Austerity vs reason
A question that deserves all the attention is: “If in times of crisis or recession one of the first measures of austerity of companies is to reduce (or cancel) marketing budgets (for example advertising, branding, PR etc.), then how do those companies/brands still work and don’t die? Isn’t this proof that that money was, up until the moment the budget cuts, spent in vain? ”
The answer is no.
Why? Because up until the moment they decided to reduce their marketing expenses, the companies/brands have already built their knowledge, reputation, reputation and recognition (KRRR) on the market with the help of those budgets. When reducing expenses, there is no sudden vacuum of KRRR, the company/brand still exists and it bases much of your subsequent existence on what it has created so far. Of course, there are changes, there is a need to adapt trade policies, distribution, prices, etc., but these adaptations only compensate – to some extent – the lack or reduction of KRRR. Logically the period of austerity cannot be extended indefinitely because KRRR decreases as time passes. But periods of crisis/recession are usually cyclical. The motivation for cyclicality is simple, for the sake of rationalizing expenses, individuals accumulate needs over time – real or imaginary, induced by a certain ideal of lifestyle – which they repress, until someday when they will be more easy-going in terms of how much money they spend on certain products/services. Immediately, one of the consequences – from companies/brands point of view – will be to gradually de-rationalize the marketing budgets by observing the new consumption trends and the way individuals choose to spend their money.
However, two other issues need to be taken into consideration. Primo: during and after the crisis/recession, invariably, individuals’ perceptions have changed. Secondo: Those companies/brands that have maintained a reasonable level of marketing budgets during the crisis/recession period are much more likely to score more points regarding KRRR and to gain share, volumes, etc. It is a simple matter of increased or at least maintained strength and pressure applied to the market compared to those who choose not to get involved and remain neutral.
Who’s winning? Those who try to maintain their level, those who carefully observe the individuals and the market and those who, after doing all of these things, start to make decisions accordingly.
Who loses? Those who did not manage to build a KRRR that “resists in any climate” so to say and those who do not take advantage of the fact that THE GREAT MAJORITY of companies/brands think in the direction of reducing their budgets.