Marketing during a recession

In tough economic times, studies suggest that those who consider advertising and marketing costs simply as an expense are likely to pull some of the funds from the budget in order to shore up the bottom-line.

There is merit to this strategy provided there will be enough cash flow to keep everything working until times of hardship are over.

Meanwhile, in the more proactive camp – where company decision makers see advertising and marketing as an investment – innovation is the key.

Maintaining a presence, growing business and even launching new products into fresh markets are viable strategies employed during a recession. Making the right decision at a key moment during any economic cycle is likely to net a positive return – but is that decision going to be right for you?

Being bold

Some might consider it foolish to spend money during an economic crisis, especially when the jury is still out on when the cash flow is likely to improve. However, those who are making considered investment in marketing strategies during this recession are reporting successes.

And even though some of these successes are small, the strategy is to firm up position for when the global economy improves.

A number of studies around the world and in New Zealand suggest that those businesses which, at least, maintain advertising will maintain or improve their market share during a recession.

More importantly, those who choose to save money and cut back on advertising costs face an uphill battle to regain the growth they lost and will likely spend more than they saved during their cutbacks to do just that.

A study conducted by New Zealand Trade and Enterprise (NZTE) on the traits of successful globally competitive companies during periods of economic stress outlined that increased advertising and marketing was necessary to increase market share and take advantage of greater advertising reach.

The study highlighted the importance of advertising spend supported by evidence that companies that slash marketing spending by half can take three to four years to return to pre-recession sales levels and also spend far more than they saved as part of the recovery.

Overseas, researchers at Oregon State University and Western Oregon University in the US found that advertising during a recession increased earnings for companies for up to three years.

However, innovative thinking into less traditional and cost effective solutions as well as discovering fresh opportunities created by a recession are also making a mark.

Finding opportunity

Christchurch-based Screening and Crushing Solutions (SCS) is focusing on business growth. The current recession has a lot to do with the company’s marketing plan as it expands its operation into Australia and starts to look even further afield.

Chief executive Rod Cullinane says the company’s expansion into the Australian market with its range of rock crushers has been well timed as the government there ramps up infrastructure spending in order to boost the economy – a recession-busting strategy employed by many countires.

Instead of pulling back, SCS is investing in more resources in Australia to counter the downturn and Cullinane says without the investment, the company would not be looking as economically stable.

It is this push into what has been identified as a key market for the company that is leading to increased success.  Cullinane says it is important to spend the money to ensure the right people are on the ground to maximise the company’s message there.