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THE MARKETS IN MOTION STUDY: WHAT EVERY CMO NEEDS TO KNOW TO MAKE MARKETING DECISIONS IN THE WAKE OF THE COVID-19 RECESSION
Marketers are in the midst of a unique pandemic induced recession. For many it is their first as a business leader. The decisions they make during this recession have major and immediate implications to their future profits, competitiveness, and careers.
This study is designed to help CMOs learn from the past and make the best possible decisions about where, how and when to invest to maximize firm revenues, profits and share. A team of experts from the Wharton Business School examined how business leaders should adapt to the current recession in the context of history, known academic research, and a survey of 352 CMOs to understand the actions growth leaders are taking today in the wake of the Covid-19 recession.
This in-depth analysis of academic, business, and primary market research has two clear recommendations to business leaders:
1. Increase investing in marketing and innovation during the recession if you can. While conventional wisdom and current management behavior suggests cutting discretionary spending on marketing and innovation in the face of shrinking demand is the accepted course of action, historical facts suggest otherwise. At a time when 66% of businesses have cut spending on marketing and innovation, there is no evidence cutting spending in a recession improved profits, growth or share in the short or long term. In fact, our analysis strongly indicates that investing during a recession is a smart and valuable investment , particularly through the lens of growing profits, share and firm value. Yet, 10% of today’s CMOs told us they plan to increase growth investment during the recession.
2. If not, anticipate and prepare for significant changes if you cannot. Another lesson is that business leaders should not expect a return to the status quo in the recovery. The facts show that recessions significantly restructure markets and only a fraction (under 10%) thrive in the following years. Many of the changes in customer behavior, sales force engagement, and general business models are not temporary, but may lead to a fundamental change in behavior. A third of CMOs believe their go-to-market model will change forever as a direct result of this recession.
In the wake of the pandemic induced economic downturn growth leaders must make some tough decisions about where to invest, where to innovate, and where to refocus their growth resources. These decisions will disproportionately define their future profitability and competitiveness in the new buying reality. The empirical research and the historical evidence is clear, the return per dollar spent may never be greater than what can be gained by spending at this time. This is important for both the short-term as well as the long-term. New leaders will be determined today that will persist into the future. The future of the business will be determined by how one spends in the present.