To Market or Not to Market
During COVID-19

When times are good you should advertise. When times are bad you must advertise. – Bruce Barton

The threat of an economic downturn means businesses reevaluate every expense and often marketing and advertising budgets are the first to be cut. But history has shown that the temptation to stop advertising during a downturn or recession is wrong. If the Great Recession of 2008 is any guide, the businesses that maintain their marketing and advertising budgets will come out the other side in a stronger position and own a larger portion of their industry’s mindshare. Below you will find some food for thought before you decide to shut off your marketing spend.

Industry Case Studies

Post was the cereal leader in the 1920s but cut its advertising during the Great Depression. Rival cereal brand Kellogg’s doubled its advertising spend and introduced Rice Krispies.

Kellogg’s profits increased by 30% and they became the leading cereal brand.

As a result of the recession of 1973-75 the U.S. government issued its first miles-per-gallon report in which Toyota Corolla was second in fuel efficiency. Toyota, already experiencing strong sales, resisted the temptation to cut advertising.

By 1976 Toyota surpassed Volkswagen as the top imported carmaker in the U.S.

During the 1991-1992 recession, Pizza Hut and Taco Bell decided to increase their advertising efforts, filling a vacuum caused by McDonald’s dropping its advertising budget.

Subsequently, Pizza Hut sales grew 61%, Taco Bell sales grew 40%, and McDonald’s saw a 28% decline. 

Food for Thought

1981-1982 – Businesses that maintained or increased their advertising efforts saw higher sales growth during the recession and during the 3 years after.

1985 – Those businesses who maintained their ad spend during the slowdown saw sales rise some 256%.

2001 – Studies demonstrate that companies more aggressive with advertising and marketing during the recession increased their market share by 2.5x.

2009 – Amazon innovated its Kindle product line, invested in growing marketing share and as a consequence, grew 28% during the Great Recession.

Source

Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.   
– Business Icon Peter Drucker

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