Opportunity in a Recession

The Internet is a funny tool — one moment you’re watching some guy play “Smells Like Teen Spirit” on a ukulele, and the next you run into a really interesting piece on marketing and innovation in a downturn.


Thanks to a series of links — Brett Duncan’s Marketing in Progress blog sending me to Paul Dunay’s post on Marketing Profs — I recently stumbled onto a paper called “Innovation Through Recession” by Professor Andrew J. Razeghi of Northwestern University’s Kellogg School of Management. In 12 pages, he examines some companies who stuck their necks out during economic downturns, and reaped huge rewards. Among them are three from the Great Depression:


  • Henry Luce of Time, Inc., who started Fortune Magazine four months after the stock market crash of 1929.

  • Galvin Manufacturing, who put out a successful car radio in 1930 — the “motor-ola”.

  • Kraft Foods, who launched Miracle Whip 1933.

Since I toil in the persuasion industry, I was especially interested in Razeghi‘s description of a McGraw-Hill study of 600 companies — specifically, their approaches to advertising during the recession of the early ’80’s:


…businesses that maintained or increased their advertising expenditures during the 1981-82 recession averaged higher sales growth during the recession and in the three years following. By 1985, sales of aggressive recession advertisers (those that either maintained or increased spending) had risen 256% over those that cut back on their advertising. Likewise, in 2001 another study found that aggressive recession advertisers increased market share 2 – 1/2 times the average for all businesses in the post-recession economy.

Professor Razeghi’s thoughts on why that might be, and how you should approach communicating with your customers and prospects in the current downturn, make for fascinating reading. You can download the full paper (registration required) here.

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2 thoughts on “Opportunity in a Recession”

  2. This is really quite interesting. It makes sense that as most other companies cut back on their advertising, other companies should increase their advertising. They have the advantage of then gaining a larger share of the market, given that fewer brands are being promoted through radio/TV/etc. However, many companies most likely do not have this option because of the recession and advertising is an expense they don’t necessarily need to keep there business operating and open.

    Reply