Strategies for Fast Moving Consumer Goods Companies in a Recession

<p>There are two consequent goals of the research: 1) to define, how consumer behavior on consumer goods markets depends on external factors, especially in a recession, and 2) to estimate the strategies for consumer goods companies on different markets.</p><p>Research starts with theory overview. Based on the classical economic studies, we provided the definitions of crisis and recession and revealed the common features of both periods. Then, we accomplished analysis of previous studies of consumer behavior changes in a recession, as well as studies of companies strategies, recommended and most frequently used in a crisis times.</p><p>In the second paragraph there is a review of historical crises, their causes and consequenses in a world and in Russia particularly. As a result we defined the constraints of applying consumer studies discoveries of different crisis times of various countries and generalization of the conclusions.</p><p>In addition, we described the main characteristics of consumer behavior during both economic recovery and recession in Russia based on the publications, articles of consulting companies and research agencies. Based on their summary we set hypothesizes of recent market changes, further tested in a research.</p><p>The particularity of the selected methodology is that it is based on quantitative analysis of a 4,5 year market data and, therefore, it means the assessment of real consumer behavior. The methodology is based on calculation of correlation coefficients between volume sales on 17 different fast-moving consumer goods markets, including food and drug, and external factors (the level of unemployment, the average salary per capita, the average price on the market). We used the most reliable data available: federal government statistics and market data, provided by Nielsen, leading global information and measurement company. Two different periods were assessed: recovery after the World financial crisis (2010-2012), and the beginning of the second wave of a recession in Russia (2013-february 2014). These periods were compared in terms of consumer behavior to reveal the common traits of changes.</p><p>As a result we identified that the cheaper segments of markets are the most sensitive to macroeconomic factors: they grew with a fast pace during recovery times, but stopped development when the first signs of a recession appeared. The more expensive products sales dynamic doesn&rsquo;t depend on macroeconomic situation much. Additionally, we distinguished some markets which are responding to the unemployment growth in a recession. Overall consumer sensitivity to price changes increases. All of revealed results closely match with current world tendencies and previous consumer qualitative studies&rsquo; findings, which means that we can use more simple methodology to assess the market changes in a recession.&nbsp;</p><p>Finally, the typical strategies of the most successful brands were analyzed. The methodology implied the estimation of three main coefficients: the brand&rsquo;s price ration to the market average price, relative price growth and the changes in size of assortment. As the result we revealed that during the recession companies on average stopped assortment growth, in other words, they switched from extensive growth to intensive brand development. In a recession Russian companies overall used both cost leadership and differentiation strategies.</p>