Marketing

A Time to Harvest: This Could Be the Time to Cut R&D and Marketing
At the M Planet Conference in late January, Anne Mulcahy, Chairman and CEO of Xerox Corporation, remarked that this is the timeto invest in R&D. Wharton Professor of Marketing David Reibstein, also a speaker at the marketing conference in Orlando, disagrees. "If this is the time to invest in R&D, when is the time toharvest?" he asks. "Now more than ever, I would think this would be the time for harvesting."
Reibstein concedes, however, that some of resources for R&D may be cheaper in this environment, whichcould provide an advantage. On the other hand, to address immediate cash flow, this could be the best time for some companies to throttle back on R&D and even on marketing investments, saysReibstein, who is academic co-director of Wharton's Competitive Marketing Strategy program and on the faculty of the Essentials of Marketing program.
This is the most productive time to be spendingmarketing dollars if you can afford to spend. But if you can't, cutting marketing expenses will help you with your cash flow.
David J. Reibstein, William Stewart Woodside Professor; Professor of Marketing;Academic Co-Director, Competitive Marketing Strategy
The Paradox of Investing in Brand
The same argument can be applied to investing in your brand. Reibstein says there is a paradox to investing inmarketing during a downturn. On the one hand, every dollar invested in brand building in this market has more punch, given the reduction in spending by competitors. On the other hand, establishedbrands may coast on their brand equity, and every dollar they save by cutting goes right to the bottom line.
"This is the most productive time to be spending marketing dollars if you can afford tospend. But if you can't, cutting marketing expenses will help you with cash flow," Reibstein says. "You have a greater ability to gain share right now. If you believe in notions of lifetime value of the...