Prospering in a Down Economy, Part 3
Posted on March 6, 2009 | Permalink
By Lane Casteix
In Part 2 of this series posted below I charge that reducing marketing budgets during a bad economy can be exactly the wrong thing to do. A McGraw-Hill Research study on this subject came up with some interesting statistics to support that position.
In 1981-1982 recession business that maintained or increased their ad spend during this time averaged higher sales growth and in the following 3 years! By 1985 sales of the businesses that maintained or increased their ad spend during that recession, sales had risen 256% over those that had cut back on advertising. Same in 2001 - another study found that aggressive recession advertisers increased market share 2 ½ times the average for all businesses in the post-recession!
But in 2002 the Strategic Planning Institute illustrated that for 80% of businesses that waited and then increased their advertising spend following the recession during the economic expansion, there was NO improvement in market share. Waiting out the recession generally didn't help!
You may also find the information in Innovating Through Recession (Andrew Razeghi, Kellogg School of Management) very helpful in plotting success even in bad economies.
What is important is to understand there are opportunities even in recessionary times, but you must be prepared to take risk and continue to aggressively market your product. An important piece is understanding the "new motivators" that drive consumer behavior during a recession (which I described in the first post in this series below) and shift your message to address the needs and concerns of your customers.