When Recession hits any economy, it is never pleasant. To survive, businesses have to work around that recession otherwise it will not take long to be thrown out of the market. To stay in the market, companies take extreme measures which involve streamlining employees and cutting costs in other ways like reducing a certain department budget. One department where cost cutting is most evident is advertising. Business owners assume that the consistency in advertising is not to be focused on in such times. What they fail to realize is that advertising encourages consumption which keeps the business afloat and boosts the economy.
Consumption is a significant force in the economy which drives any market. Consumption ensures inflow of cash and the higher the consumption the more the accumulation of wealth. The more the wealth, the higher the standard of living is, which keeps liquid money flowing and increases demand. This increase in demand leads to demand of more jobs. During recession, the consumer is not confident about his purchase decision which accelerates the existing issue. People reduce buying which decreases the demand and thus cash flow is reduced which forces companies to cut costs. This cannot go on forever. Someone needs to step in to convince the customers to purchase the product. That is where advertising comes in. Advertising induces mass consumption by increasing demand and thus increase production and more jobs. Thus by encouraging more advertising you can save the business and eventually the economy. Advertising is not a direct but organic method that increases demand that is why companies focus on cost cutting and not customer pull which is possible through advertising. Without advertising the business will eventually slow down especially once the market recovers. With a stagnant economy, the business which is not making itself visible to the consumer will eventually go lower in terms of brand recognition as compared to its competitors. Several examples have proved this theory to hold correct. Before Recession hit in 1920s, Ford was the top seller of automobiles and outsold Chevrolet. During The Great Depression, Chevrolet heavily advertised itself while Ford cut down on the cost which led to Chevrolet coming as the top player in the market leaving Ford behind. Kellogg’s in 1920s increased 1 million dollars in advertising beating Post Cereals which was dominant in the market at the time and has kept the streak till today. In 1990-1991, another mistake by a company during recession was Reebok which cut its advertising costs. Nike on the other hand encouraged vigorous advertising and tripled its advertisement cost. It made nine times more profit than Reebok. These examples attest when a business should take risks. When the competition is not as active building a market presence, that’s when. Following what others are doing in the market may look like the solution but that may not be the right strategy. When others reduce awareness, you have a chance to increase brand awareness. In such times, everyone is looking for a cheaper product. By aligning with an advertising agency which can formulate a strategy, you can use discount coupons and other incentives for consumers to get traction. This shows the consumer you care for them and keep them in mind while pricing a product. People are not going to stop consuming a product, you need to attract the consumers to your product by giving them a cheaper way out. By putting odds in your favor, you also improve the economy. So next time, don’t get disheartened when Recession hits the market. Make it count by hiring an advertising agency which uses their services to execute the best plan for you.
1 Comment
11/1/2017 04:16:33 pm
Many businesses still think that having a high-quality website alone is sufficient to do well online. They are mistaken and that too, big time, because quality websites have a very limited role to play on the internet. Such websites only help take the business online and their clout does not work beyond that. So, what next? What should a business do to maximize their online presence? Simply put, your business needs to market itself. It needs to advertise its services and products across channels on the internet.
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