Is Attack the Best Form of Defence in a Recession?

Choosing the best strategy during a recession is a vital aspect of business. You need to be able to cope with the implications that a recession introduces; to do this a plan of action is vital. This could be a plan of attack, or a plan of defence. But how do you decide which strategy is the best to take?

Both ways have there advantages and there disadvantages, so a decision needs to be made based on the type of business you run, the type of market you are in and also what your competitors are doing.

What is a Strategy of Attack?

This type of strategy involves maintaining the businesses presence in the market. This can be by marketing the business through advertising and promotion, to expanding the business throughout the country to take advantage of the current loss in other businesses confidence. Attack could even just be maintaining your business throughout the recession, by keeping prices at their current state and keeping the brand image constant to keep interest in the firm.

What is a Strategy of Defence?

This type of strategy involves lowering costs, cutting down on marketing and maybe lowering prices so that sales are increased, as this will help keep the business alive throughout the recession. A defence strategy could also involve cutting jobs or reducing wages, all to save costs.

Why Attack is the Best Form of Defence

When we hit a recession, the business world goes crazy, confidence goes down and no one really knows how to react. Some businesses have strategies in place already and this means that that haven’t got time to change. An example of this is Domino’s in the UK who had a plan of action to expand to 1000 new stores in the UK by 2014. This plan was set out before the recession and therefore they didn’t really have any plans for a recession. When the recession hit, Domino’s decided to stick to this strategy. Below are some reasons why this was the best way to go for the company.

• Allows a business to a build brand image. When everyone else is cutting back and being more careful with their businesses, Domino’s decided to stay with there tactics which meant doing more marketing and promotion. In turn this allowed them to build a brand image around their product. Instead of falling behind their competitors, they made sure they were ahead. Consequently this helped build peoples confidence in the company which in turn helped them gain sales and market share.
• Maintain sales without cutting prices and therefore losing out on revenue. Although this will cost a lot in the short-term it will help maintain brand image in the long-term, especially when coming out of the recession.
• Helps lead to innovation which in turn will help increase sales and maintain market share. This is shown with the massive amount of sales gained through online orders, something which Domino’s help to innovate.
• For a low cost product, such as Domino’s, which is a cheaper alternative to going out for a meal, so expanding will allow you to keep up with the demand.
• In a recession interest rates are normally low, meaning expansion is quite cheap, compared to when interest rates are high. This means that expanding (attacking) could be a great way to ensure your business does well after the recession.

Why Attack Is Not the Best Form of Defence

In a recession you need to save money as demand for your products or services is likely to go down, meaning that the cost of producing your products, conducting your services, needs to go down as this will then allow you to maintain your profit margins or increase them, so that if demand does fall, you can make sure that you make the same amount of money. Below are some reasons why attack may not be the way to go in a recession.

• The cost of marketing is very expensive; Domino’s spent £18million in 2009 to promote their brand, although this is relative to what market you are in and the size of your business, what you sell etc., it shows that marketing costs money, which as stated above, may not be the way you need to go in a recession.
• There is a lot of risk involve. If the attack strategy doesn’t work, a lot of money has been lost in trying, which could cause cash flow problems. Cash flow problems definitely won’t help in a recession, as you need money to survive.

What to Consider?

When you are choosing which strategy to take during a recession, you need to look at what your business currently offers. If your products or services are inelastic, meaning that people will buy them no matter what, then you don’t need to change your strategy at all really, and you definitely don’t need to attack the market. However, if your product or service depends on how much disposable income people have, elastic, then you need to make sure that when a recession hits, people wills till buy from you. To do so you may need to attack and get marketing to maintain people’s awareness of your brand.

There are many other factors to take into account when thinking about what kind of strategy your business should take, including; the market your in, type of business, type of products or services on offer, finances available, size of business and what competitors are doing. Due to all of these different factors, you will have to choose a strategy depending on your business, no one else’s. Its hard work and this is why we hope this article will help make your mind up.

If you have any questions or comments to make, please use the comment box below.