Everyone is feeling the pinch of today’s economy, and there’s no surprise in the fact that the first thing to be eliminated is often marketing and advertising related. It’s survival of the fittest – and tightening of the financial belt is running rampant in small companies to the biggest of corporations.
“Post did the predictable thing: it reined in expenses and cut back on advertising,” he noted. “But Kellogg doubled its ad budget, moved aggressively into radio advertising, and heavily pushed its new cereal, Rice Krispies.”
And what were the results in that economy? Kellogg’s strategy paid off. “By 1933, even as the economy cratered,” Surowiecki continued, “Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player.”
There it is – the lesson of history that today’s Recession cannot deny. Those who can afford to keep investing grow stronger, while the weak grow weaker – largely due to the fact they are struggling to stay afloat financially. But there’s more. When the weak scale back on marketing, campaigns from stronger companies have a far great impact.
Of note in the Surowiecki’s article is the important differentiation between risk and uncertainty. Risk requires a business to make its decisions based on a range of possible outcomes. Uncertainty, which is rampant throughout our society today, thrives on a lack of potential outcomes, leaving everyone wondering exactly what might be expected next.
The author makes sense of today’s obvious state of uncertainly: “So it’s natural to focus on what you can control. [M]inimizing losses and improving short-term results. And cutting spending is a good way of doing this.”
And so it becomes obvious that the majority of companies today who are focused on decisions that may cause them long term harm, may, in fact be missing the opportunity of their lifetime by allowing a good marketing opportunity pass them by.
Have you seen signs of this business pattern in your operations? If so, what do you think the best way to handle that lack of action and confidence might be?