Soap star: seven ways to survive the recession
It was more a case of soap’s up, rather than surf’s up for soap giant P&G during the Great Depression. But it spent its way out of trouble. Now, a report details how companies can do similar to survive and thrive in this recession…
We have soap giant Proctor and Gamble to blame for the soaps operas that soak up so much television time these days.
The US giant did the opposite of those companies who preferred to hunker down during the Great Depression by spending up big on advertising during those legendary hard days.
And, rather than focusing specifically on its own products, the company sponsored innovative radio programmes aimed at housewives, and so the ‘soap opera’ was born. The rest is history, as they say.
P&G doubled its advertising every two years during the 10-year Depression and by 1939 it was sponsoring 21 radio programmes. The company motto behind this was: “When times are tough, we build share.”
This counter-intuitive action still holds true today, when many companies are cutting their advertising spend as quickly as their IT spend – also something that should be trimmed with care, given IT’s potential to drive efficiencies.
The advice to increase advertising and marketing during today’s recession is one of seven key survival factors identified in a recent New Zealand Trade & Enterprise report, Changing the Game: Recession Survival Strategies.
The report distills lessons learnt from research, undertaken by global management consultants Bain and Company, into how various successful companies weathered – and even grew – during previous recessions.
Thirteen successful global Fortune 500 companies were examined as part of the wide-ranging study, including IBM, Cisco, Cocoa Cola, Shell, Xerox and Shell.
“Seven key factors were identified as impacting on companies’ ability to emerge strongly from recessionary periods,” says the report.
These were then boiled down into seven pointers to surviving and thriving in this recession:
The report also warns that straying from the company’s core business during a recession is as faulty a strategy as hunkering down.
“Both these approaches create openings for companies willing to pursue thoughtful and balanced recession strategies,” says the report. “This emphasises the importance of focus during periods of economic stress.”
Recessions are notorious for breaking companies, says the report. However, they can also provide opportunities for reinvigoration. It concludes that the critical factors for success are those outlined above, but adds that focus is paramount.
It also says that companies should not be afraid to spend, but should do so wisely.
It cites increasing advertising because it increases market share at the expense of those who have cut back. It also cites the example of multinational giant 3M’s introduction of the Post-it Note, during the 1980s recession, as an example of just how successful new products introduced in a tough economic climate can be.
The report also stresses the need to improve efficiency and process operations, to free up cashflow and to allow for speedy decision-making. The latter will also allow a company to correct any mistakes quickly.
Last but not least, it’s never too late to start, says the report. “Early analysis and the use of scenario planning can dramatically improve results and speed recovery.”
“The strategies identified have been used by some of the largest and most profitable companies in the world.”
To read the whole report – which is well worth the effort in iStart’s view, as it’s only 27 pages long. Click here to view
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09/06/25_h
