While marketers in many countries are worried about a recession, there is also optimism regarding the business climate and marketing budgets.
Researchers measure the effects of mass employee layoffs on a brand
By our News Team | 2023
A company’s marketing department should be involved in planning potentially damaging actions, such as layoffs, from the very beginning.
In times of economic crisis, companies frequently lay off employees. In the short term this can reduce costs, but what consequences does this have for an organisation’s brand?
A new study by researchers from three European universities – Kühne Logistics University (KLU) in Germany, Tilburg University in the Netherlands, and KU Leuven in Belgium – has investigated the phenomenon and provides recommendations on how communications strategies should be planned.
Photo by Antoni Shkraba from Pexels
The results show that after layoffs are announced, brand strength drops by an average of 18%. It only recovers after about seven weeks.
“This negative effect is strongly influenced by the corporate communications that take place in parallel,” says Alexander Himme, an Associate Professor at KLU. He warns that advertising and social media amplify the negative effect.
“If, on the other hand, companies send out many PR and CSR messages in parallel with the layoff, this average damage to the brand can be significantly contained,” Himme explains.
An above-average positive brand image also proved to be a helpful buffer against brand damage caused by the announcement of mass layoffs.
Consumers differentiate between advertising and PR
How do PR or CSR measures differ from marketing measures? The researchers’ study shows that consumers rate marketing and social media activities as more entertaining, less trustworthy and, above all, cost-intensive.
“This is then perceived very negatively in the case of layoff announcements,” says Himme. PR or CSR measures, on the other hand, are considered trustworthy and informative – as long as they are not pure ‘greenwashing’ and, for example, society benefits from the measures.
Tip: Involve marketing professionals early on
“This may sound surprising, but a company’s marketing department should be involved in planning measures such as layoffs from the very beginning,” Himme says. “After all, image losses have a direct negative financial impact via falling sales or a low willingness to pay.”
The damage to a company’s brand can be limited by managing marketing, PR and CSR measures in parallel with the announcement of a mass layoff.
“A long-term, coordinated communications strategy makes perfect sense here and protects the company from further image problems,” advises Himme.
The study, titled ‘How firm communication affects the impact of layoff announcements on brand strength over time’ is published in the peer-reviewed International Journal of Research in Marketing. You can find out more here.
US industry body warns marketers to be vigilant as programmatic media is ‘complex’ and ‘can be non-transparent’.
Dentsu says big events like the Euro 2024 soccer finals and US presidential election will help to push up spending.
Look for transparency, check results of previous projects, and request an air-tight scope of partnership, advises industry expert.
AMC’s range of Short Courses is designed to complement the study and career-growth initiatives offered by our member countries.
More people also took advantage of deals to buy everyday items, rather than spending on big-ticket luxury goods.
Bath and body well-being brand creates a 3m-high candle and lights it in a busy Christmas shopping precinct to encourage people to ‘reset’.
Data from 2008 recession indicates that, in another recession, the amount spent on higher-priced Fair Trade goods may actually increase.
Interbrand study says lack of growth mindset, weaker brand leadership and poor forecasting are among the key reasons.
Tlali Taoana has experience in strategy, marketing and executive roles, and will expand the capabilities of the business.
AMC President flies the flag at the World Marketing Forum in Thailand, then welcomes Tunisia as the confederation’s 11th member.