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Marketing during times of inflation: What winning consumer brands get right
As consumers cut back on non-essential purchases and switch to private label, brands need to work harder than ever to remain in baskets. The following five principles will help keep budget-conscious shoppers engaged.
Inflation and concerns about the cost of living are rewriting the rules of shopper behavior in many markets.
Affordability – always a priority for shoppers – has moved center stage. It is now the top concern for 35% of global consumers, according to EY’s Future Consumer Index from May 2023, up ten percentage points from October 2022.
At the same time, engagement with brands is falling. According to EY, 55% of global consumers say brands are no longer important. A separate survey, by PwC, found 32% of consumers are buying retailers’ own brands to reduce costs. Private-label grocery sales in the US surged by 11% in 2022 to reach $229 billion. In the UK, private-label groceries are now growing at almost double the rate of branded products.
To prevent even more shoppers from trading down, brands need smart marketing strategies to get into – and remain – in shopper baskets.
It’s not easy, but we know it can be done. We are already seeing scores of leading brands across markets and categories launch smart campaigns that speak to the concerns of budget-conscious shoppers, communicate the added value of brands, and provide clear reasons to believe.
Here are five things inflation-proof campaigns get right.
1. Knuckle down on visibility
It’s tempting to slash marketing budgets during times of crisis, but staying front of mind is vital. Consumers can’t choose your brand if they can’t see it.
It’s one of the reasons why General Mills says it is continuing to invest in media to keep shoppers engaged, boost value perceptions of its products, and drive demand. Investment in brands is vital for long-term growth, CEO Jeff Harmening said during a recent results call, adding General Mills is focused on investing in “compelling, digitally enabled, high ROI campaigns”.
Previous downturns have shown that maintaining investment in marketing also helps brands succeed once the economy improves. As marketing professor Mark Ritson points out: “The companies that maintained ad spend, or even increased it, during a recession saw little advantage during the hard months of the squeeze. But the minute the green shoots of growth appeared, their growth was spectacularly superior versus competitors that cut back during the recession.”
To maximize the impact of any marketing spend, maximizing visibility on the digital shelf is critical. There’s little point driving awareness with splashy ad campaigns or promotions if shoppers can’t find your products on retailer sites – or you’re out of stock.
As brands look to inflation-proof their marketing strategies, now’s the time to get serious about Digital Shelf Optimization, whether it’s fixing the basics such as ensuring every product has high-quality images and descriptive product content, optimizing share of search, or monitoring availability and out-of-stocks.
2. Bring value to life for shoppers
While consumers have clearly become more budget-conscious, they remain willing to spend on the right products, brands, and occasions. To mark the Coronation of King Charles III, UK shoppers spent an extra £218 million on groceries, with sales of sparkling and still wine soaring by 129% and 33% respectively.
To persuade shoppers to spend, however, brands must offer a clear reason to buy. Compelling product content that spells out benefits is essential. What’s more, being explicit about savings, or cost per portion/use, can be an effective strategy in the current climate.
P&G’s Gillette brand is a case in point. Its US eCommerce content for Fusion5 razors clearly spells out product benefits using eye-catching visuals and brings value to life by telling consumers that “one refill = 18 shaves”.
Unilever’s Colman’s brand, meanwhile, has been running a campaign in the UK under the strapline ‘Tasty nosh for less dosh’, inspiring shoppers to create budget-friendly meals using its recipe mixes. The campaign lists the cost per portion for suggested meals, so consumers can see how their purchase of Colman’s translates into great-value meals for their family.
3. Frame sustainability through an affordability lens
Sustainability continues to be an important purchase driver for many shoppers, even in these value-focused times.
A 2023 McKinsey survey discovered that while sustainability has become less important to consumers overall, it remains critical to certain demographics. In the US, 37% of Gen Z and 39% of millennials say environmental impact is an extremely or very important factor when making buying decisions, compared with just 18% of baby boomers.
However, sustainable choices need to fit in with shoppers’ new financial reality.
EY research in the UK found 56% of consumers believe sustainable products cost too much, highlighting the need for brands to make sustainability “a more affordable reality”. It also revealed that shoppers are adopting more sustainable behaviors such as reducing food waste – but mainly to save money.
By centering affordability when marketing sustainable products and spelling out how environmentally friendly choices can also help save money, sustainability-focused brands and retailers can remain relevant during times of high inflation.
Dutch supermarket Hoogvliet is a good example of this insight in action. It has introduced dynamic pricing to provide a financial incentive for shoppers to buy items that are close to their expiry date, thus reducing food waste.
4. Leverage retailer loyalty schemes
Loyalty and rewards programs are becoming more important in many markets and can be a highly effective tool for engaging inflation-hit shoppers.
A recent survey by Eagle Eye found that 57% of global consumers actively use loyalty points to reduce the cost of items, and 33% of US shoppers joined a new loyalty program last year in a bid to save money.
With retailers investing heavily in loyalty schemes and shoppers primed to look out for loyalty-exclusive offers, loyalty-focused marketing campaigns are rightly moving up the agenda for many consumer brands.
The opportunity for personalization through loyalty programs is a further attraction, helping brands ensure marketing dollars are spent in as targeted a way as possible.
5. Don’t forget fun and inspiration
As important as it is to focus on inflation messaging and speak to shoppers’ financial worries right now, savvy consumer brands also know that marketing campaigns present a valuable opportunity for providing lightness, fun, and inspiration.
Constant budgeting can take a heavy toll on shoppers. ‘Frugal fatigue’ is on the rise. In the UK, 21% of consumers say the hardest thing about cooking at home is the monotony of making the same recipes on repeat, according to research by Unilever and food waste charity Wrap.
By providing fresh inspiration and punchy, engaging campaigns, brands can play a vital role in lifting shoppers’ spirits and help them navigate difficult times.