Blog: Keep calm and keep selling

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Why it can be catastrophic for your business to reduce marketing activity during an economic downturn

There’s no denying that businesses of all sizes are facing a period of huge uncertainty. As a society, we are facing unprecedented challenges.

Undoubtedly, as a business owner, you will have a lot on your mind at the moment. Top of the list will be keeping your family, friends and employees safe and healthy. However, to do this, there is no getting around the fact that you will need to keep your business profitable, in an environment more challenging than any of us have experienced before.

Your natural reaction will be to batten down the hatches and look at areas where you can significantly reduce costs.

Slashing your marketing and advertising budget will probably be somewhere near the top of your list.

However, a wealth of studies over the last century clearly show that reducing your marketing activity is quite possibly one of the worst things you can do during an economic downturn.

Yes, the disruption you are experiencing to your business at the moment is completely unique.

But a look at previous recessions clearly demonstrates that businesses that continued to invest in their marketing, and leverage the technology that was available to them, were not only the ones that survived but thrived once they came out the other side.

As John A Quelch of Harvard Business School states in his white paper, How to Market in a Downturn: “Companies that put customer needs under the microscope, take a scalpel rather than a cleaver to the marketing budget and nimbly adjust strategies, tactics and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.”


Kellogg’s strengthens its position in the 1920s

Believe it or not, Kellogg’s was not always the world-dominating cereal manufacturer it is now. Prior to the Great Depression “Post” cereal was the industry leader. However, they took very different approaches during the economic turmoil of the 1920s. While Kellogg’s doubled its marketing spend (investing in the novel concept of radio advertising) and launching Rice Krispies, with its now legendary tagline of “Snap, Crackle and Pop”, while Post drastically cut back.

The result? Kellogg’s profits increased by 30% and usurped Post as the dominant brand.


Toyota becomes the top imported carmarker in the US during 1970s

Between 1973-75 much of the Western world was gripped by recession, triggered by an energy crisis. Despite the Toyota Corolla being ranked second (below the Honda Civic) in the US government’s first miles-per-gallon efficiency report and the unfolding recession, Toyota refused to reduce its advertising spend. By 1976 Toyota (which been active in the US market for less than 20 years) surpassed Volkswagen as the top imported carmaker (which had been exporting to the US since the 1940s).


McDonalds loses market share in the 1990s

During the 1990-1991 recession, McDonald’s made the costly mistake of cutting back on its advertising and marketing budget.

Fast-food rivals Pizza Hut and Taco Bell did the reverse and increased marketing activity. Pizza Hut increased sales by 61%, Taco Bell sales grew by 40% and McDonald’s sales declined by 28%.


Amazon’s dominance in the early 21st Century

While high street competitors were failing around them, as a result of the 2008 financial crisis, Amazon sales grew by 28% in 2009. This was not only due to their lean business model but heavy promotion of its Kindle device (launched at the height of the credit crunch).

This innovation and diversification during difficult economic times not only helped Amazon increase its market share but has helped establish it as the giant it is today. Also worthy of note is that Jeff Bezos, Amazon’s founder, is famous for adopting a long term strategy for growth, sacrificing short term profits for long-term growth, rigorously reinvesting profits back into the company.


How should your printing business react to the current crisis?

We have already gone through a significant digital revolution, where your customers are increasingly communicating and buying online.

As a result, it’s never been easier to segment your business, diversify into new revenue streams and reach new customers. Yes, there will be a lot of pressure on your bottom line, more than ever before.

Yes, you may have to take a significantly new approach to how you run your business and attract new clients.


But if you invest in the right tools, strategies and expertise now you will come out of the current crisis in an incredibly strong position.

During this difficult time, we will be doing all we can to help our friends in the printing sector(s) to streamline and automate their marketing and business processes, reduce costs and explore new revenue streams.

So keep an eye out for our webinars and white papers so you stay right up to date with the latest practices that will help your business get through the current uncertainty.

To get more information on how we can support your organisation during the weeks and months ahead please get in touch, we are after all here for you and your business!