New Yorker financial columnist James Surowiecki tells the tale of two cereal companies’ approach to the Depression in his April 20 column (“Hanging Tough”): Post cut its ad budget, while Kellogg doubled its budget, moved into a new medium, and gave a major push to a new product (Rice Krispies). The result:
By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty per cent and it had become what it remains today: the industry’s dominant player. You’d think that everyone would want to emulate Kellogg’s success, but, when hard times hit, most companies end up behaving more like Post. They hunker down, cut spending, and wait for good times to return.
Examples like Kellogg and Post (and Surowiecki gives plenty more) are why we tell people that now is the time to market like hell—you’ll position yourself well for the upturn, and you’ll give yourself the best chance to capture those who are still spending. Of course it’s in our self-interest to say that, but we are following our own advice, and spending more than feels quite comfortable on marketing and new initiatives.
As Surowiecki points out, this can be scary. There’s a good reason so many organizations choose to batten down the hatches in a downturn: a gamble on the future isn’t always successful.
But as they say at the tables, you can’t win if you don’t play.
