On December 12, 2012, RMR sent out an e-blast to our database on the benefits of marketing during a downturn economy and how it can help companies gain an advantage on their competitors. You can read the article that was sent below:
EVERYBODY’S SCARED. BUDGETS ARE DOWN. COMPANIES ARE CUTTING BACK. THE ECONOMY IS ON THE ROPES. THE MARKETPLACE IS QUIET.
IT’S THE PERFECT TIME TO MARKET!
There’s talk of a recession. On the street and at the office, everyone has less money to spend. What were once necessities are now luxuries. What was once growth is now survival. And anyone with any sense is slashing his or her marketing budget like there’s no tomorrow. Right? Wrong. Absolutely, bass-ackwards wrong. The truth is that your marketing budget, correctly spent , will generate a proportionately even greater return during lean economic times than during prosperous ones. It could even gain you a permanent market advantage. And there are decades worth of data to prove it. Of course, we at RMR & Associates could clamor all day about the wonders of marketing. But we think the facts speak much more profoundly. So, before you panic, read this article. And then hope none of your competitors have seen it.
FACT: MARKETING COMMUNICATIONS WORKS HARDER DURING A RECESSION.
It’s true. The brave souls who stick to their marketing guns during a recession can gain even greater sales advantages than during easier times.
A McGraw-Hill Research study of business-to-business advertisers, for example, showed that companies who maintained or increased their ad budgets during the 1981-82 recession reaped an eventual sales advantage of 3.2 to 1 over companies who cut spending. A similar McGraw-Hill study during the 1974-75 recession reinforced this finding. And an October, 1990 study by the Center for Research & Development showed that aggressive recessionary advertisers nabbed fully 4.5 times the market share gain of their timid competitors.
Want more proof? Consider Chevrolet, who bucked competitors by increasing ad spending during the 1974-75 recession and promptly grabbed a 2 percent market share gain – equivalent of $4 billion in today’s dollars. And consider Delta and Revlon, who achieved comparable results by boosting spending in the same period.
When you think about it, it makes sense. In a recession, there’s less market activity. So who’s going to get noticed? The companies who make the most noise. An economic downturn is actually your single greatest opportunity to use marketing communications for short- or long- term gain.
FACT: MARKETING MORE NOW COULD GIVE YOU AN ADVANTAGE FOREVER.
Don’t think that using advertising as leverage during hard times is a new idea. In the 1930’s, in the depths of the Great Depression, seven market category leaders had the fortitude to maintain their commitment to ad spending: Campbell’s, Coca- Cola, Ivory, Kellogg, Kodak, Lipton and Wrigley.
Guess who the leaders are today in those categories? The same seven companies. The fact is, it’s much easier – and more cost-effective – to maintain marketing momentum than it is to try to regain it after you’ve lost it. Smart, targeted promotions while the market is down can give you an edge you’ll never relinquish. Remember the companies we mentioned earlier who sustained their ad budgets through the 1981-82 recession? In 1985, long after the economy has recovered, their share advantage over their rivals was still growing.
FACT: MARKETING WORKS. ANY TIME. ANY PLACE.
Let’s not let all of this talk about the economy obscure one basic fact: in good times and in bad, in healthy markets and in ailing ones, marketing works. That’s something that brand leaders have always known, even if they couldn’t quantify it. But now there’s solid proof.
A remarkable study, performed by the Strategic Planning Institute, tracked the performance of more than 700 businesses in North America and Europe from 1970 to 1986. By observing how advertising affected a product’s “perceived value” to customers, and then impact this had on relative market share and price, the researchers were able to actually measure the real profits generated by advertising.
The results: brands that advertised much more than their competitors averaged returns- on- investment of 32 percent, while brands that advertised much less averaged only a 17 percent return. How’s that for strength in numbers?
So if you’re looking for a silver lining in today’s economic gloom, it’s this: the recession has handed you a golden opportunity. Use it. But use it wisely. With an agency who knows how to make your marketing pay its own way. An agency that dares to hold itself accountable for producing results.
Which makes your next strategic move a simple one. Call RMR & Associates at 301-230-0045 x360.