With high inflation and rising costs across the economy, how should you approach your marketing strategy?
In a tightening economy, consumers won’t stop spending on housing, gas, electricity, wifi and other staples, but they will become more selective in their discretionary spending – travel, entertainment, food experiences, personal luxuries and convenience purchases. This behavior can be problematic to Consumer Goods businesses, more premium brands, and services that rely on consumers’ ability and willingness to pay a little more.
NielsenIQ’s Inflation Survey in grocery ranked drivers of purchase for consumers during inflationary times. Not surprisingly, price was the top purchase driver with 56% of consumers in Conventional Grocery and 69% in Discount Grocery. However, Brand and Quality were the second and third purchase drivers respectively, meaning that these drivers can be influenced.
Here are five practical strategies to consider right now with rising prices, inflation, and a tight economy.
1. Focus Marketing Dollars at the Point of Purchase. Longer term brand building initiatives like sponsorships, PR, and broader media campaigns are important to building consumer awareness and affinity, but the ROI tends to be long-term. Owners and senior management look to cut media budgets first, as they tend to be larger amounts, and focus moves to retail spending. Instead of just increasing trade spend and discounts, look at ways to partner with retailers and create in-store communication. Shelf blades, cart advertising, incremental displays, shelf poppers, trial coupons, bolder packaging, etc. can all provide stronger messaging at the point of purchase. Staying quiet in the market and riding previous brand equity/loyalty can work short-term, but don’t make it a habit or your brand can slip into irrelevance, making it that much harder to regain loyalty.
2. Increase Quality Messaging. Put aside emotional based and higher order messaging for a time and replace it with clear quality and benefit statements. Why is your product or service better? NielsenIQ survey pointed to some clear quality attributes that consumers look for including: Natural Ingredients, No Artificial Ingredients, and Locally Sourced as top attributes for purchase decisions. It’s a great time to remind consumers about the basics of your brand and why it’s worth paying a bit more. Make it clear and simple.
3. Launch Innovation around Format Changes. When discretionary spending decreases, consumers tend to take less risks. That’s not good if you want to introduce consumers to a new category or new line extensions, like flavors. Pack size was the fourth driver of purchase decisions during inflationary periods according to Nielsen. Instead of introducing new flavors or new categories, consider format changes or pack sizes. Now 35% More in a larger bottle for families looking to stretch the use or launching smaller bottles of sauces for single households that come at a smaller price tag can help. Can you move into single serve or Halloween style of smaller packages or bundle/variety packs where there’s a higher initial price but more savings for consumers because they’re buying bulk. Variety packs are also a way to sell slower moving SKUs with the more popular SKUs especially if inventory is high.
4. Consider New and Alternative Uses in your Messaging. Can you help consumers use your product in more or different ways? Bounce fabric sheets has been educating consumers on using Bounce to freshen the air in your car or gym bag which could save consumers’ money versus buying an air freshener. Bounty created smaller perforations in their towels to help consumers with smaller spills, leading to less waste and extending the life of the paper towel roll. Creating alternative ideas and uses can also be great TikTok and social media content that influencers could help spread cost-effectively.
5. Focus on Regional Battle Grounds for Market Share. If you need to stretch your marketing budget further, focus on a few regions that will give you the largest return. Instead of a national media buy, do a regional one and increase the frequency. Your competitors will also be looking to do this, so you’ll want to choose regions where you have strong distribution, there’s a larger consumer population, more local (if that’s been key to your brand messaging) and where you can target your media spend more effectively. Showing clear market share wins regionally will build better sales stories for retailers when you start to expand and grow again. It will also create deeper loyalty and brand equity within that region creating a wider moat against incoming competitors.
There’s no easy way to win when the economy contracts, but hopefully these strategies can jump start ideas and tactics to ease the pain. If you have questions or want to go deeper on your specific brand, we’re always happy to help.