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The Counterintuitive Case for Maintaining or Increasing Your Marketing Budget in a Down Market

In the world of business, it’s natural to tighten the purse strings when there’s a downturn in the market. After all, it’s a time of uncertainty, and the instinctive reaction is to cut costs wherever possible. However, history has shown that companies that maintain or even increase their marketing budgets during these challenging times often emerge stronger and more dominant than before. Let’s delve into this intriguing phenomenon.

Case study # 1. The Kellogg’s vs. Post Cereal Saga
During the Great Depression, two major cereal companies, Kellogg’s and Post, faced the same economic downturn. Their responses, however, were markedly different.

Post took the conventional route. They cut back on advertising, pulled back on expenses, and played it safe, waiting for the storm to pass.

Kellogg’s, on the other hand, doubled down. They increased their advertising spend, invested in new product introductions (like Rice Krispies), and aggressively marketed their brand.

The result? By the end of the Depression, Kellogg’s sales had surged ahead, and they had established themselves as the new cereal market leader, a position they’ve largely maintained to this day.

The Power of Visibility
When times are tough, and many companies are cutting back on advertising, there’s less noise in the marketplace. This presents a golden opportunity. By maintaining or increasing your marketing efforts, your message can stand out more, gaining more attention and mindshare among consumers. This visibility can translate into increased market share and customer loyalty.

Building Trust and Confidence
For business owners and developers, it’s essential to understand that marketing isn’t just about selling a product or service. It’s about building a relationship with your customers. By continuing to market during tough times, you send a message of stability and confidence. It shows that you believe in your product and its value, regardless of external economic conditions. A sudden disappearance on the other hand may imply that you are not to be trusted and don’t have what it takes to weather the economic downturn.


Case Study #2. Toyota vs. Volkswagen in the 1970s
During the oil crisis of the 1970s, many car companies faced declining sales due to reduced demand for gas-guzzling vehicles. Volkswagen decided to cut its advertising budget. Toyota, however, chose a different path. They not only maintained their advertising spend but also focused on promoting their fuel-efficient cars. By the end of the crisis, Toyota had surpassed Volkswagen in U.S. sales and had made significant inroads into the American market.

Marketing as a Long-Term Asset:
It’s essential to view marketing not just as an expense but as an investment in your brand’s long-term health and growth. Like any investment, the returns might not be immediate, especially during tough times. However, consistent marketing efforts compound over time, building brand equity, recognition, and loyalty.

The Snowball Effect:
Imagine pushing a snowball up a hill. It’s hard work, and if you stop or slow down, you risk losing ground. But once you reach the top and start descending, the snowball gathers momentum and grows in size. Similarly, marketing efforts build upon each other. Pausing or cutting back can mean not only losing the current momentum but also making it harder to restart in the future.

Customer Memory and Brand Recall:
Even if consumers aren’t purchasing as much during economic downturns, they are still observing, learning, and forming opinions. By staying present in their minds through consistent marketing, you ensure that when the economic situation improves, your brand is the first they recall and trust.

In essence, by viewing marketing as a long-term investment, businesses can better appreciate its cumulative benefits. This perspective encourages consistent effort, even during challenging times, ensuring that when the market conditions improve, the business is well-placed to capitalize on the opportunities.

Note: Every business situation is unique, and while history provides valuable lessons, it’s essential to evaluate your specific circumstances and consult with professionals before making significant business decisions.