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Recession Marketing

What The 1929 Wall Street Crash Teaches Marketers


It was quite the Thursday on Wall Street. A weak president, under-regulated credit markets, and investor greed finally began to take their full toll on share prices, and after years of unprecedented growth, the markets fell by more than 6% in a single day.

As the US’ economic woes began to affect the British market, the Labor government tried to take a leadership position in Europe, with apparently little success. Shares continued to plummet, and the world stood on the edge of a massive recession.

It sounds like last week, but these events happened 80 years ago. The weak US president was not George W Bush but Herbert Hoover, and the British Labor government of the time was not headed by Gordon Brown, but by Ramsay MacDonald.

The parallels between the Octobers of 1929 and 2008 are astonishing. Once again, brand managers and marketers can do little more than wait, worry and hope that their organization will survive the inevitable turmoil ahead. But maybe this year’s parallels with 1929 can offer us insight into how brands can survive, or even prosper, in the drastic economic conditions ahead.

Let’s start with Procter & Gamble. The world’s greatest marketing company has a long record of doing very well in times of recession, thanks to a, simple but proven, approach – advertise your way out. While its rivals cut back on adspend during the Great Depression, P&G actually ramped up its marketing investments after the 1929 crash. Its then-president, Richard Deupree, ignored the protests of shareholders and went on to dominate share of voice in radio advertising which saw the company thrive during the 30s and build an unassailable lead for the rest of the century.

Most banks are in a mighty amount of trouble, but HSBC is well-placed due to its international operations. Although the recession we are about to enter will be a global one, the brands with the biggest international presence are poised to recover most quickly.

Similarly, after the 1929 crash, F W Woolworths sold off part of its UK operation to support the ailing brand back in the US. Thanks to a diversified international empire, Woolworths was one of the few star performers during the Depression era.

Another company with little to fear is Phillip Morris International. With seven of the top 10 cigarette brands in the world, including Marlboro, the company has brand equity, mass global addiction and strong historical precedents in its favor. The cigarette companies of the 20s were less affected by the crash of 1929 than any other sector, and the industry went on to enjoy relatively strong growth and profits throughout the Depression era. No reason not to expect the same this time around for a business that has barely changed over the past century.

The cinema business also prospered during the Depression. By introducing sound and cutting production costs, studios enjoyed significant profits as audiences looked for cheap, escapist entertainment. Computer games, the 21st-century equivalent to the movies, are likely to prove a recession-proof industry. Look for brands such as Nintendo and Electronic Arts to prosper.

The upcoming recession must also favor discount retailer Aldi. The brand built by the sons of Anna Albrecht in the difficult post-World War II era in Germany will thrive in the recession ahead. Albrecht would certainly agree, as she once observed the link between Aldi and a tough economy: ‘The worse off people are, the better off we are.’ It’s a fitting mantra for marketing success in the dark days ahead.

Courtesy of Marketing Magazine

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