Changing times means changing business also
Aug. 10, 2010 at 3:10 a.m.
A change is coming to the U.S. economic engine. As I see it, the impact of the change will be on consumers' buying behavior and habits. Consumers will re-evaluate their perceived value for all goods and services.
This re-evaluation is likely to be our perception over what the economic future might hold. As a result, consumers are likely to hold on to more of what they earn.
To accomplish this, consumers will learn to do with less, and change their lifestyles. The change in lifestyle is likely to result in a new definition of how we value goods and services. The end result could mean more discretionary dollars going into savings accounts instead of lifestyle and impulse purchases.
The unknown and uncertainty of current times makes most of us wary and far more conservative with our available money.
Finding opportunity as a business owner in this new challenging economy is the personification of entrepreneurship. Businesses will need to recognize if consumers' lifestyles and values are changing from status and branding purchasing to a new standard.
A large part of our buying behavior for years has been driven by the need for instant gratification. Simply put, we would buy it now on credit, and pay for it later with future earnings. Credit card debt flourished. Much of our modern marketing plans and sales programs are based on these consumer purchasing habits.
The longer the current uncertainty in the marketplace continues, the more likely a fundamental lifestyle shift in consumer buying behavior will occur. If businesses are too rigid or too invested to change, they will continue to struggle, and the potential for failure increases. This change in the economy will mean opportunities to the businesses with versatility, vision and the willingness to change.
Timing is everything in business, and capturing this opportunity requires positioning your business to meet the emerging and changing market. What should your new position look like? This new market might look like one with less available credit and a consumer expecting a higher value for their cash. There will invariably be less turns per client as their expectation focuses on durability more than a rapidly changing style or status purchase. Consumers will most likely also demand better customer service after the sale, rather than leading up to it.
Fundamentally, a business positions itself in the four major categories: price, quality, features or functionality, and customer service. This is the business's "Value Proposition" to their customer. Those businesses that position themselves on price alone will always get the price shoppers and have to accept smaller profits. Traditional customers' perceptions of value may have already changed, or be in the process of this change. Value to consumers in these new markets will be more about durability and retention of value, rather than brand recognition and status.
Entrepreneurs will have to look at their Value Proposition to their current and potential customers to succeed in today's uncertain times.
How is your product or service positioned in the marketplace? Now is the time to find out. For help about understanding market positioning and other issues impacting you business, just contact us.
Joe Harper is director of the University of Houston-Victoria Small Business Development Center.