Growth5 Blog

Thursday, April 9, 2009

Flying to Quality

It's a global trend. When times are tough, people pick quality first. They invest in Treasury bills. They shop for better cars and homes. Somehow, when every penny counts, people think more about how they spend or invest their money. It's called "The Flight to Quality."

So, explain this: why do some companies cheapen their products and services in a downturn? True, people look harder for value when times are tough, but less quality at a lower price is not a "deal."

"We have to do more with less," everybody says, but they don't mean it. They mean less with less. And they're going to deliver it with a bad attitude. Count on it.

So if you want to position yourself to make good money -- in bad times and in the better times that are coming -- all you have to do is deliver good value when everybody else is delivering junk.

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At May 9, 2009 at 8:40 PM , Blogger Don said...

This reminds me of a basic concept we learn from micro-econommics - in competitive markets all firms are in a constant battle to simultaneously lower costs AND raise quality - therefore companies that have operated in hyper-competitive markets seen to be better equipped to deal with economic downturns - it's just more of the same value-creation imperative for them. Maybe markets do have value after all?


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