There’s a lot of chatter back and forth lately about whether we are in a recession or about to enter one. Many commentators don’t like seeing the term bandied about loosely, and for good reason. The economy is not primarily about spreadsheets; it’s about human behavior, which can be heavily influenced by negative messaging. People may behave differently if they think the economy is in recession, and these behavior changes could be a contributing factor to a downturn. Companies are no different. And if they’re operating under misconceptions about what the economy is doing, they can miss enormous opportunities.
Take, for example, a new product launch. Conventional wisdom says a recession is a wrong time. People are tightening their belts. They’re not willing to experiment when funds are short, so they’re going with the tried and true. Now’s the time to focus on customer loyalty, and retain as much business as you can. You might even want to trim your product line, focusing solely on your most profitable items. But while this advice might make sense purely practical, consumers who drive the economy are not entirely practical, even in a downturn. Sure, folks worry, but that worry can lead them to look for new, innovative solutions. And they also hope, which can trigger acceptance of a new product that brings a bit of excitement.
If you’ve got an innovative new product you want to launch, you shouldn’t be discouraged by our current economic malaise. If your product is right for this moment, offering solutions that consumers are looking for, it can still enjoy a spectacular take-off. On the other hand, if you delay the release, you might find that the moment for your new product has passed you by.
Successful companies and products launched during economic downturns
People forget that just 15 years ago, the housing market started to crumble, and we entered what became known as The Great Recession. Though it was painful for a time, the crisis passed, and the groundwork for future fortunes was laid. In 2009, when the economy was ostensibly at rock bottom, numerous startups that are worth billions today were launched. These include Beyond Meat, Zulily, Venmo, Pinterest, Uber, Okta, Square, and WhatsApp. And their success was not an Internet-spurred anomaly. Going back a century we can see many iconic companies and products were introduced to the public during hard times, such as:
- Disney — The years after World War I were fraught with economic challenges, with a post-war recession in 1918-19, a depression in 1920-1921, and a recession in 1923-24. That latest period saw a drop of 25.4 percent in business activity throughout the United States. Yet, Walt Disney was able to found his film studio because of an innovative short film Alice’s Wonderland, which featured a child actress interacting with animated characters. When Alice became a hit, Disney rebounded from the bankruptcy of his Laugh-O-Gram Studio and started Walt Disney Studio. The pioneer in film animation never looked back.
- Kleenex — Although Kimberly-Clark introduced its facial tissue in 1925 as a way to remove makeup, it wasn’t until 1930 that someone in the company suggested it be used as a handkerchief substitute. By then, America had tumbled into the Great Depression, and fewer women were even buying Kleenex for its original purpose. That’s when a clever advertisement saved the product. The slogan “Don’t Carry a Cold in Your Pocket” resonated with consumers who couldn’t afford to get sick, miss work, and pay doctor bills. Spending on Kleenex seemed like a prudent measure in light of those worries.
- Revlon — The cosmetics giant was launched on March 1, 1932, with a line of nail polish. Such a product would seem like a frivolous expense amid the Great Depression, except that after three years of a miserable economy, women were drawn to Hollywood glamour for a bit of escapism. Revlon’s innovation, making nail enamel with pigments rather than dyes, meant that the color was more vibrant and lasted longer. With this competitive edge, Revlon captured the market.
- Monopoly — Parker Bros. began marketing what had been The Landlord’s Game in 1935, during the depths of the Great Depression. The public responded largely because the board game fulfilled two burning needs: to be cheaply entertained and to enjoy a diversion from the poverty all around. Players could handle tens of thousands of dollars in play money and imagine what life would be like when the economy finally turned around.
- Microsoft — Bill Gates and Paul Allen’s first business partnership was in 1972, just before the Oil Crisis recession that straddled 1973 to 1975. The two plugged away, forming ASCII Microsoft in August 1977. By 1980, Microsoft was ready to make its mark. The country went into recession in 1980 and then again in 1981, but it didn’t matter to Microsoft. They had developed a product the business community was hungry for the MS-DOS operating system. Microsoft signed a contract with IBM, and the rest is history.
- Warby Parker — Why are eyeglasses so expensive? Everyone who wears specs knows they’re grossly overpriced. Warby Parker execs realized there was a huge market for stylish, discount glasses, and they didn’t let The Great Recession of 2010 deter them. Today the company is worth more than $1.7 billion.
- LEGO — Founded during the Great Depression, the toy company whose name means “play well,” has shown a knack for expanding during economic downturns. Conventional wisdom says that quality toys are luxury consumers can do without when tightening their belts, but “The Toy of the Century” has proven to be the exception. The last great challenge LEGO faced came during the Great Recession. As the American market flattened, LEGO made the strategic move to expand in the East. LEGO took Eastern Europe and Asia by storm, building a truly global brand.
These companies succeeded because what they were offering at the moment spoke to where consumers were at that time in history.
Keys to launching during a sluggish economy
From the success stories we’ve mentioned there are three key elements for a profitable launch during a down economy:
- Innovation — The product has to break new ground in some way. There has to be a distinctive feature that separates this product from its competitors. This can be related to function or design. Consumers mired in recession get restless with stagnation and want to feel like they’re moving forward.
- Problem-solving — The product should remove an impediment or alleviate a worry. During a recession, most worries center around money, so if a product costs less or eliminates other related costs, that’s a big plus. But a low price won’t mean much if consumers think they’re losing quality. Recession shoppers want quality products that will last.
- Aspiration — The product should connect the consumer to some higher goal or state of being. Many companies accomplish this today with green production processes or fair-trade policies. Because hard times can dampen consumer spirits, your product should make them feel good about themselves and/or about the future.
The good news about launching during a downturn is that consumers are actively looking for solutions to problems. If your product fills an acute need, they’ll respond, and they’ll help spread the word to other consumers with the same concerns. This could make a bad time the best time for your company to prosper.