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Marketing and advertising in the prism of the Business Cycle

The most recent economic roller coaster and its impact on medium and small businesses are not quite obvious however, sporadic and panic-driven actions by small business owners are starting to show an impact. The most obvious decision to cut advertising and marketing budget to meet year-end profits is the most flowed decision that can be observed.

As a general rule, it is vital to recall some of the most fundamental rules of business. Advertising and marketing are the cornerstones of any solid business that plans to maintain and expand its market shares. Cost cutting and or fat trimming to achieve short-term budget requirements in exchange for long-term loss of market shares is by far one of the most devastating decisions that can be made.

It is not to say that budget adjustments in the marketing and advertising section may not be done, rather than achieving a balance that assures long-term business market shares and survival. It is our opinion that, especially in an economic downturn in general markets, it is vital not only to maintain advertising and marketing budgets but, if possible, an increase those spending should be undertaken.

The same, however, does not apply to the economic downturn in specific markets and industries. If particular downward trends in a specific industry are noticed, overall reductions and budget adjustments are vital and will ensure proper financial liquidity and cash flow that may assist in long-term survival.

None of the above strategies would apply to publicly traded companies or large organizations. Those points are rather generalist theories based on the most common business and economic environments of small and medium-sized businesses. But again, even very large organizations have similar concerns that need long-term and short-term strategies.

To reiterate the above strategies, it is important to remember that the mere budget increase or maintenance of advertising and marketing funds does not assure any success. Any consideration to spend marketing and advertising funds should be subject to detailed scrutiny for efficiency, effectiveness, and return on investment.

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