Smaller brands that maintain ad spend during recessions fare better than leading brands, according to industry analysts Datamonitor.
Datamonitor cites a study from the UK's Advertising Association which emphasises the need to maintain advertising spending even in recession times. The goal is to maintain the same intensity of advertising by using lower cost techniques such as guerilla marketing tactics.
The Advertising Association claims that companies that cut advertising in a recession damage the future of the brand. A study found that, based on 26 years of sales data of premium grocery brands in the UK, smaller brands that maintained advertising spending during recessions fared better than leading brands.
Between 1997 and 2001, for example, leading brands lost 2 per cent of market share, while the smaller 'tertiary' brands gained 15 per cent. The study attributed this dynamic to the fact that, in this period, leading brands slashed advertising spend by 15 per cent compared to a mere 3 per cent among smaller brands.
Such findings inform manufacturers about the importance of maintaining marketing and advertising spending during tough times, Datamonitor said.
"For companies facing a severe loss of sales, resulting in an absolute necessity to cut down advertising budgets, the focus should be on maintaining the same intensity of advertising efforts through lower cost marketing techniques. Viral marketing, for example, has been proven many times to be a very effective tool despite its low cost."
Datamonitor gave the example of companies such as Red Bull and Ben & Jerry's, who originally relied heavily on viral marketing to grow their businesses into what they are today. "Multinationals are also tapping into the strength of guerilla marketing. Procter & Gamble even formed a dedicated viral marketing unit, Tremor Marketing Solutions. The division leverages the Internet to find a core group of 200,000 teens around the US to spread messages to other teens."
To ensure a successful word-of-mouth campaign, the marketer must be able to demonstrate to the target customer group that the product is superior to others in many ways - extra functionality, attractive product image, widespread availability and superior customer relationship, Datamonitor concluded.
For more information, see Datamonitor's report Recessionary Consumers 2003.