Advertising During Economic Recession

Advertising should not be cut in difficult times. One of the major things is that increasing advertising during the recession leads to increase in market share and sales. Furthermore, that effect seems to last beyond the recession and the response to advertising during a recession may be higher than that during stable times.
The problem that face a lot of firms during a recession time is that incomes get lower and, as a result, they have a lower advertising budget. As a result, advertising in the media decreases. Competitive advertising is lower; the advertising of any single ad would have less competition and greater effectiveness. That means, that some firms can use it as an opportunity to show them and have a bigger expectation that they will be noticed, observed and they will attract more consumers. It would be optimal for a single firm to advertise more during a recession than during a stable market.
Few examples of successful firms that advertised during a recession:
In 1994, Tim Broadbent analyzed the advertising strategy of BMW. After the advertising campaign, BMW had a better overall image. Also, advertising campaign increased the worth of the brand. Consumers were even saying ‘You pay 8000 for the car and 5000 for the name.’ Next successful example could be Whipsnade Wild Animal Park. In 1992, Cathy Clift analyzed the advertising strategy, how after a 30 years decline in attendance helped reverse the attendance trend despite being in a recessionary period. A television-based advertising strategy was based on slogan ‘’A walk on the wild side’’. (Tellis & Tellis, 2009)
In addition, there are other ad tricks during a recession. Burger King developed an application on the popular social networking site Facebook offering customers a coupon for a free Whopper if they de-friended 10 of their contacts. It shows that you do not need millions to create something smart what carries itself. (ABC news, 2009)
On the other hand, not all advertisements are successful during a recession. It may cost bad consequences. If we assume that during a recession the effectiveness of advertising does not change, then is to say that consumers equally respond to advertising during a recession. Since sales are likely to decline during a recession, the new optimal advertising during a recession is lower advertising as a percentage of sales relative to a stable market. So, the optimal firm strategy should not change. (Tellis & Tellis, 2009)
Advertising in the broader economy occupies a large share. Advertising affects consumer choice: differentiation, brand loyalty. Affects product costs and prices: advertising as an expense increase the cost of products and increase differentiation. Furthermore, advertising change consumers tastes, lower sensitivity to price, builds brand loyalty, reduces competition, and leads to higher prices, leads to fewer choices. As a result, advertising equals market power. Also, advertisement provides useful information, increase price sensitivity and competition, pressure for high quality and lower prices, forces inefficient firms out.
Advertising makes a big influence in every people life. It makes us want something by using emotional appeals, which are significantly effective. In some ways, advertisement encourages us to become dissatisfied with what we have. To be sexy, beautiful, happy, relaxed, we must buy them products. (Guardian News, 2011)

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