Magazine article Management Review

Fortune Follows the Brave

Magazine article Management Review

Fortune Follows the Brave

Article excerpt

It's a classic debate: What should marketers do in recessionary times? Some argue that recession offers an opportunity to grab new market share by increasing budgets while competitors are cutting back. Others resort to juggling available resources, reducing advertising expenditures while maintaining sales personnel in an effort just to survive. All agree that one question is central: If you succeed in increasing market share during a recession, will the gains hold after recovery comes?

We asked AMA member firms how they allocated marketing resources during the 1990-91 recession and how their actions paid off as the economy began to grow, however slightly, in 1992. The data indicates that fortune follows the brave. Most respondent firms that increased their marketing budgets gained market share during the recession and are holding those gains today.

Under recessionary pressure, three-quarters of respondent firms froze or cut their marketing budgets. Among those cutting back, the average decrease was a hefty 23 percent. But other companies, sensing opportunity, increased their marketing expenditures, by an average 17 percent.

Larger firms were able to take advantage of deeper pockets. Only 9 percent of firms with annual sales under $10 million added marketing dollars, compared with 25 percent of bigger companies.

Advertising was particularly hard hit. Fifteen percent of the sample reported "greatly decreased" ad budgets, while 29 percent cut advertising "somewhat." Half of the respondent firms reported some reduction in ad dollars spent. …

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