When businesses experience challenges of degrowth, often the directors' reflex is to cut on everything that is not the core product of the company, especially advertising and promotions. But more and more empirical research shows that they are making a mistake
A saying commonly attributed to Henry Ford goes, “A man who stops advertising to save money is like a man who stops a clock to save time.” Ford had his senses sharpened, and a precise gut feeling. This statement of his tells a simple truth: a brand needs to grow, and when it stops the maintenance work, it weakens, and can even vanish as a result. Let’s take the Cow Milk Chocolate by Israeli company Elite, as an example: Less than four months have gone by since the production was brought to a halt due to food-poisoning — that the brand that has been around since the 30’s, a true Israeli classic, has essentially become non-existent. Although it wasn’t an economic collapse and ‘only’ a PR crisis for the company — before they know it, the public will forget all about the product anyway. The only way to bring the cow back to life is with a lot of money invested in recuperating the brand’s name.
Ford’s statement could be met with the contrary statement: “the poor cannot afford to be poor”, meaning, that if a business is struggling, and they have to cut costs to survive, how are they going to find funds to invest in advertising? Professor Byron Sharp, head of Ehrenberg-Bass and his colleagues, at the world’s largest institution of marketing research, surveyed the activity of dozens of Beer and Cider brands, spanning over 20 years. They discovered that when a brand stopped their marketing activities for a year, their sales dropped by 16 percent. A brand that stopped its marketing for two years lost 25 percent of sales. And finally, a brand that put a hold on its marketing for three years, lost 36 percent in sales. In a research project sponsored by the institute, a similar conclusion was reached: there is not one brand that had higher sales due to cutting their marketing budget. This seems almost self evident, yet it needs to be stated: Stopping sales or promotional activities should be the last resort.