Condoms sell very well during a recession, apparently. And so do guns and burglar alarms. When ruled by fear, our buying habits go back to our primal instincts – food, sex and shelter. But the same doesn’t hold true for the housing market, battered by 3 years of a dismal performance. In India, the rise of interest rates and skyrocketing real estate prices have dampened the demand for housing. While the theory is that markets are ruled by facts and figures, the truth is that it takes very little to spook the hordes. Medicine and education are two markets supposed to be immune to a recession but a few companies have managed to beat the odds. In 2008, while Ford and GM had their lots full of unsold cars in spite of the government sops, Hyundai did the inconceivable – they inverted their entire marketing strategy and harvested some of the biggest profits in their history.
Hyundai offered to buy back new cars for up to one year if customers lost their jobs. They locked in fuel prices at $1.49 per gallon for a year and promised to pay the difference if prices rose – attacking two of the biggest fears prevalent at the time – financial insecurity and the possibility of higher running costs. This helped to expand their US market share by over 1% point at a time when the auto majors were actually losing market share in double digits and the entire market was collapsing. The program is just winding up – about 350 cars were returned since 2009. But the goodwill and the enhanced appreciation for Hyundai’s cars have more than made up for the losses.
It takes a lot of courage to go against the tide. When the 5-star hotels in India were badly hit on occupancy during the recession, they quietly renewed yearly contracts with their biggest customers at much lower rates – obviously, this was never publicised. It was business as usual but with the demand back, the shoe is on the other foot now. But in the case of condoms, it would be interesting to figure out if the demand drops during the boom periods. That is crazy – unless people are throwing caution to the winds and having unprotected sex when markets are on the rise. Maybe Freud has an explanation.