Contrary to conventional knowledge, cutting back on marketing in a recession may not help, but actually hurt an organization.
In a recession, marketing budgets are often the first to get slashed. According to a recent Marketing Magazine poll, nearly 60% of those surveyed said that due to the economic downturn, they plan to cut staff, reduce expenses or both in 2009.
But marketing in a recession isn’t about marketing less, it’s about marketing better and smarter. Some 60% of American Marketing Association member marketers say halting or reducing spending on key marketing programs is the biggest mistake marketers can make in an economic downturn, according to a recent AMA survey.
Recessions seem to be different from other threats to a firm’s viability, and marketing activities appear to help pull the firm through a macroeconomic downturn.
Though CMOs are facing tough challenges in the current economic climate, according to an Epsilon survey, 94% of those surveyed agreed with the statement, “A tough economic period is precisely the time when marketing plays a key role.” To offset budget cuts, CMOs are shifting to more targeted and measurable marketing strategies. Social computing (including word of mouth, social networking sites, viral advertising, etc.) was the most popular emerging channel with 42% of marketing executives expressing interest in adding it to their marketing mix. Blogs were the second-most-popular emerging channel, with 35% of marketers expressing desire to use them and 19% already using them.
According to Harvard Business School professor, John Quelch, who writes, Marketing Your Way Through a Recession, a downturn is no time to stop spending on marketing. The key, says professor John Quelch, is to understand how the needs of your customers and partners change, and adapt your strategies to the new reality.
In the scholarly article, Marketing strategies that make entrepreneurial firms recession-resistant,John A. Pearce and Steven C. Michael of Villanova University and George Mason University state, “A company’s marketing strategies preceding a recession strongly impact the extent of economic downturn on the firm, and influence its odds of a timely and complete recovery.”
They also go on to say, “Our specific prescriptions follow: First, maintain marketing activities in the core business as assurance against recession. Increasing sales and advertising, increasing breadth of production, and increasing geographic coverage improve performance during both the peak and the contraction of the business cycle.
Second, during the peak period, cautiously expand with an emphasis on marketing efficiency. Increasing the number of channels of distribution and cutting price have a negative effect unless accompanied by sales-force performance measurement. A simple emphasis on incentives and efficiency alone hurts a firm as a recession hits. All of these prescriptions run counter to existing views that suggest that recession simply requires cutbacks and retrenchment. Recessions seem to be different from other threats to a firm’s viability, and marketing activities appear to help pull the firm through a macroeconomic downturn.”
Tell us what your company is doing in marketing to prosper during the economic downturn.
Posted by: Lianne Bridges
Lianne is a founding partner of Bridges Horizon, providing Marketing Transformation Consulting Services. Lianne has spent the past 20+ years managing and consulting across an array of sectors from B2B to Not-for-Profit, including such world-class organizations as: Aeroplan, Bombardier, Pfizer, Nabisco, Plan International, Southam News, United Technologies, the YMCA and Alcan, to name a few.