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The Importance

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Title: The Importance


1
The Importance Value of B2B advertising during
times of economic uncertainty
2009
2
Introduction
  • History has shown that companies who either
    steadily continued or aggressively increased
    their advertising efforts during times of
    economic uncertainty
  • Experienced overall growth of their businesses at
    the expense of their competition, who chose a
    more timid approach during times of economic
    uncertainty, and either cut back on or cut out
    their advertising budgets all together.
  • Experienced continual growth post the period of
    economic uncertainty (tracked post uncertainty
    for three years in most cases), and they gained a
    stronger position in their market and in the eyes
    of the buyer.
  • A survey conducted by BtoB Magazine amongst 162
    B-to-B marketers has demonstrated that the
    importance of advertising during times of
    economic uncertainty has clearly resonated with
    marketers and is reflected in their planned
    spending in 2009.

3
2009 BtoB Survey
  • Despite the current economic conditions, 29 of
    marketers indicate they will increase spending in
    2009. Over 40 say that their 2009 budgets will
    remain the same as 2008.

Poll of 162 business-to-business marketers
participating in a BtoB webcast during October
2008
4
BtoB Survey
  • Amongst marketers who plan to increase spending,
    business-to-businesss three key media platforms
    will each benefit

BtoB online survey of 684 business-to-business
marketers conducted during the last week of
January and first week of Feb. 2008
5
Yankelovich/Harris Study1
  • In spite of a down economy, virtually all
    executives acknowledge the importance of keeping
    abreast of new products and services in their
    industry, and continuing to invest for the
    future.
  • Advertising in a down economy clearly creates a
    competitive advantage. The vast majority of
    executives agree that when they see a company
    advertising in a down economy
  • It makes them feel more positive about the
    companys commitment to its products and
    services1
  • More importantly, it also keeps those companies
    top-of-mind when purchase decisions are made1

1 2001 Yankelovich Harris Study
6
Yankelovich/Harris Study
of execs who agree with below statements
7
Yankelovich/Harris Study
of execs who agree with below statements
8
Yankelovich/Harris Study Conclusions
  • More than 95 of executives maintain a high
    interest in learning about and investing in a new
    products and services even in a down economy
  • Over 85 of executives believe advertising in a
    down economy is extremely important
  • Executives react favorably to companies that
    advertise in a down economy the companies stay
    top-of-mind and are viewed more positively
  • Executives are not about to let their guard down
    even during an economic downturn they must stay
    current on what is new in the industry and must
    position their organizations for the future.

9
Proactive Marketing for better business
performance
  • The greater the proactive marketing of a firm
    during a recession, the better its a) Market
    performance and b) Business performance1
  • Research on firm performance in hostile
    environments suggests that risk-taking may be
    necessary for survival and growth
  • Firms that invest aggressively in marketing send
    a reassuring signal of confidence to concerned
    customers about their staying power and provide
    an incentive for customers to switch from
    brands/firms that they perceive as weak
  • During a recession, reduction in input costs,
    combined with the increased marketing
    effectiveness of the proactive firm should result
    in improved business performance.

1 Pennsylvania State University ISBM Report,
Raji Sriniva, Gary Lilien, and Arvind Rangaswamy,
2002
10
Proactive Marketing for better business
performance
  • Results confirm business press accounts of
    companies such as Dell, Microsoft, and BMW that
    view recessions as opportunities and exploit that
    perceived opportunity with aggressive marketing
    programs
  • Proactive marketing has a strong direct effect
    on market performance even during the recession
    and an indirect effect (through market
    performance) on business performance
  • Surprisingly, firms do not have to wait until a
    recession is over to realize benefits from the
    marketing investments they make during a
    recession

11
Conclusions of Previous Studies
  • McGraw Hill Researchs Laboratory of Advertising
    Performance (LAP) analyzed the performance of
    600 business-to-business firms those firms
    which maintained or increased their advertising
    expenditures averaged significantly higher sales
    growth during and for the three years following
    the recession compared to those which eliminated
    or decreased advertising
  • Firms which maintained or increased their
    advertising budgets during the recessionary
    period could boast an average sales growth of
    275 percent over the preceding five years 1
  • American Business Press Study Sales and profits
    can be maintained and increased in recession
    years and in the years immediately following by
    those who are willing to maintain an aggressive
    marketing posture, while others adopt the
    philosophy of cutting back on promotional efforts
    when sales appear to be harder to get.2

1 McGraw Hill Laboratory of Advertising
Performance (LAP) 1985 2 American Business
Press 1974 75
12
Conclusions of Previous Studies
  • Buchen Advertising Inc. tracked a large number
    of business to business companies sales and
    profits dropped off, almost without exception,
    at companies which cut back on advertising. Post
    recession, those companies continued to lag
    behind companies which maintained their
    advertising budgets.1
  • - Harvard Business Review report of 200
    companies largest sales increases reported by
    companies that advertised the most during the
    recessionary year.2

1 Buchen Advertising Inc. 1949, 54, 58, 61 2
Harvard Business Review 1923
13
Summary
  • Advertising aggressively in a recession can not
    only boost sales and market share, it can also
    open a lead on the more timid competition. It can
    skillfully reposition a product to take advantage
    of new purchasing concerns, give the image of
    corporate stability within a chaotic business
    environment, and give an advertiser the chance to
    dominate the advertising media.

14
Summary
When times are good, you should advertise. When
times are bad, you must advertise.
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