The reason many businesses don’t have the means to increase advertising during a recession is a lack of faith in this concept. I see many businesses in Central Pennsylvania making this mistake. It takes a lot of faith, because during the recession you could increase advertising and other marketing efforts and still see negative growth. Experts like Harvard Business School professor John Quelch says “It is well documented, brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at a lower cost than during good economic times.”
Use the Recession to Gain Market Share
You’ve probably heard it is easier to increase your market share during a recession. But how important is market share anyway.
Market share is everything! With all business, there is a finite amount of money available to that business sector. The metaphor would be the pie chart showing the whole pie as all the available revenue with a slice of the pie representing your market share.
There is not much you can do alone to increase the size of the pie. That is determined by many factors beyond your control. So to increase your business, you need to either maintain or increase your market share or slice of the pie in proportion to the size of the whole pie.
We talked about the importance of maintaining market share during a recession so when the recession is over you do not lose share to your competition. But if you have the means to increase your advertising during a recession, you can increase market share easier and more cost effectively as your competition cuts back and media rates drop. When the economy recovers, your competitors will find it more expensive to gain back the share they lost to you.