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Who Makes Money in
Tough Times?
By
Carol I. Kallendorf, PhD., Founder, The Delta Associates
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Despite the pervasive gloom and doom
in the financial news these last months, the picture isn’t all
bleak. While sectors like telecommunication and high tech are
deep in the doldrums, other sectors like energy and utilities,
as some of our readers remind us, are doing just fine. And
consumers seem to be holding up with remarkable fortitude, as a
reader in India noted to us.
But even if what we are currently
experiencing were a complete economic rout (which it is NOT),
there is money to be made and somebody’s out there making it.
How Much Will People Pay--and for What?
Case in point: If ever there were a time of vast economic challenge, it would have been the bleak
years of the Great Depression. But even in those desperate years
of the 30s, entrepreneurs who had the guts to get creative—instead
of flinging themselves out of windows—found ways to re-invent
themselves and their businesses to pursue new opportunities.
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Carol Kallendorf, PhD
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What those sturdy souls of
industry asked themselves was this question: What would people
pay for and what could they pay to possess it?
The Parable of Muzak
The answer that some of them
found was this: People in the Depression would pay a modest
amount of their limited cash for a little diversion, something
that brought a spot of joy to their lives, made them forget
their troubles, and gave them a sense of abundance—if only for
a moment.
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Made in Silicon Heaven: Mike Wood’s Virtual
Chip Exchange helps firms like Cisco find buyers
around the world for their excess inventory. |
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So in 1934
Signal Corps General George Squier founded Muzak to sell
recorded music to homes in Cleveland for $1.50 per month
on 3 channels. Hollywood began to turn out a lot of glitzy
stuff that for a few cents gave Americans an evening off
from their worries. And smart restaurateurs invented that
American classic—the salad: a way to make dining out
affordable and still create a sense of abundance.
All of those things led to
multi-billion dollar, highly profitable industries.
So what do your customers want?
What will business buy? What will consumers buy? What are the
magic price points? And how do you make them feel they’re
getting even more for their money?
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And What Opportunities
Do Hard Times Create?
Or, looking at it from another
direction, what are the opportunities specifically created by
hard times? Sure, we all know that bankruptcy lawyers love a
downturn. But Mike Wood of Virtual Chip Exchange is making money
handily by charging 9% to help companies with a glut of chips
find buyers.
So how will you
rethink customer need and economic opportunity to be one of the
ones who says of the year 2001: That’s the year we really made
it happen?
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