Avraham Shama

Abstract: Recession is a phenomenon of decreasing demand for raw materials, products, and services. Technically, its beginning, progress, and ending depend on the operational measures used by different researchers and federal agencies. For example, in the United States a recession is said to exist when the gross national product (GNP) declines for two consecutive quarters, or when the leading economic indicators (LEIs) decline for three straight months, or when the index of the Association of Purchasing Managers dips below 50 points. Whichever the case, recession requires marketing managers to modify their marketing strategy and action in order to stay both profitable and consumer-responsive. This generally means adapting the marketing mix and/or changing the target markets. However, the response of marketing managers to recession depends on how they perceive its meaning and impact on their businesses. As a result, it is possible that a recession on the national level may affect different companies differently and may, in fact, indicate different economic environments, including those of growth and inflation. Specifically, an objectively measured and determined recession on the national level may affect companies of different size and different sectors and regions differently, hence requiring that marketing managers take different tactical and/or strategic measures to adjust to or even exploit changes in the economic environment. This article seeks to determine management perception of and response to economic recession by measuring the following and contrasting the results by sector and by company size: (1) The meaning of the 1991 economic recession to marketing managers, (2) The impact of this recession on marketing decisions, and (3) The resulting adjustments in marketing strategy and action. A fourth goal of this article is to make recommendations to marketing managers, which may be especially useful to those in small businesses. By accomplishing the goals of this article, the study will make a bridge between the scholarly marketing literature and daily or weekly reporting on marketing and economic performance. LITERATURE REVIEW Recession has been defined in the marketing literature as a "process of decreasing demand for raw materials, products and services, including labor" (Shama 1978) or as a "state in which the demand for a product is less than its former level" (Kotler 1973). Recession calls for marketing managers to use strategies to stimulate consumer demand. Such strategies often require a redefinition of the target customers and the marketing mix. They may include narrowing the product line, offering cheaper products and quantity discounts, lowering prices, increasing promotion, and offering products directly to consumers. To weather the recession, Bonoma (1991) advises practicing marketing managers to: (1) "Avoid |empty middle' marketing," (2) "Don't mistake expansiveness for empire," (3) "Do more for less," and (4) "Remember what winter is like when summer again comes" (Bonoma 1991, 10). In a related study, Goerne (1991) reports that marketing managers have been using significantly more coupons in the promotion mix in order to fight the negative impact of the recession on sales. In view of this, it is critically important that marketing managers make sure that the economic environment facing their company is indeed one of recession. However, the existence of a recession is often determined on a national level by federal agencies and business and economic research organizations. Thus, the U.S. Department of Commerce gathers and publishes two highly watched statistical data: the GNP and the LEIs. The GNP is the total monetary value of the "goods and services produced and consumed in the private, public, domestic and international sectors of the economy" and is therefore "the broadest indicator of economic output and growth" (Guide to Economic Indicators 1990). …

TL;DR: In the former Soviet Union, the transition from a centrally-planned and centrally-managed economy to a market-driven economy was a total and drastic change as mentioned in this paper, with a very low inflation rate.

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