Marketing is not a cost centre…
…but it absolutely should behave like a profit centre. Marketers should expect to have their budgets cut if they don’t embrace the hard fiscal realities of making one dollar turn into two.
Because of a commonly held view of marketing as a cost centre, many companies will cut marketing budgets significantly and for the dollars that remain, there will be increased scrutiny for each marketing activity.
But here is the irony: For the companies that choose to see marketing as profit centre, economic downturns present marketers with an opportunity to out-manoeuvre the competition and grow their businesses profitably.
A recession presents Marketing with an opportunity
Consumers will still spend (albeit cautiously) and businesses will still need to invest in their infrastructure, provided there is a positive return on investment within a reasonable time frame.
When the economy rebounds, the companies that continued to invest in marketing will have out-manoeuvred their competition.
In an analysis of the 1990-1991 recession, Penton Research Service, Coopers and Lybrand, and Business Science International, found that better performing businesses focused on a strong marketing program enabling them to solidify their customer base, take business away from less aggressive competitors and position themselves for future growth during the recovery.
Reducing your marketing budgets in a recession could leave your company worse off (in terms of marketing momentum, profitability and market share) than if you continued to spend.
In a study of U.S. recessions, McGraw-Hill Research analysed 600 companies from 1980 through 1985. The results showed that business-to business firms that maintained or increased their advertising expenditures during the 1981- 1982 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 risen 256% over those that didn’t keep up their advertising.
See my previous post Selling in recession – Making the most out of what you have for other steps you can take.
