I just came across this data last night I just had to share with you..
It comes from studies and reports from the London Business School and International Consulting group McKinseys..
Hillier analysis of 1,000 companies on the PIMS (Profit Impact on Market Strategy) database after the early 1990s recession:
- The companies who had cut their marketing budgets saw ROCE (return on capital employed) decline by 0.8% after the recession.
- Those who increased their marketing activity saw an increase of 4.3%.
McGraw-Hill research, analysing 600 companies from 1980-1985:
- The sales of companies who had kept advertising during the 81-82 recession had risen 256% over those who had not.
McKinsey study of 1000 USA companies during the last major recession of the 1990’s which found among other things that
Expenditures on advertising followed a similar pattern,with successful leaders spending more money (as a percentage of sales) than
did their former peers during the recession and smaller amounts of money in periods of
growth. Despite selective spending increases during the 1990-91 downturn, successful
leaders,which maintain an employee-to-sales ratio 27 percent lower than that of their
industries,were still farmore efficient than their former peers.
The financial markets rewarded companies willing to pursue contrarian strategies during
the downturn. By the end of the 1990-91 recession, successful challengers had market to-
book ratios that were 25 percent higher than those of the unsuccessful challengers.
This is clear proof why companies need to be counter-cyclical or contrarian…. to not get sucked into ‘group think’ and fear perpetuated by some members of the media..
Keep attacking.. keep advertising… keep lead generating and keep selling…