The post lockdown economy: Product development strategy to surviving the new realities
The post-lockdown economy, starting anytime from May 2020, will have to be approached strategically to maintain market relevance. Businesses will face new consumer habits when the strict economic restriction finally turns to mild social restriction and then full market operation. By then consumers would have grown more cautious than ever in how they spend. They are more likely to shop for discounted and basic products.
The best strategy to surviving the new realities – whether you are a manufacturer or service provider – is:
- build a low cost business
- Sell luxury products or services at deep discounts
Consumers are expected to go through these 3 phases after the economic lockdown is over,
- Survival phase – The global economy has contracted. In most cities, stimulus packages are being prepared to usher small businesses and employees back to work at least by the beginning of May 2020. Having survived largely on, and emptied, their savings, consumers will pinch their kobos and cents. In essence, they are most likely to shop for basic products and buy highly discounted products for the next few weeks after the lockdown is lifetd. They will also shun luxury such as expensive travels, luxury clothing and highbrow eating.
- Caution phase – When the survival stage, which is expected to last between 2-3 months is over, the consumers will move into caution mode at which phase they seek to build their emptied savings. They will seek to plow more of their new incomes into savings accounts to meet the demands of future projects such as children school fees, rents, mortgages and marriage. More, they will also rebuild the ‘broken financial fence’ to guard against future economic and social disruptions. Spend at this stage will tilter towards discounted products, and less luxury.
- Expression phase – If there is no economic hiatus for the rest of the year, businesses and households are expected to bounce back to a large extent around the next 6 month. Consumers would have rebuilt their broken savings, met obligations such as debt repayment, school fees and rent payment. They can now go back into living their normal life.
However, businesses will have to learn to adapt from the get-go to stay afloat until the ‘expression phase’ is reached. To stay relevant some companies will have to –
- Discount product and services to cater to the discount-hunting consumers
- Build low range extensions of basic products and services to cater to economically haunted consumers
- Invest in consumer relationship to keep the loyalty of the distracted consumers.
In sum, both consumer and business-to-business markets will be filled with 3 sets of buyers, post-lockdown:
- Discount-hunting buyers – those living on stimulus and fast depreciating savings
- Economically haunted buyers – those laid off or furloughed with no income for immediate recourse
- Distracted buyers – those keeping tightly to strict household or business budgets and refusing to be swindled by market jingles to break their limit
It is smart to think about hanging on than getting phased out. Therefore, it is instructive for businesses to foresee and make shrewd preparation for the market they are going to be dealing with in the coming months. This projection will put the business in good stead to adapt their operating models to stay relevant.
Now the best way to building low cost or discounted products is to build low cost operating models. Here are some quick steps to building a low cost business:
- Think about what parts, ingredients, processes or packaging of your products or services can be substituted for more affordable parts, ingredients, processes, or packaging, without jeopardizing quality and the core offer i.e. Swatch, a wristwatch maker, once switched to making watches from rubber instead of steel, to help more people afford its brand
- Reconsider your suppliers; bait and throw up bid to get in suppliers who are likely outbid one another and supply at more reasonable rates
- Think partnership and collaboration to reduce cost of overheads
- Focus making getting and making more sales via e-channels and digital to reduce rent and overheads