From recessions to deep recession, businesses and consumers have always faced tough economic times most of them unpredictable. And again now Ghanaians find ourselves coping with the uncertainty and fall out of the coronavirus, COVID-19.
At this stage, no one knows what will happen. And in the UK, USA etc. where less developed countries get support from are also faced with same difficulties with daily update and changes. What is more, the Russia and Ukraine war is seriously imparting negatively on the Ghanaian economy and the world economy at large in the construction, crude oil just to mention a few sectors.
In times like this, it is understandable that companies review their brands, marketing plans and spend. But what is the best approach to take? Should companies cut advertising or even stop spending right now? Or is it wise to keep spending, albeit with a different strategy and messaging?
To help Ghanaian companies scrutinize their position, the author has collated research on advertising during economic uncertainty and tough financial times, and the outcome for businesses taking different positions on marketing during them. Here is what the author learned:
1.0 Companies who advertise during economic uncertainty see sales growth
A Market study during the 1989-91 in United State of America recession concluded that brands who increased their advertising saw significant sales growth. Examples include Jif Peanut Butter and Kraft Salad Dressing who experienced sales growth of 57% and 70% respectively.
Coors Light and Bud Light saw sales jump 15% and 16% respectively after increasing their ad spend, and Pizza Hut sales rose 61% and Taco Bell’s 40% through advertising.
Further research by McGraw-Hill of 600 B2B companies learned that the sales of businesses who maintained or increased their advertising grew 275% more than those who did not, both during and after the recession.
The above studies supports the authors claim that companies who advertise during economic uncertainties sees sales growth.
2.0 Companies who reduce advertising in tough financial times DIMINISH
In 1923 during the USA recession, Roland S. Vaile tracked 200 companies and found that the companies who advertised during the economic downturn were 20% ahead of where they had been before it started.
The companies who reduced advertising however were 7% below their 1920 levels. It is evident from the above that companies in Ghana who will advertise in this economic downturn will be ahead of those companies who will reduced advertising.
3.0 Companies who advertised after Covid 19 saw their market share rise
More recently, during the tough financial period that followed Covid 19 in 2021, the 25% of all companies who boosted their ad spending in Ghana saw their market share rise more than twice as fast as it typically rises during a normal economy, according to Advertisers market report 2001.
4.0 Buyers feel better about brands who advertise in a difficult times
Advertising in tough times also increases loyalty to your brand.
A survey into companies who advertise during tough times by the author discovered that 66% of people “… feel better about their commitment to products and services”. 66% also said these companies were front of mind when the time came to make purchasing decisions.
5.0 The right messaging is important – and how we can help
Companies rolling out their pre – coronavirus marketing plan should not behave they are not sensitive to the plight of customers. It does not also mean companies should not roll out their plans. The plans must be rolled carefully if not, it will be a disaster.
While it is judicious to keep advertising in difficult times, companies messaging and marketing plan needs to be carefully considered. It needs to be sensitive to the market, and how people are currently feeling and acting. And their offers appropriate.
In conclusion, Ghanaian companies are advised to sensitively advertise their products and services, and protect (and even grow) their market share in difficult times like we are experiencing through intelligent advertising.
Dr Alfred Owusu
Dean Business School
Kumasi Technical University