With the ongoing economic slowdown, winds of change are disrupting consumer patterns. Consumers are reducing spending and seeking affordable brands. In other words, consumer needs and consumption standards are adjusting to the economic conditions.

Corporations, in response, have reduced their investment in research and development as well as marketing, which are understandable efforts to minimalize costs. However, these efforts will not help companies make profits in the long run, because corporations must invest in effective strategies to overcome the recession. 


A look at past cases in which corporations raked in profits through successful marketing strategies despite a recession will offer some insight.

Brand strategies during an economic slump

Most importantly, brands must quickly respond to consumer needs, as highlighted by the example of the Japanese unit of the 7-Eleven convenience store chain during the Asian financial crisis in 1997.

The chain 7-Eleven had quickly identified consumer desires and developed high-quality products sold at affordable prices as the company took into consideration the effect the recession had on consumers’ wallets. Moreover, 7-Eleven created food items that consumers would not easily get tired of, such as Japanese bento boxes and rice balls, which proved to be a hit with consumers.

Furthermore, by collecting and analyzing sales data from all store units, the company strategically adjusted its products to the local areas around each store. For instance, if a sports complex was near a store, the store stocked up on sports-related items to target nearby consumers. Therefore, the number of 7-Eleven convenience stores jumped from 4,000 locations in 1990 to over 9,000 by 2002, which boosted company revenue by threefold.

Secondly, corporations must focus on securing loyal customers by expanding their luxury products and range of services. As the state of the economy worsens, it is becoming clearer that the top 20th percentile earn 80 percent of the total income. Therefore, corporations should target the 20th percentile and gain their loyalty by increasing customer satisfaction to increase profits.

During the Asian financial crisis, Singapore Airlines trained flight attendants to specially cater to the first and business class and further invested $300 million to create a comfortable travel environment. This resulted in a surge in company revenue and built up a reputation for the airline.

Cases in Korean market

As there is no vast change in the spending of high-earners during a recession and they do not tend to change their spending habits as they are accustomed to luxury goods, corporations should expand their luxury products and services to target them.

In 2005, Hyundai Card for the first time in the industry launched the Black card, exclusive for the top 0.5 percentile. With a yearly membership fees of 1 million won ($850), Black card members gained access to desirable premium services, which resulted in the Hyundai Card dominating the industry.

Food manufacturer Nongshim also focused on premium products by releasing high-quality products to target new customers. With marketing aimed at young women who avoid oily food, Nongshim developed noodles that were not fried, such as “Saeng Saeng Udon.” Such premium food product sales took a 10 percent share of the company’s overall revenue.

Furthermore, by marketing premium ramyeon to Chinese city dwellers, Nongshim received favorable gains in the Chinese market leading to the company ranking No. 1 among Korean food companies in China, according to the Korea Trade-Investment Promotion Agency. Additionally, when the company increased its ramyeon prices by 8.7 percent in the first quarter of 2001, its revenue and net profits in the second quarter increased by 4 percent and 25 percent respectively.

Economic recession torments companies every now and then. Therefore, companies must set up effective plans by studying successful cases from past economic slumps and implementing strategies used, which include quickly grasping and responding to consumer needs as well as securing loyal customers by focusing on high-quality products. Through such methods, companies can do more than just overcome difficulties by taking this setback as a chance for growth.

By Park Heung-soo
Professor at Yonsei University School of Business