Some great thoughts in this short piece from Harvard Business Review on topics that we discuss in several points during the semester. From cost analysis and cost cutting to product design and emotional impacts of products and marketing, many factors are impacted (even though they aren’t always considered) when decisions are made.  Recently many companies have been creating stripped down products with a “value” focus to appeal to recession-weary consumers.  A good example of this was detailed in a post I made last August about Tide Basic.  For some companies, this might be a great plan in the short-term, but it potentially carries great risk in the long-term.

Cost cutting needs to be done surgically and with great care.  The bigger the brand-name the more care that is required or there is great risk that the brand will be damaged.  During hard economic times some companies are cutting costs wildly just to maintain sales volume, but the true test may be when recovery begins and consumers once again have more freedom to choose products on the basis of how they are made to feel rather than on cost alone.

In reaction to the Great Recession and the forecasts that consumer demand in the US, Europe, and Japan will remain anemic for the foreseeable future, many companies are focusing on stripped-down “value” products. In doing so, they risk making a big mistake: Assuming that consumers in hard times care more about utility and low price and less about the emotional and social dimensions of products.

While people, of course, do care about price, they care even more about how products give meaning to their lives. Even when they are pressed financially, they do not want to feel poor. So the challenge for companies is to cut costs without cutting meaning.

Cut Costs Without Cutting Meaning – The Conversation – Harvard Business Review.