Can firms spend their way out of a recession?

university-of-waikato

Wed Sep 29 2010 13:00:00 GMT+1300 (New Zealand Daylight Time)

Can firms spend their way out of a recession?

Wednesday, 29 September 2010, 12:49 pm
Press Release: University of Waikato

Media Release
September 29, 2010

Waikato University marketing professor Harald van Heerde has received a $740,000 Marsden grant to look at the role marketing can play in a recession.

His is one of nine Marsden grants worth a total of 5.5 million dollars awarded to Waikato University researchers in the 2010 round of Marsden funding, administered by the Royal Society of New Zealand on behalf of the government.

“During a recession, firms typically slash their marketing spend because it’s usually the easiest thing to cut,” says van Heerde, “but some economic theories now suggest that it is actually better to increase marketing investment during a recession; that the return on these types of investments is actually higher during periods of economic turbulence than in boom times.” We will find out what is the best strategy.

Professor van Heerde is working with colleagues in the Netherlands and USA to develop a new theory on how the return on investments in innovation, advertising and sales promotion varies across business cycles. “We’re developing a novel econometric model and will be testing it on detailed data for thousands of New Zealand products. The results will provide insights into how New Zealand firms can better navigate through economic turbulence using marketing investments.”

Earlier this year, Professor Van Heerde received the distinguished Researcher of the Year award at the annual ANZMAC (Australia & New Zealand Marketing Academy) conference in Melbourne. The award is given annually to a member of the ANZMAC community judged to have made the most significant contribution to advancing our knowledge of marketing through their research.

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