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If these are effectively cut, there should be enough money to spend on the good costs. Such examples supporting advertising spends during recession are quite common in the annals of marketing history. Closer home, there are enough examples from countries that faced the Asian meltdown. Here, brands that spent maintained their leadership position and, in some cases, surged ahead of the competition.
Some recent analyses during our current phase of economic slowdown throw up interesting facts in support of advertising. In the sub-popular soap category, Breeze has upped its Gross Rating Points (GRP) by 47 per cent over the year 2000 to achieve a 20 per cent value growth in sales. As against that, Lux has maintained its GRPs to see some decline in sales value. Similarly, in the category of hair dyes, Godrej—the market leader—has grown by more than 20 per cent in value by increasing GRPs by a comparative amount. These are some indicators that hard times have not dampened the desire to look good and feel good. As a matter of fact, there is an indication that despite recession, businesses such as mortgage, insurance, snack foods, home furnishings and house wares, to name a few, continue to do well. Perhaps, investing, feeling safe and feeling good are the more basic needs during a phase when people are generally feeling depressed?
While on one hand periods of economic slowdown are a good time for established players because consumers don’t want to take chances, it’s also true that during such uncertain times there is a tendency to trade-down. Therefore, recession is also a great opportunity for challenger brands that spend heavily to communicate brand values that lead to a churn. One such example in recent times is Akai TV from Baron. At a point when the color TV business was growing annually at the rate of eight per cent (value) and the total advertising outlay for all brands put together was Rs 830 million, Akai came up with a proposition for upgrading from black-and-white TVs on one hand and moving from 21″ to 29″ TVs on the other; all this at never-before, attractive prices. Akai achieved some dramatic results in terms of market shares with an aggressive advertising budget that supported a hefty 16 per cent share-of-voice (SOV). Akai reached a 13 per cent market share in less than two years.
What really happened as a result of this brave and defiant move from Baron was that the color TV market saw a growth of 18 per cent and, in the following year, the category grew three-folds.