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Recession:
An opportunity or threat?
One
should set his vision for his company’s performance post-recession
states V R Kannan
GENERALLY,
recession affects advertising spend, manpower, future investments
and the cuts in these have already hit the headlines. The fluctuating
fortune of the IT industry also speaks for the effect of global
recession.
However,
one is not going to ignore health because of recession. So the health
industry has not been affected and is not likely to be also. The
pharma industry has seen a lower growth rate overall, but select
therapeutic segments and strong players in these segments have shown
growth rates, beyond expectations.
Reason:
Their smartness in segment selections. Essential medicines will
be consumed and superfluous ones will come down. However, part of
the decline in industry growth is also the continuous price reductions
- competition sponsored or government notified. In the face of recession,
what does one do? One should set his vision for his company’s
performance post-recession.
The
immediate inclination to cut down should be avoided. David Ogilvy,
the advertising giant says, ‘‘If you stop advertising
a brand which is still in its introductory phase, you will probably
kill it for ever. This is true of brands or products in the peak
growth phase. Ogilvy adds that companies that do not cut back their
advertising budgets grow almost double when recession ends and recovery
starts.
During
recession do not cut the number of ads, if possible increase; but
cut the cost of advertisements, as the media industry will definitely
bring down their prices to keep floating.
As
regards, manpower - the immediate trend is downsize. While you downsize
one needs to be careful because when recession ends you may not
be able to attract talent. Release the less talented as smoothly
as you can without compromising the corporate image. Talent had
been scarce earlier but with the attractive industries like IT going
down the hill, talent will be available for the pharma industry,
probably at a lesser cost.
However,
one should optimize compensation of talent and do not overpay. The
loyal employee race is diminishing and try to compensate properly
so that loyalty begins again and job satisfaction peaks.
With
improving longevity and reducing mortality it is for the intelligent
company to focus on geriatric medical solutions as more than 30
per cent of tomorrow’s population will be senior citizens.
Recession will probably affect big companies with more flab, than
it will affect the Underdogs. This is the time Underdogs, who have
nothing to lose and everything to gain, should be aggressive.
When
recession ends, GATT starts, what does one do? There is no cause
for concern. Existing products are not likely to be replaced by
newer ones in most of the therapeutic segments and the affordability
of the average man in a mass market like India is unlikely to go
up. So current therapies are likely to continue for another decade
and a half. A time good enough for companies to think big, plan
big and become big also.
However,
the marketing mix has to be prudently handled, especially looking
at novel methods of promotion with a 100 per cent certainty to reach
the customer, most of the times and hence get a better share of
his mind. Another important aspect is that companies should publicise
their commitment to the community they service and profit from.
Keep advertising and at a same time let the aspirins also be available.
Look
at recession as an opportunity not a threat.
The writer V R Kannan is vice-president (marketing) at Bal Pharma
Ltd, Bangalore
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