Tuesday, September 1, 2009

Branding in a Recession

Do you know the difference between a recession and a depression?

Here is the easiest way to distinguish the two:

"In a recession, your neighbour loses his job; in a depression, you lose yours!”

The National Bureau of Economic Research (NBER) confirmed on December 1, 2008, the U.S. economy has been in a recession since December 2007. Many economists believe the current downturn will be the worst since the recession of 1981-82.

But, you already know tough times don't last; tough people do and today on TSB you get to contemplate how life will change in the business ocean you currently splash around in. This ocean (your market) that has sustained you and your competitors, has been shrinking to the size of a pond, spelling T-R-O-U-B-L-E for those who can't foresee the implications of this contraction. Natural law dictates that some competitors (smaller, slower fish) will be squeezed out of the pond, gasping, choking and wheezing their way to a spot on the beach.

The obvious, knee-jerk reaction to this "shrinking pond" dynamic is to cut back on your branding activities, such as advertising, P.R., and the new darling, social media; however, studies have shown taking your foot off the marketing pedal might be the most dangerous thing you can do in tough economic times.

In a study of U.S. recessions, McGraw-Hill Research analyzed 600 companies from 1980-1985. The results showed that companies that maintained or increased advertising budgets during the 1981-82 recession averaged Significantly Higher Sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were Aggressive Recession Advertisers had climbed 256% over those that didn't keep up their advertising.

But wait ... there's more!

Another series of six studies conducted by the research firm of Meldrum & Fewsmith showed conclusively that Advertising Aggressively during Recessions not only boosted sales, but also increased profits and overall market share. This fact has held true for all post-World War II recessions studied by The American Business Press starting in 1949.

When the pond is shrinking, there are fewer competitors with the grit in their gills to splash around and make some noise. Consequently, your message has a better chance of being heard and when the tidal wave of prosperity comes rushing back in (which it always has in the 35 recessions since 1867) your brand has a window of opportunity to leapfrog over everybody else; to the ONE brand customers in your category think of first.

Consider this:

- Everyone still needs to put gas in the car.
- Families still need to buy groceries.
- Kids still need clothes and school supplies.
- Handymen still need power tools and other gadgets.
- Women still need makeup and lipstick.
- NFL fans still need Zesty Cheese Doritos for the upcoming season.
- And great brands still need to flourish and grow.

Here is why:

When times are good, your branding activities - such as marketing, advertising and P.R. - set you apart from the other fish. When times are tough, your branding activities allow you to gain an unbeatable advantage once the inevitable rush of fresh water from the turnaround arrives.

Market share is still up for sale in 2009 and beyond.

Will you wade in the shallow end or head to deeper water?

"I have learned, that if one advances confidently in the direction of his dreams, and endeavors to live the life he has imagined, he will meet with a success unexpected in common hours"

Originally posted January 13, 2009

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