Original Source: forbes.com
Managing Director TERRITORY Influence, a leading full-service influencer marketing agency activating 4 Mio creators for brands in Europe.
Many marketers are facing unprecedented challenges due to the current high-inflation environment. As with any crisis, it is important for companies to understand how their consumers will likely behave and adapt their strategies accordingly to continue delivering value to consumers and differentiate themselves from competitors.
Make Sure Marketing Leads The Company’s Response In Any Crisis
In this high-inflation environment, your marketing function and teams are key to understanding your consumer, how they feel and how they will likely behave. And it is your marketing team that should lead the evaluation and your response regarding pricing, place, product and promotion strategies. So let’s evaluate how brands should respond in the current economic crisis and how to adjust marketing strategies and activities across all four “P’s” of marketing: product, price, place and promotion.
1. Promotion: Keep Investing In Advertising
I’ve found that advertising is critical to strengthening consumers’ emotional bonds with your brand. Reducing or halting advertising could lead to irreversible consequences for your brand, especially in terms of reduced market share, weak brand awareness, market positioning and customer connections. A 2018 study by the Ehrenberg-Bass Institute shows that brands that stop advertising for longer periods on average experience a 16% drop in sales in the first year and 25% after two years.
However, there are things that marketers should adjust in times of crisis:
• Adjust your media channels: Determine which media channels consumers will focus on during times of crisis and adjust your media plan accordingly.
• Show empathy in your storytelling: Empathetic communication across touchpoints is critical for brands during times of crisis to connect and bond with consumers in duress. Be human and put yourself into the shoes of the customer by focusing on delivering helpful, empathetic and caring communication.
• Activate human-to-human communication: Peer communication becomes even more important during times of struggle as people turn to friends and family for information and advice. Brands should hence focus on word-of-mouth programs, user-generated content and influencer marketing.
2. Product: Adjust Your Product And Portfolio Strategy
Your product or service sits at the core of your brand and is fundamental to your brand’s health. If the product or service experience is great, solves a problem for the consumer and delivers value, then consumers will likely be more willing to pay a premium. In this context, brands should maintain investment in their product pipeline and continue to innovate but pay attention to the following areas:
• Leverage customer insights and social listening: Investing in social listening and real-time analytics allows brands to collect, track and analyze customer insights for product development and innovation. Real-time data—such as purchases, transactions, spending, reviews, repurchase information or consumer sentiment—can all be used to better understand shifts in consumer behavior and preferences during a crisis and allow you to adjust your offering or portfolio accordingly.
• Maintain investment in product innovation: Whether it is a tangible product or a service, I’ve found that innovation is vital to driving and sustaining brand growth. And when consumer preferences change, there is an even stronger need to keep your products up to date.
• Improve the success rate of your innovation by co-creating with your consumers: Consumer or influencer co-creation is a great way to create products and services that meet the needs of your consumers and limit the risk of failure.
• Don’t neglect customer service: Customer service, in many industries, represents a great part of the brand experience and can have a significant impact on the consumer’s satisfaction and likelihood to repurchase.
3. Price: Turn Pricing Into A Competitive Advantage
During times of high inflation, companies pay more for input materials, shipping and other resources as overall costs increase. Brands might be forced to increase prices during inflationary periods to protect profit margins and keep investing in their people, services, marketing and product innovations. But higher prices may result in lower volumes due to price elasticity. Hence, CMOs should make sure they:
• Understand consumers’ willingness to pay: If you decide to increase pricing, bear in mind that consumers will only accept a price increase if the product or service is perceived as delivering adequate customer value. That means determining how the product is helping them, how it stands out from the competitors and why it is the better option.
• Select the right strategy for adjusting prices: Prices might be increased directly via your wholesale or retail prices or indirectly through a reduction in quantity per pack. I’ve also seen smart companies look at reducing the cost of their ingredients or raw materials, as consumers may not notice this change.
• Explore individual pricing powered by consumer insights and machine learning: Leveraging real-time analytics alongside machine learning might enable your brand to predict consumers’ willingness to pay and adjust your pricing or promotional offers accordingly.
4. Place: Adjust Your Distribution Strategy To Maintain Physical Availability
Physical availability is widely accepted as a key success factor for any brand. High inflation, however, might drive price-sensitive consumers to different retail channels. There might be another shift toward e-commerce or a downturn within established retail channels. Marketers should, hence, closely track where consumers are buying the type of items they promote and adjust their distribution priorities accordingly.
Conclusion: Make Sure Marketing Is A Key Element Of The Response To Any Crisis
Brands can respond to a crisis more successfully by understanding and anticipating their customers’ preferences, behaviors and habits, which are at the core of marketing. I believe brands that maintain their investments in advertising and innovation will fare significantly better than companies that cut budgets in a vain effort to protect their bottom line. However, marketers need to adjust their storytelling, media channels, product portfolio and pricing and distribution strategy to continue delivering value to consumers during times of inflation, economic uncertainty or crisis.