Archived entries – recession

Advertise in a recession? Definitely…

For the March issue of Eurofruit Magazine, we’ve been putting together a whole raft of ideas on how fresh produce companies can beat the recession, and one of the areas which seems to stir the most debate is the whole question of advertising. Of course, as a publisher which depends on advertising revenue for a certain proportion of its overall income, we would say that companies should definitely continue spending on self-promotion. But don’t take our word for it! Look at this research carried out by McGraw-Hill:

McGraw Hill research analyzed 600 companies covering 16 different SIC industries from 1980 through 1985. The results showed that business-to-business firms that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the following three years, than those that eliminated or decreased advertising. By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising.

Clearly some companies have to cut their advertising budgets in order to survive, but this study suggests those that have the commercial capacity to spend on advertising ought to think carefully before doing so.

According to the Strategic Planning Institute based in Cambridge, Massachusetts, a “recessionary market can provide an opportunity for businesses to build a greater share of market through aggressive advertising. Correspondingly, businesses that reduce media expenditures suffer loss of market share.”

Advertising can skillfully reposition a product to take advantage of new buying concerns, give an advertiser a stable image in a chaotic environment, and give an advertiser the chance to dominate the advertising media.

A series of six studies conducted by the research firm of Meldrum & Fewsmith showed conclusively that advertising aggressively during recessions not only increases sales but increases profits. This fact has held true for all post-World War II recessions studied by American Business Press starting in 1949.

This quote from American Business Media sums it up best:

When times are good, you should advertise.
When times are bad, you must advertise.

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Europe: things get worse, then get better

So, it’s official The European economy is expected to contract sharply in 2009. But there is light at the end of the tunnel: things are going to get better in 2010.

So says EU Economic and Monetary Affairs Commissioner Joaquín Almunia, who announced this morning that real GDP in Europe is expected to fall sharply in 2009, by 1.8 per cent in the EU and 1.9 per cent in the euro area. But the reckoning is that it’ll recover by about 0.5 per cent in 2010.

Naturally, it’s worrying news for the fresh fruit and vegetable business. But people have eaten their way through recessions before and they’ll eat their way through this one too. Dutch exports, for example, are up sharply as a result.

The trick is to manage your business through the downturn so it’s ready to take advantage of growth when it comes. And the official word is that it’ll be here as soon as next year.

Over in the US, the incoming Obama adminstration is planning a US$800bn recovery package to revive the US economy. The hope is that Mr Obama, who is inaugurated as the 44th President of the United States tomorrow afternoon, lives up to people’s expectations.

Expectations are sky-high in the US and they’re just as high in the rest of the world!

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