The advantage of innovating in a recession
A savvy company will focus on product innovation to create new products to satisfy new consumer needs even during downturns. Many successful companies use the recession as a chance to get ahead of the competition. This will position the company as a leader instead of a follower. According to EY Parthenon group innovation during a downturn makes a company stronger and leaner.
As a good example of this strategy you can take the Apple iPod. Apple launched this in 2001 – the same year that the Nasdaq 100 took a 30% hit. Operating costs are usually cheaper in a recession and talent is easier to find due to layoffs by other companies. Competition is less fierce during a recession because so many other players are laying low. They choose to wait until the recession is over to fund their own innovation.
Whatever product innovations are created during a recession, they will stand out strongly due to the decreased level of competition.
Consumers don’t stop buying goods altogether in a recession. But they do become more discriminatory and more selective in their approach. They buy products which resonate with them and have meaningful additions which somehow change their lives. Or products which meet an unfulfilled need. To achieve the best results you should conduct detailed market research. If you also have a product innovation team with deep understanding of product use you have the key to success.
Outsourcing of product innovation
Sometimes it is better to outsource product innovation to other companies if you cannot afford to hire your own team of innovators. Our company Anisha perfumes offers design resources to our regular perfumery clients free of charge. We include the product innovation development charges in the cost of the final packaging supply.
This model works well for smaller factories who do not have the time and expertise to pay for their own team of product and graphic designers. Or maybe they don’t have the time to fly around the world finding the right supply partners.
We need strong leadership for product innovation
It takes a strong leader to focus on product innovation in a recession. It’s too easy to prune resources which are not going to give an immediate return. But lack of product innovation means that you will lose your long term differentiation and competitive advantage. Therefore your company will lose out on long term sales to your competition.
It has been historically shown that a period of economic boom three times as long as the recession itself usually follows a downturn. For this reason it makes more sense to prepare for the upturn.
If you found this article interesting and you are interested to innovate in your own range of perfumes, you may enjoy our article “How to Design a perfume”.