Quotes of the Day

Recessions tend to shake up the corporate status quo. Under the stress of collapsing demand and tighter credit, companies that seemed solid are exposed as dangerously flawed, while others panic, slash costs, hunker down — and pass up chances to gain on their competition in ways that would be impossible in a normal economic climate.

During downturns, "there are opportunities to really establish your brand," says Peter Steidl, author of Survive, Exploit, Disrupt: Action Guidelines for Marketing in a Recession. When times are tight, customers rethink how they spend, often breaking buying habits and abandoning product loyalties. This offers an opening for companies not only to win new customers, but also "hold on to [their] wins" even after the economy recovers, Steidl says.

Today, as giants like General Motors tumble into bankruptcy and others like Sony struggle with historic losses, smaller rivals are maneuvering for their market share. On the following pages, TIME looks at the key strategies of four companies that are seizing opportunity amid turmoil.

HYUNDAI MOTOR
Lend Confidence, Not Cash

Hyundai has a reputation for selling cars to the budget-minded. But last year, as U.S. auto sales plunged, incentives such as rebates and fancy financing schemes weren't moving wheels off the lots as they usually did. John Krafcik, chief executive of the American subsidiary of the South Korean carmaker, polled consumers to find out why. The answer: fear. "The root cause was not that the deals weren't good," Krafcik says. "So many of them said, 'I'm afraid of losing my job.'"

In late 2008, Hyundai's U.S. management team began searching for ways to drive around this mental block. The solution was as direct as it was unusual: Hyundai would promise to take back vehicles from buyers who got sacked within one year of their purchases. Tossing a marketing campaign together in just five weeks, Krafcik had ads running on TV by early January, in time for the much watched National Football League playoffs. The offer instantly grabbed headlines across the country. "Give them credit, they made some noise," says Gary Dilts, a senior vice president at auto-research firm J.D. Power in Troy, Mich. Hyundai "got people into the showroom."

Hyundai believes it did much more than that. Based on company research, Krafcik figures the program boosted sales by 10% from what they would have been otherwise. That was more than enough for Hyundai to outdistance rivals. True, Hyundai's U.S. sales fell 3.6% overall in the first four months of 2009 from the same period a year earlier. But total auto demand plunged more than 37%, so Hyundai's U.S. market share actually jumped to 4.3% compared with 2.8% the year before. "We're hopeful that [Hyundai's gains] are sustainable," Krafcik says. And the program hasn't backfired: fewer than 10 cars have been returned by customers who lost their jobs, out of more than 60,000 who qualified for the deals.

ACER
Bend with the Wind

Selling computers is a tough business at the best of times. These are the worst of times — global computer sales slumped nearly 7% in the first quarter of 2009. But PC maker Acer has bucked the trend. According to research firm IDC, Acer's PC shipments rose 10% in the first quarter of 2009 from the same period a year earlier, lifting Acer's global market share to 11.9%, up from 10.1% the year before. In notebook computers — Acer's speciality — the company claimed 17% of the world market in the first quarter, enough to make it the world's second largest notebook maker behind Hewlett-Packard. Acer earned a net profit of $59.7 million in the first quarter.

Acer CEO J.T. Wang chalks up the results to his company's willingness to adapt to unpleasant market realities. While competitors are trying to protect their profit margins by keeping prices of PCs stable, Acer, recognizing that consumers have less to spend nowadays, has been pushing low-cost computers including netbooks, shrunken portable PCs costing just a few hundred dollars. Wang says that computers priced under $500 are taking a larger share of overall sales; according to IDC, the average selling price of an Acer machine in the first quarter dropped to $611 from $855 a year earlier. "People can't go on living without PCs," Wang says, "but in difficult times, they would like to spend less and still get a good PC."

At Acer these days, R&D is focused on reducing sticker shock. In May, for example, Acer launched new line of ultra-thin notebooks that can run for more than eight hours without recharging yet cost as little as $699. Wang claims these full-featured machines are unique in the market, and that it will take six to nine months for his competition to catch up. "It's not just low price," Wang says. "There is innovation in the product as well." Acer is entering the cell-phone business, and Wang makes no excuses for churning out low-margin netbooks, considered inferior devices by computerati because of their cramped keyboards and limited performance. "Our competitors consider these junk — the more you sell, the more you lose," Wang says. "We don't judge. We do what the customer really wants."

