World economic crisis
World economic crisis and trend of the Russian companies and consumers to cut costs, reducing buying the unnecessary services and goods or looking for the lower price substitutions. Service provider: Training company Liona (http://www.liona.spb.ru/). One of the largest training and educational providers in Saint Petersburg, main area is corporate training for personnel efficiency improvement, sales, time management, motivation.
Normally what we can suggest about trends in the training service when we have financial crisis? First of all companies will think about keeping the existing business, not looking for the change and growth, so we can predict the falling demand. But the crisis in Russia affected not all types of the companies, for example food retailing sector was practically not affected. Also in the crisis companies will think about maximizing effectiveness from the lower amount of employees and in that case special trainings can be effective. So theoretically the training sector should be affected, but main professional service providers may stay nearly the same sales values.
But what really happened? What we can see on the market, it practically crashed (Baksht 2009). There are several reasons why it happened. First, the professional training companies (among that I place Liona) main business was from the large companies, mainly representatives of global foreign companies. These companies were affected not by Russian, but by global recession and mainly not cut, but completely zeroed the training budgets for the foreign branches (Kovalenko 2010). The second reason is that trainings were widely used as the motivational activities, having trainings as a reward for the best workers.
When job market turned that there are more people looking for the job than vacancies, this sort of motivation stopped being necessary, people worked just because they wanted to keep the job. Also during the previous years when demand for the training service was great, training companies did not form the good sales structures, they did not have looking for the client, clients called by themselves (Baksht 2009). In the crisis starting this activity was not easy, but to survive companies had to do this.
To stay on the market, Liona reviewed the possible trends and modified its marketing mix to target the actual tendencies. First, when companies stop training the line level personnel, they still need to have effective top and middle management resistant to the crisis and emotional stress caused by it. To reach this target auditory Liona started the coaching program, giving the personal assistance and support for the top management of the companies that earlier were their customers and were happy with the level of Liona’s work. This was new market for the company and this could happen only because its SEO was already interested and trained to be a coach and had good relationships with potential clients.
Also during several years Liona has the 2year program “Master of the Group Training”, the educational program for the people who want to become trainers. In the crisis companies tend to take trainers inside the company, so if person wants to start working in that position, it is very good time. But 2 year program in the crisis was too long and Liona created the new product “Corporative business trainer” specially designed to prepare current employees to start working as internal trainer in 3 months. The program was a success, and interest was mainly not from the companies, but people paid by themselves to have this opportunity.
The third successful activity was creating the anti-crisis or related trainings. For example in the period of layoffs Liona started the short program training HR managers how to fire properly by law and making less psychological damage for fired people and for themselves. Liona actively participated in the government educational programs (like in Presidential program for young managers) and in conferences that kept the company name actual and known. In 2010 the market of training service started growing again and those who did not have budgets for training now start educational programs again, selecting between those main companies who survived in 2008-2009 and Liona is among them keeping good positions on Saint-Petersburg market.
I can’t say that 2008-2010 were very easy for Liona, they also had to fire non key personnel, cut costs and change the office, but flexibility and initially professional reputation and attitude allowed the company to survive. Mainly this is because of its SEO’s attitude, personal and professional qualities. For example Olga was awarded as Best Russian Young Manager 2004 and I believe she is really one of the best.
EcoService is a small manufacturing company based in Saint-Petersburg, Russia. Its production line is based in Saint Petersburg State University and key research and development is done by university scientists, mainly in chemistry and biochemistry fields. Having these researchers company initially was able to create set of low-cost kits used for analyzing blood and other basic biochemical analysis for the hospitals. This market is very tough, as a lot of manufacturers produce such kits and competitive advantages are mainly in the field of packaging, how easy and quick is to use these kits. EcoService did not have production line for good packaging and they targeted in regional hospitals that had small budgets and had not so great volume of analysis as in main cities.
The crisis affected EcoService in 2 ways. First, practically all chemicals necessary for kit creation nearly doubled in price because of the dollar/euro price increase in 1.5 times in 2008. So the company has to increase price for the kits, and thus start concurrent war with the companies already operating in that niche. To avoid this company used its unique position as part of the State University and was able to buy chemicals together with other laboratories, exploiting the large volume for better prices.
Keeping the prices relatively low, EcoServise started being attractive for the large hospitals. Initially hospitals worked with foreign manufacturers and had enough money to buy more expensive ones, but now they became also 1.5-2 times more expensive. The company reviewed the main demand and was able quickly create the new products that substituted the expensive ones. This was possible because of the very strong RnD department that was able to create new products and propose the quick production line for them.
But not only the new products were attractive, analysis kits are usually used together with the equipment and hospital personnel is trained to use this equipment quickly and effectively. Not proper substitutes can ruin the hospital analysis performance in urgent causes. EcoService understood this and developed “adaptations for analysis equipment”, that is its main products packaged in the way they are suitable for 9 main hospital equipment systems. Having this adaptations hospital got the full substitution of their initial system but for the much better price. Amount of customers increased and now main customers are located in Saint-Petersburg additionally having good transportation and quick response from the local company.
