How can brands navigate the cost of living crisis?
With inflation rocketing to its highest level in 30 years and projected to rise to 10% this year, its not easy for UK consumers or businesses to navigate the post-pandemic world. But brands and businesses, including marketing agencies, need consumers to continue spending at the rate they were before the cost of living crisis. So, how can marketing support brands to achieve this?For marketers, our challenge now is to help brands appeal to consumers. According to Marketing Week in May 2022, 38% of shoppers saying they have swapped tried and trusted brands for cheaper alternatives. 24% have also cancelled subscription services like Netflix. 33% have cut back on large expenses like holidays abroad.
How should brands react?
We can see that consumers are acting in similar ways across sectors and product categories. However, brands themselves should not all follow suit. Brands’ fight for consumers’ reduced share of wallet is fierce, but it doesn’t necessarily mean the cheapest brand wins! How brands react now depends on the price of their products, the new spending habits of their target audience, and how cost-effective a product is. Cost effectiveness can be just as important for brands as price. The most successful brands will be those that don’t shy away from addressing the cost of living. For low cost products and value brands, this is welcome news. But, as always, we expect honesty and authenticity. Consumers like you and me will buy from brands that can add value to our lives at a time when disposable income has shrunk.
Authentic brands will win
During the pandemic, we wanted to buy from brands which expressed care for our needs and aligned themselves with a wholesome purpose or social good. Now as purse strings tighten, we want to buy from brands we believe offer longevity and value for money. Brand names don’t matter as much now and we will switch to alternatives which offer greater perceived value. This is the case even if they aren’t actually any cheaper. Promotions and discounts are short term because brands can’t sustain them in the long run. Cost cutting ultimately leads to reduced loyalty, with consumers shopping around for the best deal. Learn more about authenticity in your branding, here.
Different marketing strategies for different price points
With the consumer eye on prices, marketers’ eyes need to be on price too. Marketers for low cost products and value brands can enjoy the initial rewards of consumers switching to their ranges with less persuasion than normal. But, now is also the time for nurturing relationships with these customers. You should be preparing a long-term marketing strategy to maintain market position. The cost of living crisis will not be around forever.For more costly brands and non-essential items, weathering the crisis is all about flexing to current consumer needs without de-valuing the brand in the long-term. Higher cost brands can expand value ranges and build a strong brand story which highlights the added value their products bring to consumers’ lives.Times may be unpredictable but the basics of marketing remain the same. Success for brands is about understanding the pain points of target audiences. Solve them with differentiated solutions and build enduring relationships with customers. These relationships will outlive this current cost of living crisis… and the next.If you would like to talk to a team of experts who apply both innovation and creativity in times of crisis, and calm, talk to the ThinkOTB team.
