When your business is in trouble and you can’t cover your costs, what’s the easiest answer? Most companies affected by the credit crunch would say the only way to save money is to do one of three things: cut costs, cut costs, or, surprisingly, cut costs. Advertising budgets get reduced, and businesses quickly switch to “survival mode” hoping to get through tough times. While this choice might seem smart at first, it can lead to serious problems down the road.
Take Pizza Hut and Taco Bell for example. During the 1989-1990 recessionary period, these fast food chains experienced a growth in sales of 61% and 40%, respectively. During the same time period, McDonald’s sales figures were reduced by 28%. You might ask why? While the high cholesterol concerns of McDonalds double cheese burgers certainly was partly to blame, the company’s primary downfall had much to do with its inability and unwillingness to rise up in the face of competition. Because advertising is deemed to be a “dispensable luxury” for so many companies during recessionary time periods, it often becomes the first to go. Both Pizza Hut and Taco Bell, however, recognized the competitive advantage they could achieve by increasing their advertising budgets to gain greater visibility and build brand equity. Because Pizza Hut and Taco Bell faced limited competition from other fast food chains unwilling to beef up their marketing efforts, their advertising messages carried greater weight in the marketplace.
During tough economic times, there is no doubt that certain expenses should be cut. However, advertising is not one of them. Instead, try to distribute your advertising dollars toward multiple, cost-effective marketing platforms to achieve the greatest exposure of your product or service offerings. Try SEO. Try Google AdWords. Try email marketing. Just don’t try nothing.
Look at recessions as an opportunity for business growth. Let your competition fade out in the background so that you can make an appearance.