• Hartford Courant, Monday, February 23, 2009 11:15 AM

Akshay Rao, director of the Institute for Research in Marketing at the Carlson School of Management at the University of Minnesota, says that as the economic downturns hits home, people will trade down slowly. If they are used to eating out twice a month, for example, they will switch first to buying food at an upscale grocery. "It's not steak to meatloaf overnight," he tells Anne M Hamilton.

But taking advantage of trends like that is a key strategy across the board, according to Andrew Razeghi, a lecturer in marketing at the Kellogg School of Management at Northwestern. Quaker Oats has always been positioned as healthy, he points out, but now "it's a cheaper form of protein." And A1 Sauce? "Use it for hamburgers," Razeghi says.

Retailers, meanwhile, are trying to walk a fine line between lowering their prices enough to stay solvent and retain their price-conscious patrons, and offering something extra, such as durability, value or service. "If you discount too much, it emphasizes to consumers that my clothes weren't different from anyone else's," says Ravi Dhar, director of the Yale Center for Customer Insight at the Yale School of Management. Instead, stores may try to disguise discounts by selling multiple items at a slightly lower price.

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