When Marketing in a Recession Works. . . And When It Doesn't

The last piece on recession marketing for a little bit will focus on some work by Raji Srinivasan at University of Texas on determinants of effective recession marketing.

Dr. Srinivasan begins with a historical context of great marketing dividends paid during recessions and even the Great Depression, including:

• Brands that made a marketing big push and took market leadership during the Great Depression: Camel, Chevrolet, Ivory Soap and Crisco
• Brands that experienced wildly successful marketing campaigns in the recession of 89-91: Saturn, DeBeers and Intel, featuring an excellent quote from an Intel executive: "you don't save your way through a recession."

They also do a nice summary of other, recession marketing research which includes these findings:

1. Firms increasingly focus on marketing for cutbacks during a recession. The recession of 2001-2003 saw the largest cutback in advertising budgets since before the Great Depression. (This, despite substantial evidence that companies should do the opposite. Marketers, ironically, need to market their impact better.)
2. In recessions, market leaders profit from marketing investments and suffer from marketing reductions.

Lastly, Srinivasan's own research finds that firms which are historically aggressive marketers in both good times and bad tend to reap a larger reward proportionally got marketing in a recession than the market laggards. The author points to these companies likely having stronger marketing assets (brand name, recognizable images and messaging, a more experienced & elite marketing team) PLUS the fact that advertising costs less and fewer competitors advertise during a recession, so they get more bang for the buck.

While he identifies these interesting dynamics in recession marketing, questions still remain: do the leaders continue to grow in a downturn due to marketing acumen or because of a thinning of the competitive herd? And, in a threatening environment, do buyers place a premium on company stability over an individual product's appeal?

Please email me with any thoughts or put in the comments below. For the next series of articles, I will be heading to the tabloids for inspiration.