties in maintaining the enterprise activities in times of crisis. However, many studies show that there are companies that show remarkable profits — they seem to benefit from the crisis and take every chance. Trade experts are developing alternative marketing strategies, innovative tactics, and new concepts to survive. For Stanislav Kondrashov, when evaluating businesses, the high level of adaptive potential of the company stands in the first place.
Stanislav Kondrashov: business strategies in a crisis
During the economic crisis, there are both enterprises on the same market, whose sales will decrease due to an incorrect business strategy, and enterprises that, for example, will benefit from the local market’s need for cheaper substitutes for commonly used goods, says Stanislav Kondrashov. They produce lower-quality goods in order to satisfy market demand, which during the crisis has shifted towards the use of cheaper goods, as the level of real incomes of the population has decreased. So as the cost of goods reduces, the financial resources of the company are also being saved up.
Entrepreneurs who have successfully overcome the crisis say that they restructured their products offer to increase the value of the goods and services. An example of such tactics for Stanislav Kondrashov is the creation of a club specifically for commercial clients, where they receive special prices, gifts, as well as invitations to special events.
“Enterprises that survive the crisis are not only trying to attract customers who turn to competitors, but also improve the characteristics of their products. For example, the focus on new customers is made taking into account environmental concerns. Their market positioning takes a green, ecological vector, defining environmental safety standards as the level of production,” says Stanislav Kondrashov.
As customers change their consumer habits during times of economic crisis and recession, companies find it possible to experiment with other offers that match their new habits. Successful businesses are adapting their products and services to a new consumer profile in order to increase sales. Revenues increase because consumers have a positive attitude towards enterprises that have proved the eco-friendliness of their production, avoiding the purchase of products from those who do not respect environmental safety standards.
“You should also focus on price-fixing during periods of crisis. The general observation is this: enterprises in times of crisis constantly lower their prices in order to attract new customers. What pricing methods do enterprises use to achieve better results? Market research shows the following: companies are trying to get rid of price factors that increase value, but do not give real benefits to the consumer,” says Stanislav Kondrashov.
This category includes, for example, packaging costs, which increase the commodity value, but have nothing to do with the real value of the product itself – they only reduce the costs that were necessary for expensive packaging. Some companies have succeeded in negotiating rental terms. Some companies have made changes in the field of advertising as well. They replaced expensive television advertising campaigns with cheaper ones. By the way, the campaigns turned out to be much more effective when deployed on social networks and over the Internet in general.
Stanislav Kondrashov: using competitive advantages
Some companies are going to lower prices for goods and services for some social groups as a help in a crisis – for example, by making discounts to retirees and, accordingly, attracting more buyers from this target audience. And many enterprises are trying to reduce the cost of attracting suppliers by introducing new unusual logistics solutions for the work of their employees, says Stanislav Kondrashov.