If it seems like some companies are trimming fat just in anticipation of hard times, you may be right. In fact, that seems like the conventional wisdom. Among the most tightened budgets is marketing, but when consumer dollars are fewer and farther between, it’s probably not a good idea to let them forget about you altogether. 
The economic principle is fairly simple. Brokers will advise people to invest in Kraft Foods during recession because people aren’t going to stop buying cheap family favorites like macaroni and cheese. They will limit what they spend on other things as less and less of their becomes disposable. In turn, if you’re not providing a basic necessity, competition balloons not just from within a company’s industry, but from outside, too, as consumers decide to go out to eat or to a movie, but not to both.
That’s why Dr. Sharan Jagpal, of Rutgers University and author of Fusion for Profit: How Marketing & Finance Can Work Together to Create Value, says bad times are the worst times to cut the marketing budget. “In a recession, it’s harder to gain new customers, to convince existing customers to buy more, and to win back customers who have left,” he said. “So companies often need to be spending more money, not less. They just need to be smart about it.”
For example, notes Jagpal, when times are good, the vacation and video game industries are not in direct competition. “In a bad economy, consumers may have no option but to forgo vacations. But to compensate for this loss, they may reward themselves with a small, affordable purchase such as a videogame. And that’s why it’s important to pay attention to shifts in consumer spending—if you’re a videogame maker, you may well benefit from a dramatic increase in your marketing right now.”
So in the end it’s about marketing strategy, not marketing cuts. The vacation industry, during trying times, probably shouldn’t focus on growing their customer base, but instead should focus on retention of customers unaffected or minimally affected.
Likely one won’t hear an objection to an increased marketing budget from the marketing department, but rather from finance. Jagpal suggests that the distance between marketing and finance, the tendency for finance to regard the marketing department as a money pit with uncertain return are old-world corporate structure thinking.
“When these two groups stop talking at each other, when they get out of their functional silos and start working together, they can create marketing strategies that help an organization thrive even in the grimmest economy. But that means Finance must squelch its knee-jerk reaction to cut the marketing budget, and Marketing must learn to create metrics that demonstrate the bottom-line impact of their ideas.”
