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May 18, 2009

GE, Microsoft, HP and Walt Disney were all started when economic times were bad.  My first experience with a start-up was at the beginning of a recession and we were hugely successful.  This week and next several companies will go public in a very bad market:  Rosetta Stone (language software) GlobalSpace (Satellites and imaging) Open Table (on line reservations) all have good products and have been successful in this down market.  As I see it, the common thread with all these companies is the belief in their products ability to sell even in trying times and spending money on marketing those products.

History has shown that companies that spend more on marketing tend to prosper most in down markets.  During the 1930’s depression Chevrolet beat out Ford because Chevey increased its ad budget while Ford slashed theirs. Kellogg beat Post for the same reason.

I have always wondered why executives put the squeeze on marketing dollars during bad times.  Often you’ll fine the motto “CASH IS KING” thrown around as the golden rule during difficult times. While I agree that cash is king all the time, companies would have more cash if they were spending on marketing.  Some executives just don’t understand the value of marketing and think its voodoo in good times let alone bad ones.

If you know of a company that is not spending on marketing now, you may want to  ask them to consider the brands mentioned above and how successful they became in a recession or depression and how successful they are today.  Suggest that they talk with their marketing people or outside consultant to see what is possible.  Who knows they may just wind up with a lot  more business.

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