Marketing in difficult times

Marketing in difficult times

The man who stops advertising to save money, is like the man who stops the clock to save time.

Marketing budgets are probably the first to fall under the hatchet in an economic downturn, mostly because it is seen as a luxury or something you spend money on when you have some change to spare. Historically, this point of view has been proven wrong over and over again. Studies focusing on past recessions have all come to the same conclusion:

Businesses that continue to advertise regardless of economic times have a competitive advantage over businesses that trim their ad budgets.

(www.americanbusinessmedia.com/images/abm/pdfs/committees/ValueofAdv.pdf)

Increased share of voice and mind

Advertising drives awareness.

Awareness, in turn, drives purchases.

During a recent study conducted by Yankelovich Partners and Harris Interactive, a majority of executives agreed that seeing a company advertise during slower times makes them feel more positive about the company’s commitment to its products and services.

(www.signindustry.com/management/articles/2002-10-31-JL-AdvertInDownEconomy.php3)

Another study by the American Association of Advertising Agencies in 2004 found that increased advertising in an economic downturn or recession has greater benefits than increased spending in a period of economic expansion. These benefits can be accredited to an increased share of voice (SOV) among consumers, a consequent increase in share of mind (SOM) as well as enhanced perceptions from stakeholders.

(blog.empowermm.com/2008/02/22/investing-in-advertising-during-economic-downturns)

The performances of 600 industrial companies were evaluated following the 1980-1982 recession. A study by McGraw-Hill found that business-to-business firms that maintained or increased their advertising expenditures during the recession grew their sales with 275% from 1980 to 1985. In comparison, sales of those firms that cut their ad spending averaged only 19% growth during the same period.

(www.marketingprofs.com/2/greymatter1.asp)

In spite the current economy, this is an opportune time for any savvy marketer to identify the gap and step up to the plate.

The IBM personal computer and the iPod are examples of brands that were birthed as a result of savvy marketing during a recession. Another firm favourite is the story of Kellogg’s.

During the Great Depression, Post was the leading cereal brand.

Although sales were falling, Post reduced advertising because they ‘owned’ the cereal market and needed to cut expenses. Kellogg’s saw the gap, created a positive ad campaign in the midst of troubled times and doubled their ad budget. Since then Kellogg’s has sustained the lead in the highly competitive breakfast cereal market.

(www.inetinteractive.com/blog/why-should-you-increase-your-advertising-budget-in-a-recession/)

The simple facts

• During an economic downturn, a strong advertising/marketing effort enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery.
• Maintaining a strong advertising presence while competitors cut their budgets will automatically increase your ‘share-of-mind’, and maintaining ‘share-of-mind’ costs much less than rebuilding it later on.
• Advertising through economic ups and downs sustains the necessary brand recognition and your market position.
• Maintaining your advertising presence in various economic conditions gives the image of corporate stability within a chaotic business environment, and gives you the chance to dominate the advertising media.
• Advertising is never a drain on profits, much rather a contributor to it.

(www.americanbusinessmedia.com/images/abm/pdfs/committees/ValueofAdv.pdf)

The idea is not to go around recklessly, throwing money at every advertising opportunity that presents itself.

To ensure that marketing is effective AND cost-effective, advertising should be aimed specifically at the target market – now more than ever. You, as the advertiser, have to be absolutely sure that the message you pay to have delivered, reaches the necessary people, and has the necessary impact.

Advertising is not money thrown in the water. It is an investment in the company’s future image, stability and income.

This entry was written by Charine, posted on August 14, 2008 at 4:13 pm, filed under Marketing. Bookmark the permalink. Follow any comments here with the RSS feed for this post.Post a comment or leave a trackback: Trackback URL.