Acer's lowball strategy is not without trade-offs. Despite market-share gains, revenues in the first quarter fell 6.5% from a year earlier to $3.5 billion, while operating income sank 6.1% to $75.8 million. (Wang still expects Acer to match or slightly exceed its 2008 operating profits in 2009.) Bryan Ma, a computer-industry analyst at IDC in Singapore, says Acer risks tarnishing its brand in the long run. But during the recession, Ma says, Acer's product mix will help it outperform. "They're in the right place at the right time," he says.

PRIMARK
Be Cheap, but Chic

On a recent weekday in May, Primark's flagship Oxford Street store in London bustled with shoppers snapping up $3.20 T shirts, $1.60 turquoise tank tops and $21 pink chiffon dresses. The fitting rooms were so crammed that some patrons tried on skirts and shirts in front of mirrors on the store floor. Crisis? What crisis? In the six months to February, revenues at Primark, an Ireland-based company that is the U.K.'s second largest clothing retailer, surged 18% to $1.8 billion, with same-store sales up 5%. Operating profits, at $200 million, jumped 10%.

Sure, discount stores tend to withstand downturns. But since the slowdown began, two of Primark's competitors — MK One and Select — have been restructured under creditor-appointed managers. What makes Primark different — and keeps customers interested — is a keen eye for fashion trends worthy of a more expensive retailer. Devotees call the store Primani or Pradamark in honor of its acute fashion sense. And hot styles are delivered with commendable speed. New products can take as little as six weeks to hit the hangers. Primark has bridged "the gap between sheer value and fast fashion," says Robert Clark of London-based consultancy Retail Knowledge Bank.

What's more, Primark in recent years has invested in upgrading its outlets so the shop floor looks as hip as the clothes. "Primark has been moving into big stores that look as good as any middle-market retailer," says Maureen Hinton, lead analyst at U.K. retail consultants Verdict Research. "If you can pick up a dress for GBP 15 [$24] in a place that looks as good as any other High Street store, it makes the value even better." Even in hard times, it pays to keep up appearances.

FIELMANN
Throw Your Weight Around

Germans in need of new eyeglasses can have a pair made at any one of hundreds of optical boutiques or discounters. But many prefer to visit an optician at Fielmann. This is partly because Germany's largest optical chain, which sold nearly 50% of the 10.6 million pairs of spectacles purchased in the country last year, promises to match the lowest prices available. A well-known Fielmann TV ad, in classic noir style, shows a busty blonde sauntering into the office of a hard-boiled private eye. "Find an optician cheaper than Fielmann," she implores. "Forget it," the sleuth responds.

It also doesn't take a detective to find Fielmann shops, which number 536 in Germany — and counting. The Hamburg-based company sees the downturn as a chance to press home its dominance by expanding and squeezing out stumbling rivals. Fielmann, which also operates in Austria, Switzerland, the Netherlands and Poland, plans to open 150 new stores in Germany alone, as many as 30 of them this year. Georg Alexander Zeiss, Fielmann's head of finance, says that he is also considering acquisitions of smaller, weaker competitors. "We are looking at every serious opportunity," Zeiss says.

Founded by CEO Günther Fielmann in 1972, the publicly traded company can afford to be aggressive. While the total optical market in Germany grew 3.2% in 2008, Fielmann's sales jumped 7%, according to the Central Association of German Opticians. Total net profit soared 39% to $163 million. Company officials attribute the results to the company's size. Fielmann sources frames in bulk, from both cheap Asian manufacturers and designer brands, keeping costs low. Indeed, Fielmann's expansive mood shows that farsightedness can be a virtue: you can envision the day when the recession will end, and be ready to cash in.

— with reporting by William Boston / Berlin and Adam Smith / London

• Michael Schuman
• The downturn doesn't have to be deadly. Some companies aren't just surviving, they're thriving