Reza Masiha
Jeremy Hamilton
John Glimmerveen
Paul Funk
Reza Masiha
Dimitri Hettinga
Doug Stabler

How to Overcome Depression?

Date:06-01-2017 Source:chinamotor

Depression is caused by two reasons which are principally divided into soft and hard factors. Hard factors generally occur due to the lack of liquidity or devaluation. On the other hand, soft factors are largely due to subjective factors of the market and consumers.

These two factors interact with each other which means that they have the ability to make the stagnation worse or better in a turning cycle.

It should be admitted that in recent years, the world has been experiencing a major downturn which has engaged all global markets. The reason for this is that global production has overtaken demand because purchasing power has not increased in line with the increase in production.

In explaining this phenomenon, we usually refer to the emerging economy in China. Because Chinese companies have not been able to increase demand as much as production. Accordingly, China's economic growth has been decreasing due to low sales and this recession has impacted all global markets. We must accept that global markets are saturated in a specific range and are in need for economic and mental stimuli for improving the purchasing power of consumers.

However, economic solutions are not in the working scope of production units such that they can create purchase by providing that stimulus because such solutions are usually created by governments in a big move. Market strategists consider mental approaches as the answer for manufacturing companies because they can create excitement for buying goods with different techniques and move the economic wheel.

Creating excitement is a subjective approach for the buyer which could lead the consumer to purchase goods. Creating a purchase excitement cannot be focused on specific academic techniques because, as proven through experience, some new and innovative techniques can challenge the academic approaches in spite of all scientific methods.

As a comprehensible example in creating purchase excitement, we can refer to Chinese mobile manufacturers which have growing sales in the global market recession. This is because when the purchase power decreases for various reasons, Chinese companies produce goods at low prices with high performance. Hence, buyers of sluggish markets will tend to buy quality inexpensive Chinese products rather than iPhone and Samsung's products. This is important in two respects: One is that it leads to higher sales of Chinese firms and the other is that it creates opportunities for improving the brand position of Chinese products in world markets.  That is why market strategists consider the recession period as the golden era for brand promotion of weak companies.

Market experts suggest different techniques to get through this period. But most managers refuse to implement it because of their fear and this further deepens the recession such that it eventually leads to great bankruptcies.

The easiest technique for mental excitement during economic recession is advertising. In market strategy, because of its availability for all, this is considered as a fun technique which was used by great companies in the decades 70-80. But today, because of widespread publicity, market experts consider advertising as a low impact strategy and use it more as a complementary technique.

One of the techniques for sales of products in recession is direct sale of goods in target markets because it removes the merchant from the product sales process. This method can reduce the final price of goods about 30%. Since Chinese companies have not yet entered the era of brand commitment, this simple solution is very useful. Because if they have brand commitment to a target market merchant, they cannot do this.

The second technique that can be used in depression is lowering production profits and being satisfied with minimum profits. Hence, the price of commodity is reduced for the consumer which creates excitement in the consumer to make a purchase. This is generally applicable for great brands because they used to take large profit margins for their products in prosperous times and can therefore cut their high profits and deliver the goods at lower prices to the consumer in recession period.

The third technique is that manufacturing companies produce commodities which have far more value than the money spent for their purchase. This is mostly true about Chinese manufacturing companies and they can execute it easily but most managers refuse it because of their fear. Albeit, we intend to show some successful examples of this technique so as to know what we should do to get rid of recession.

All market experts know the recession years of the nineties.

During these years, stagnation had effected most American and European companies. This slowdown in European motorcycle companies, whose produced motorcycles had more prime cost due to economic reasons, was more evident than Japanese companies. This was because European motorcycles were about 50% more expensive than Japanese motorcycles and this was while the quality of Japanese motorcycles had become the same as the European products.

One example of escape from recession happened in Ducati Company with designing the Monster motorcycle, the motorcycle that could revive the sales of street motorcycles in Europe. What is written in the history is that Miguel Angel Galvez saved Ducati Co. of bankruptcy by designing Monster in 1993. Because at this time, the majority of motorcycle manufacturing companies were in feigned sleep as a systematic behavior. This was while the Ducati Co. moved boldly to create exciting products during the economic recession. This was how the world's first Street Fighter arising from a social demand in Europe was designed and marketed. Sales of Monster motorcycle accounted for more than half of the sales of Dukati Co. in 1995.

Another palpable example in the motorcycle industry is the story of KTM Co. and Gerald Kiska. In 1991, according to economic parameters, auditors of KTM Co. announced that the corporation is going bankrupt and the experts recommended to split the company into four small corporations of radiator, bike, tools, and motorcycle production.

What history says is that in the last days of KTM, it held a competition on motorcycle design. In these competitions, the small company of Kiska headed by Gerald Kiska won the competition with an innovative design. At the end of the competition, based on the decision made by management of the KTM Co., the responsibility for designing motorcycles was given to the Gerald Kiska team with 5 employees.

In fact, Gerald made a very good use of this achieved situation, such that Gerald Kiska is now known as the savior of KTM.

In fact, Gerald gave a new life to the body of KTM motorcycles. He simultaneously pursued two strategies: 1. design in line with demand and 2. design for creating demand.

In fact, he attacked the depression problem of KTM Co. from two aspects at the same time. This led to the very impressive impact of his design on high sales of KTM Co. such that it could encourage KTM managers to do a long-term cooperation.

In explaining the above paragraph, we must say that designing a product is a matter of 10% importance and design strategy is a matter of 90% importance because a correct strategy provides the ground for an optimal design. This is true in the case of Gerald because he insisted on changing the design strategy in KTM Co. In this regard, Gerald dispensed the top to bottom (manufacturer to consumer) view and pursued customer satisfaction from the perspective of design.

In this thinking, new concepts such as the Duke, Super Duke, and Super Engine are created beside concepts like Cross, Trial and multi-purpose motorcycles. Based on this different view, KTM Co. succeeded to sell 150,000 units motorcycles in 2015 and overtook its powerful German rival BMW with sales of 136.963 motorcycles.

What was mentioned above highlighted Gerald Kiska's emphasis on design for creating demand in addition to design in line with demand.

By moving in that direction, we see that Gerald Kiska created the concept of "lifestyle for a motorcycle rider" and tries to create excitement in using KTM products through advertisements.

The paper concludes that "recession can open a gateway to higher achievements of a Chinese motorcycle company brand. In this regard, managers should refrain from fear, and use this opportunity with a bold move based on design knowledge".

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