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business

From: James Thorson, Chairman of the SCSU Department of Economics:

How likely is a recession as a result of the coronavirus pandemic and the closure of many businesses?

If the social distancing measures remain in place for a month or more, then a recession is almost inevitable. Even in our increasingly online economy, many of our transactions involve face-to-face transactions. In many sectors of the economy, spending is being curtailed — which results in lower incomes. The good news is that if the virus gets under control fairly quickly, any downturn should be relatively short.

James Thorson

Will the economic stimulus help stave off a worse recession and help it bounce back more robustly when the virus is finally under control?

In all likelihood, economic stimulus should lessen the severity of a recession — as long as the stimulus induces additional spending in the economy. This additional spending is likely because many people have had their incomes reduced dramatically, so they will need the stimulus money to survive. Once the virus is under control, the economy should bounce back pretty quickly because there will be much pent up demand.

What are your thoughts on the volatility of the stock market?

The stock market hates uncertainty and this virus has caused uncertainty. What we thought was going to be a two week or so social distancing period has extended to an uncertain period of time. This is having devastating effects on businesses such as restaurants, hotels, airlines, among others. When this will end is anybody’s guess. Such uncertainty always makes investors nervous. The good news is that the virus will eventually come under control, and the economy and the stock market will eventually recover.

What effect is the pandemic having on small businesses?

Many small businesses are going to be hit very hard by the pandemic, at least in the short term.  For example, many restaurants and stores have shut down for the time being.  That means that these business owners are still paying rent and property taxes, but they are receiving no income. Even businesses not directly affected are likely to see a slowdown.  The supply chain in the United States is still operating, but more slowly and not as completely.

Also, productivity is likely to be lower, even with people working from home.  For most of us, our houses are just not set up as efficiently as our workplaces, so that makes it more difficult to get work done.

With the market in decline, is this generally a good time for people to increase their investments, such as in a 401(k), or to sit tight?

The general question of market timing is always a difficult one, and stock prices are inherently unpredictable.  For a person with a long-tern horizon, I would not shy away from investing in the market.  Those who invested in the market in 2008-2009 still have done very well, even with the market decline.

The best time to invest in the market is when things are at their worst. But there are two potential challenges with that strategy.  First, we never really know beforehand when “the worst” is.  Second, it can be psychologically difficult for many people to do this. That is one reason why automatic investment strategies, such as when we have money withheld from our paychecks to be put in a 401(k) or 403 (b), can be very successful over time.

 

 

 

 

School of Business, marketing students

Southern’s Student Marketing Club (SUMA Marketing) recently placed among the semi-finalists at the prestigious International Collegiate Case Study competition after developing a comprehensive campaign for an ecommerce giant.

Each fall, the American Marketing Association hosts the Collegiate Case Competition for its 370 student chapters around the world. Every year, a different company sponsor provides the chapters with a marketing problem that they are prompted to solve through a comprehensive 40-page marketing plan.

“This was the first time that an ecommerce company (eBay) was used as a case study, so for our students, this was great experience in digital marketing,” said Randye Spina, assistant professor of marketing and faculty advisor to SUMA.

The challenge was to increase eBay’s participation in the online trading marketplace by Millennial and Generation Z non-users. Listed as one of the most valuable brands in the world with more than $8 billion in revenue in 2015 and with an estimated 164 million active buyers as of the second quarter of 2016, eBay is facing an increasingly crowded and competitive market with competition from rivals such as Amazon, Alibaba, craigslist, and Etsy.

To address the challenge, SUMA collected primary and secondary market research, devised a marketing strategy, and created an integrated marketing communication plan with creative marketing tactics — all within the sponsor’s provided budget.

From data collected through 186 completed surveys of commuter and resident students “we learned that many young adults think of eBay as their parents’ website, while theirs is Amazon,” said SUMA Marketing President Julia Rotella.

“To overcome this, our recommendations included tapping into their existing business assets including Shyp (their trucking company) and StubHub (the world’s largest ticket site),” Rotella said. “In addition we recommended using several demographically-relevant social media influencers as spokespeople and we recommended simplifications to their website to make the user experience easier for younger audiences who don’t want to ‘bid’ but would rather buy.”

The resulting annual plan for July 2017 through August 2018 saw Southern’s team placed among the top 20 competing colleges, when results were announced in January.

“The students were thrilled, this is a major accomplishment for them,” Spina said. “They deserve a lot of credit for finishing in a group of finalists that included representation from some very prestigious schools.”

This year, for the first time, due to the complexity and difficulty of the project, the AMA Case Study was run as a three-credit course (MKT 398). Past Southern entries were based solely on club activities, Spina said.

About SUMA Marketing

SUMA (SCSU Undergraduate Marketing Association) is Southern’s collegiate chapter of the American Marketing Association. SUMA provides members with marketing and professional experience through national competitions, fundraising, community service, and much more. For more information visit: owlconnect.southernct.edu/organization/sumamarketing.

About the American Marketing Association

American Marketing Association student membership and AMA collegiate chapter affiliation offers many benefits, from career resources, platforms for professional development and experiential learning, execution of chapter events, leadership development, to taking part in the many AMA competitions offered annually. For more information visit: ama.org/collegiate.