Page 141 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

share increased to 7 percent in 1980 and to 18 percent in 1983;
by 1985, Huggies was the number one selling brand. This is
further proof that consumers will pay for an innovative product
that genuinely meets their needs—and will pay a premium for
it even when times are tough.
A deep understanding of how consumers are responding to a
prolonged downturn can lead a company to go beyond new-
product innovation and even make changes to its fundamental
business model. Had Kimberly-Clark not continually moni-
tored how its consumers thought and behaved, the Huggies
brand probably would not have achieved the success that it did.
The benefits of adapting to changes in customer preferences
can also be seen in Japan during the difficult years of the 1990s.
During the Lost Decade, Japan’s retailing model moved toward
discounters and mass merchants. Cash-strapped consumers had
begun to buy a larger share of the products they needed from
these outlets, and they also were steadily shifting toward the
purchase of the private-label brands the mass merchants offered.
Seven-Eleven Japan, the country’s largest chain of conven-
ience stores, whose owner also controls the U.S. 7-Eleven
stores, was already well positioned to benefit from these trends.
Adapting to new demands, it aggressively invested in the devel-
opment of private-label products. Collaborating with U.S. man-
ufacturers, Seven-Eleven developed a private-label cola for the
Japanese market that retailed at 25 percent less than the
national brands, and a private-label beer that sold for 20 percent
less. The company also leveraged the influence it wielded in the
retail sector to convince suppliers to work with it to develop
higher-margin private-label products. The manufacturers,
afraid of losing shelf space to their competitors if they did not
cooperate, reluctantly agreed. As a result of these moves, Seven-

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