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  • History paints the picture for the future

  • During the recession of 1981-1982, a McGraw-Hill Research team analyzed 600 companies covering 16 different industries through that period.  The results showed that business-to-business firms that maintained or increased advertising expenditures during this time, especially in the troubled ’81-’82 period, averaged significantly higher sales growth, both during the recession and following it.  By 1985, sales from companies that were aggressive recession advertisers had risen 245 per cent over those that didn’t keep up their advertising.

    Sales for the companies studied were relatively even before the recession but varied sharply during and after it.

    History tells us that maintaining your marketing spending can improve return on investment at a lower cost than during good economic times. In other words a stinky economy is a great time to do battle with your business foes. Not only do you keep the percentage you’ve won, but once the economy finds its footing, you’ll multiply those gains.  (McGraw-Hill Research. Laboratory of Advertising Performance Report 5262 New York: McGraw-Hill, 1986.)

    We all think that technology, and the Internet, and spending money on primary research are the important ways of learning what to do.  However, just being aware of the history lessons that are freely available to us all is really the #1 teaching aid available today.  So why don’t more of us heed those lessons?  It’s incredible to fathom out.

    As we head deeper and deeper into our own troubled economic times, surely we should look even more actively at the lessons of the past that can help us to fathom out our future.  After all, the lessons are fairly consistent and can be traced back as far as the great depression.

    In 1932, the two leading breakfast cereal brands in the U.S., Kellogg’s and Post were suffering through a similarly bad economy. Post, with 50% market share, decided to save costs and cut its marketing budget by 50 per cent.  Kellogg’s did not.  As a result, Post lost its brand awareness and its market share. Kellogg’s eventually won four times the sales and today continues its dominance of the market.

    There is also another very important lesson to learn.  From the doyen of stock market investing, Warren Buffett.  According to Buffett: “When others see chaos, I see opportunity”.  Quite a brave and contrary attitude.  However, that’s the precise attitude that made him successful.  So, how can we learn from and relate that attitude to marketing in a recessionary period?

    Quite simply: following the crowd is not always the way to go.  One of the most critical requirements for a company to make themselves successful is to STAND OUT FROM THE CROWD.  Following the crowd does not allow the company to stand out.  Separating themselves from the crowd is the key.  And since we know that most companies will inevitably cut their costs (for whatever reason), any company that maintains a healthy attitude towards SMART Marketing is likely to stand out.

    William Arthur Ward, a renowned writer and poet said it best:

    “Believe while others are doubting.
    Plan while others are playing.
    Study while others are sleeping.
    Decide while others are delaying.
    Prepare while others are daydreaming.
    Begin while others are procrastinating.
    Work while others are wishing.
    Save while others are wasting.
    Listen while others are talking.
    Smile while others are frowning.
    Commend while others are criticizing.
    Persist while others are quitting.”

    No, things have not changed so much from the past that allows us to simply ignore the lessons that history attempts to teach.  And not only are we talking about sales or market share, but profits as well.

    According to the Harvard Business Review, “Advertising as an anti recession tool,” comes the effect of cutting advertising on the bottom line. “The rationale that a company can afford a cutback in advertising because everybody else is cutting back [is fallacious]. Rather than wait for business to return to normal, top executives should cash in on the opportunity that the rival companies are creating for them. The company courageous enough to stay in the fight when everyone else is playing safe can bring about a dramatic change in market position.” In addition, the article points out “Advertising should be regarded not as a drain on profits but as a contributor to profits, not as an unavoidable expense but as a means of achieving objectives. Ad budgets should be related to the company’s goals instead of to last year’s sales or to next year’s promises.”  (Dhalla, Nairman K. “Advertising as an anti recession tool,” Harvard Business Review, Jan.-Feb. 1980).

    Marketing Tip…from Neville Pokroy

    Given that the lessons have been well learned (I hope!), where should a company that believes in SMART Marketing begin?  Well, things have changed in that regard.  More and more do we find companies looking for marketing tactics that are more measurable.  More focused on lead generation and nurturing, and a more aggressive focus on linking the traditional approaches of marketing and sales with a process that makes both disciplines more effective.  The Internet and other similar digital marketing opportunities have made this even more necessary.  Inevitably it will force the two distinct disciplines to work closer together in order to generate sales.  However, it starts with planning and ends in execution.  You cannot have one without the other.

    Learn from the history that is there for us all to read.  Be contrary and brave – it will set your company apart.  But most important, be a SMART Marketer.  It will lead you into the future stronger than ever before.  And you can thank the current recession for giving you the opportunity to accomplish this incredible feat.

    Click here to find out where to begin with SMART marketing

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