We are experiencing a situation that most, if not all, of us have never experienced before. Most businesses don’t have much idea about how to survive the possible economic recession the world is moving towards. Predictions say that the unemployment rate is going to hit 31%. Some businesses will survive, some won't. So how do we make sure our businesses are on the survivors’ list? Whom do we go to for advice?
Like most other questions in the world, history has an answer to this one as well! Yes, I am talking about the ‘Great Depression’ of the 1930s, specifically two competing businesses during that time period and how their opposite marketing strategies served them in the long run.
Post and Kellogg’s were the two in-demand cereal brands in the 1920s. But as the economy began to fluster, said brands picked two very different approaches to marketing their products.
As the Depression arrived, Post cut down on their advertising budget while Kellogg’s kept spending whatever they had on advertising. The result is really not very difficult to guess. Kellogg’s came out of the depression much better than before. Their profits grew by 30%. They are, at present, the world’s leading producer of cereal. In 2018, Kellogg’s had a revenue of 13.547 billion USD.
On the other hand, Post Consumer Brands which are about a decade older than Kellogg’s lost to their rival. The profit Kellogg’s made from promoting their inexpensive new product, Rice Krispies, was sufficient to overtake Post and to be the category leader till this day, after almost 90 years later. And not to mention that their Rice Krispies are still a breakfast favorite of many American kids and more.
Now, what do we learn from this story? Yes, we need to focus on survival. If your business does not have the money to pay the storage rent, that should be your first priority. But while you are crafting a plan for the pandemic period, marketing and advertising should not be on your “non-essentials” list.
Keeping your business visible during the recession will establish the reliability of your brand. It will make consumers believe that your business is stable and they can rely on it. And while most of your competitors are busy focusing their budget on other essentials, planning and investing some of your budget on marketing will give you a head start.
I know it’s scary to spend cash on advertising while most businesses are suffering from the fear of getting extinct. But a suitable marketing plan during and after the pandemic is much likely to give your business the chance to shine.