Last week on Doomwatch we considered the impact of the downturn on consumers and businesses: http://www.thevalueengineers.com/2009/05/26/doomwatch-the-marketing-survivors-guide-to-the-economic-downturn-part-1/

In this post we will examine how to assess its impact on your category, brand and business model.

Firstly, what is the nature of the category that you operate in?

• Is this an essential or non essential purchase?
• Is it easily substitutable by another (lower cost) category?
• Do competitors with a strong value proposition exist within the category?

How about the consumers in your category?

• To what extent are your consumers insulated from downturn: by wealth, security of employment, other sources of income?
• How sensitive are they to downturn psychology: what is their orientation to spending / lifestyle maintenance; how important is the category for self identity?

Turning next to the resilience of your brand:

• How strong is your brand as a generator of cash flow and margin bulwark?
• How clear is the brand proposition?
• How relevant / potent is it in a downturn?
• How strong is consumer emotional attachment to the brand?

And finally (possibly most crucially), how sustainable is your business model?

• How do you sustain your margin: differentiated added value or low production cost?
• What is the driver of cash flow: fundamental necessity (needs) or marketing driven aspiration (wants)?
• How resistant is your cash flow to downturn effects: competitor pressures, category substitution, delayed purchasing?

In the final instalment of this Survivors Guide we will look at investment for the future – in insight, marketing support and innovation.