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Recession- Dial M for Marketing

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Submitted By mayank1989
Words 667
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When the going gets tough, the tough get going.

Economic Downturns are tough times, not only for individuals but for the companies on the whole. While all the functional wings are contemplating a cut in their spending, austerity drives are seen as the ‘need of the hour’, it’s a catch twenty two situation for the marketing wing. These are frightening times for any CMO. Financial markets are in chaos and now the real economy seems to be taking a nosedive. How should you be prepared to react? What's the optimum marketing strategy in a recession. In the following paragraphs we try and gauge into how marketing acts as the one department which identifies recession as an opportunity to gain some more ground at the competitive level.
Roger Graham & Kristina Frankenberger ,professors of management at OSU &WOU respectively, studied data from five recessionary periods since 1971, sampling data from more than 3,000 firms that demonstrated a 4-year advertising contribution to found that when adjusting for inflation, advertising expenditures contributed to increased earnings by firms for up to three years. The greatest impact occurs in the year immediately following the recession, and especially for firms offering consumer goods or industrial products, as opposed to firms offering services.
MarketSense compared 101 household name brands during the recessionary period 1989-1991. Jell-O, Crisco, Hellman's, Green Giant and Doritos saw sales drop by as much as 26-64%. Jiff peanut butter raised ad support and sales went up 57%; Kraft salad dressings saw a rise of 70%. In the beer category, overall spending was down 1% while Bud Light and Coors Light, each spending ahead of the category, saw sales increases of 15% and 16% respectfully. Pizza Hut sales rose 61% and Taco Bell's 40% thanks to strong advertising support, with McDonald's volume down approximately 28%.
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