Cutting back on innovation

A new research study* shows rather shockingly that a quarter of British businesses have reduced their commitment to innovation in the current economic climate. And more intend to do the same in the coming year.

Do they imagine that battening down the hatches will help them to emerge from the current double-dip recession stronger?

It’s always been my experience that recession is a great time to outperform timid competitors with new creative ideas that have the potential to change the game. 

*Allianz Insurance, 500 CEOs in Britain, 2012

Spending on marketing in hard times

When I started work on Rowntree’s Fruit Gums and Fruit Pastilles in 1967, my rather ancient and knowledgeable boss, Michael Evans, told me that the reason those brands had survived the Second World War was that the company had continued to advertise throughout that time, whereas many competitors had withdrawn from supporting their brands, which had in turn died post-war.

Now there’s a powerful article in the current issue of Market Leader magazine by my colleague at City University London, Vincent-Wayne Mitchell. He’s Professor of Consumer Marketing there.

The article lines up the reasons that marketing spend in hard times can be highly effective. Here are a few of his points (all derived from recent research):

Increased share of voice (as competitors rein back)
Increased saliency and perceived brand quality
Boosted consumer confidence
Helps to justify premium prices
Increase in brand switchers to our brand
Reduction in media costs in a recession
Market share gains

Mitchell adds: “Breakthrough innovations can build firm value significantly, while small innovations preserve firm value.”

Wise words!