ADNET Audio & Internet Advertising

With the threat of yet another GFC it’s hard not to fall into thoughts similar to the Great Depression.

However just as one man’s trash is another’s treasure some business start-ups thrive in the slow environment whilst other known brands collapse. General Electric, Walt Disney, Hewlett Packard and Microsoft were all founded during the recessions of 1873, 1923, 1930′s and 1975 respectively.  Smart companies prosper during and coming out of a Depression.

Those who know what they were doing make great economic strides, and the very nature of the Depression is an economic boom for them. It is a time when your business can benefit from aggressive marketing while your rivals cut back.  Consumers don’t stop spending during a Depression; they just look for better deals, and the companies providing those better deals come out stronger after the GFC ends. When spending picks up, consumer loyalty to those companies will largely remain.

Historically, companies that survived and thrived continued to act as though there were nothing wrong and that the public had money to spend.   They didn’t wait for public demand for their products to rise. They created that demand even during the most difficult of times.

The first thing that the bean counters tend to do is cut advertising budgets.  This results in a decline in spending and some companies actually drop out of public sight. Advertising cutbacks can make many customers to feel abandoned. They associate brands that cut back on advertising with a lack of staying power. This not only drives customers to more aggressive competitors, but causes financial mistrust when it comes to making additional investments in the no-longer-visible companies.

Some would analyse that a hierarchy of demand (classified as essential consumables, non essential products, deferrable purchases and capital goods) exists but this doesn’t explain why the hierachy of necessity is so often sidestepped by those with marketing chutzpah.  Naturally you need a strong balance sheet but if you keep your eye on the prize, consumer confidence will return and the slowdown will disappear.  History says so!

The fact is that income levels do affect buying behaviour during a recession. Those with incomes well above subsistence will continue to spend as they had. Those on low income will decline slightly.  Those in the middle were the ones most likely to defer normal purchasing.

Now is the time to housekeep your business in readiness for when spending returns. It’s a good time also for market research.  You may find that there have been opportunities you have overlooked.

A  little bump in the road is a good thing because it causes us to slow down and look around.  Quite often an opportunity arises that had you continued to be barrelling along at a hundred kilometres an hour you would have missed.