Smart marketers that review historical data, understand that a recession or downturn is a golden opportunity to increase sales and market share. One of the most famous of all stories relating to this is how Coca Cola used a downturn to increase sales and to pass up Pepsi in market share. And to this date Pepsi still trails Coca Cola in market share.

Coca-Cola vs. Pepsi. The most famous marketing story about marketing during a downturn.

Early in my advertising and marketing career, and shortly after becoming a radio advertising sales-rep in Chicago I had to go through two recessions within a 3-year period, “Welcome to the business world young man!!”

And so probably the biggest challenge in those days was trying to convince businesses to “not cut back their advertising”. (I’ll come back to this in a bit.)

Statistics show that many businesses in trying to survive down-markets, end up having to cuts costs. And in the viewpoint of many businesses, advertising & marketing is an easy budget to cut or eliminate.  

Harvard’s Viewpoint on Marketing in a Downturn

An article in Harvard’s Business Review, takes a rather detailed look at best practices for marketing in a downturn and finds that it is in fact a very bad decision to cut back advertising spend. In summation the article exhorts businesses to find the new needs or services (read the article for ideas on how to do this) of the downturn and increase your marketing so as to promote your “pivoted” product in a way that will be very appealing to this “new normal” down market.

If you are lucky one or more of your competitors will make the wrong decision to actually cut back their advertising. If so, this then is your chance to now increase your market share. Do realize, this opportunity doesn’t come around very often. This decision by your competitor(s) in and of itself is a gift, wrapped with a huge, big bow. (As long as you take advantage of it). The time to plan for a downturn the article suggests is before the downturn even starts.

But back to my opening comment. So I was selling radio advertising, and the general sales manager at the radio station told us sales reps the story of how during the depression, “Pepsi cut its advertising budget while Coca Cola increased theirs”. Net result - Coca Cola passed Pepsi in market share, and to this day Pepsi is still trying to get it back, but still has not. 

I took this story to heart and used it successfully to convince many businesses to increase rather than decrease their ad spend. Net result for me? I made a lot of new friends by helping businesses to make the decision to use the recession as an opportunity vs. accepting a decrease in business. And ultimately the sales manager at the radio station was happy too.

Recently and during a discussion about our current possible recession, I caught myself using the Coca Cola/Pepsi story.  It was a story I had actually never verified back in the day, and so I went on to Google to see if I could find the story. I made a few searches, and I couldn’t find any reference to it, had I been lying to all of those people?

But finally, I did find it on Seeking Alpha. Old news I guess is harder to find. So anyway, here briefly is the story.

You know how you sometimes see a chart like this one below of the Dow Jones Industrial Average from a few decades ago?

It usually comes with an explanation that an investor who bought stocks just before the Crash of 1929 didn’t break even until the 1950s. Well, one stock that didn’t follow that playbook was Coca-Cola (NYSE:KO). Here’s a chart of its performance during that same era, based on annual prices

It seemed unbelievable to me at first, but the data comes from ... well, The Coca-Cola Company. The chart assumes an investment of $10,000 (yes, I know five figures was a fortune in those days) and reinvesting dividends. I’m not sure if reinvesting dividends was practical back then, but if you could, you’d be saying, “Bear Market? What bear market?” as your investment grew tenfold.

The Great Depression Was Actually Pretty Great for Coca-Cola

Yet when you think about it, the Great Depression was actually pretty great for Coca-Cola. In an era when companies were cutting back on advertising, Coke ramped up, because after all, it only cost a nickel and it was “the pause that refreshes.” That set the company up for rapid expansion during World War II, as Coca-Cola travelled with the troops and spread worldwide. It may indeed have been the world’s first truly global brand, and on the way became “the stock that refreshes.”

As more and more years pass by and as Coca-Cola continues to maintain its No.1 position in market share, this story continues to get even bigger. Imagine if Pepsi had been the brand to out market Coca-Cola instead of the other way around? It ended up being a multi-billion-dollar decision for both brands, with a definite winner and loser.

A Downturn is Actually an Opportunity in Disguise

Want to see your business expand during a downturn? You now have the roadmap for what to do and what not to do for your brand to be the winner.

The key though is planning in advance for it, so that if and when it happens, your brand can actually see increases in market share and in revenue.

For brands looking to be aggressive to optimize their digital marketing campaigns, video is proven to drive the most brand awareness, sales and conversions, and so upping your video presence should be a key element of your strategy.

Wrap-up

VideoFresh offers are experts at creating video content that will elevate your sales. So feel free to contact us today to chat about some ideas to to help you beat any possible downturn by increase your sales conversions.