Then came the truly frightening times for marketing managers. How to respond? What is the optimal strategy? There are several rules of survival in the times of crisis and DigitalBuzzBoard.com can help.
Do not panic. Most marketers assume that during the crisis consumers have sharply cut their spendings. In fact, consumer spendings rarely really fall, they simply grow at a slower, not at the pace of inflation.
Cut costs. You can trim the administrative costs and even reduce the volume of manufacturing output. But it is impossible to consider saving on the quality of a product or its promotion; two areas that will produce negative or no results in the overall picture.
Reduction in advertising investments inevitably reduces your income. This is the easiest and fastest way to cut costs, but the reckoning is inevitable. Studies have shown that firms that reduce advertising costs during a recession typically experience 20-30% decline in sales and earnings over the next two years.
Reduction in advertising costs inflicts long-term harm. Research, proves that advertising has a lasting effect on sales: it becomes obvious in three to five years after the campaign. Cutting advertising budgets is hurting business in the long run. PIMS analysis shows that companies that shorten their ads and decrease ad buys need much more time to exit the crisis than all the rest, on national TV, you'll notice the big companies increase their spots. (when the economic situation begins to improve).
