There have always been financial downturns in history and there always will be, it’s up there with death and taxes.
It’s how a business reacts when there is a downturn that will influence how they survive and indeed thrive afterwards.
So often, during a downturn, the knee jerk reaction is for a business to cut marketing activity in an attempt to protect immediate profits.
However, all historical evidence and a great body of research highlights that the most successful policy is for a business to increase, not decrease, marketing effort during a downturn as it provides real opportunities.
Opportunities for businesses to gain market share, solidify their customer base and position themselves for future growth.
Proctor and Gamble is a business built on taking risks during downtimes.
During the great depression in the 1930s they were one of the United States most intrepid marketers.
Where other businesses stopped spending and became risk averse, Proctor and Gamble continued and actually increased their marketing activities as they chose to manage the risk and take the opportunity to gain market share and brand awareness.
The biggest problem is of course that marketing is still often seen as an expense not an investment, therefore during a downturn it is regarded as a drain on profits.
But during a downturn it is much easier to gain and control a ‘share of the voice’ as competitors silence their own voices to cut costs and the actual cost of advertising falls. These inexpensive gains in sales and profitability are then carried forward post downturn.
As Peter Fader, Professor of Marketing at the Wharton School says, “As companies slash advertising in a downturn, they leave empty space in consumers’ minds for aggressive marketers to make strong inroads.”
It is vital however that companies manage their expectations regarding growth during a downturn, gains may not be imminent, however by continuing to market during a downturn, growth will be much quicker to restore when the economy expands again.