Trump Marketing: Why Poking The Bear Can Make Surprisingly Good Business Sense.

Trump Marketing: Why Poking The Bear Can Make Surprisingly Good Business Sense.

With Donald Trump in the Oval Office, the US has entered a new era of political involvement in business. Trump has a habit of speaking his mind about various brands and businesses that have pleased or offended him, and his often emotional and brash updates on Twitter have gained the spotlight of millions waiting with bated breath for his next 140 character decree.

But what effect is this having on the businesses themselves, and how should your business adapt to this new political atmosphere?

Brands that have received favorable mention from Trump recently include United Technologies and Fiat Chrysler, praised for decisions to keep operations in the US rather than creating jobs abroad, and L.L. Bean, which Trump far more controversially praised for a campaign donation by a board member.

Brands that have incurred his wrath include department store Nordstrom, which dropped his daughter’s jewelery brand, and General Motors, which he attempted to shame into manufacturing domestically.

He’s made comments on all these brands in speeches or social media, generally picking up a great deal of attention in the process.

Effect on business

But what effect has this had on the companies themselves? The impact it seems is rather muted – or at least it is now. During Trump’s candidacy for the presidency, it’s thought his comments had a greater effect.

It seems to be the case that Trump’s pronouncements have less and less effect on share prices and sales, particularly as his presidency progresses.

Back in December when he was still president-elect, shares in Lockheed Martin dipped when he complained about the high cost of the F-35. In January as he entered office, he wiped a huge amount off the market cap of major pharmaceutical companies with a few choice comments.

But as he settled into office and began to learn that not everything could be changed using the weight of his executive order, markets learned not to take Trump’s intimidation tactics seriously.

Back in February, in the early days of Trump’s administration, a Financial Times article looked into the market impact of Trump taking issue with a company via Twitter. It found that on average the impact on share price was zero.

If the outspoken president praised a brand on Twitter, stocks rose on average 1% but this effect only lasted a day. When Trump patted General Motors and Walmart on the head for their job creation, GM’s stock actually sank slightly. By the next day, both companies were trading lower than they had been before Trump opened his mouth.

For media outlets that Trump has taken issue with, the president’s criticism seems to have had a positive effect. He’s complained about reporting by The New York Times, NBC and CNN but the Financial Times found this had no noticeable negative impact on these companies’ share prices.

In fact, CNN has recently been performing beyond its own expectations, and the New York Times is enjoying its highest ever rate of digital subscriptions.


It seems the market doesn’t take much interest in Trump’s pronouncements. And perhaps it’s no wonder. Trump’s known for being volatile and changeable, and as a result, his sabre-rattling is taken less seriously. This is a leader who took military intervention in Syria only a week after saying it wasn’t America’s problem to solve.

Markets are learning to distinguish between what the president says and what he does. Emotional outbursts on Twitter don’t necessarily correspond to any particular change in policy or governance.

But Trump is certainly active on business matters; denigrating companies on Twitter may just be hot air but he can also threaten to cut off lucrative government contracts. United Technologies worked out a deal to keep manufacturing in the US rather than relocate to Mexico.

For this, Trump used a carrot and stick approach: a package of incentives paid from state tax, plus a warning that federal contracts could be withdrawn if they relocated abroad.

Although this may have saved several hundred manufacturing jobs, most economists are wary of this level of intervention. Political involvement in business activities at this level can negatively distort markets, particularly if companies expend efforts on pleasing politicians rather than their customers.

Trump’s presidency is already benefiting America’s powerful lobbying industry, and it makes it harder for smaller firms to compete. It’s also harder for new market entrants to disrupt established players when they have the weight of the establishment behind them.

A political administration that favors certain types of business activities above others is ultimately just another risk for businesses to consider.

With outsourcing of jobs a major concern for Trump’s administration, companies considering outsourcing as a strategic move also have to consider the risk of incurring negative political attention and potentially being punished by the administration.

Researchers at the University of Chicago found that corporate behaviour changes in response to political risk factors. These risks tended to be associated with lower investment and less hiring – which suggests that Trump’s “pro-jobs, pro-business” interventions may be counterproductive.

Larger firms also spent more money on lobbying activities; an expense that’s hard to defend.

So how should businesses respond to Trump’s “bully’s pulpit”? Although the evidence indicates that crony capitalism doesn’t ultimately benefit business, it seems that not all businesses operating in the US will be treated equally under the law during this administration.

It’s difficult to know how to respond to the uncertainty and inequalities this brings. A recent Reuters article suggested that companies’ best option is to oversee political spending at board level and disclose all political payments.

Harvard Business Review advises that, if directors decide to engage in political spending, it’s done with the appropriate oversight and other policies and procedures.

The advice really is to weather the storm and maintain integrity as the US enters a new era of crony capitalism.

Written by Demetrius Williams
Demetrius Williams
Demetrius Williams is a Digital Marketing Specialist at TranslateMedia and has previous eCommerce experience working with a number of luxury brands in the fashion and beauty industry. He enjoys photography, binge-watching Netflix and can often be found roaming around London with a camera in his hand.

Related posts