The inflation situation that we are currently experiencing is affecting all sectors of society. The gradual price increase means that small and medium-sized companies have to restructure their budgets and adapt to the new reality and marketing is one of the departments that most often suffer the consequences of these economic instabilities, since many times companies decide to cut expenses in this area without thinking very carefully about the consequences that it can have in the medium and long term for the company. That’s why we want to give you some keys so that your business adapts to these times of inflation and thinks twice before giving up on marketing.
Marketing in times of inflation
This 2022-2023, inflation is setting historical rates and has shot up beyond 10%, something that has not happened since 1985, and the forecasts are that although it will moderate in the coming years, inflation rates will continue to be the highest in the last years. The increase in prices affects a more exhaustive selection by the consumer when choosing the products they consume. In fact, the word “discounts” has increased by 18% in search engines year-over-year and the search for the term “loyalty program” has increased by 45%.
What do these data tell us? Basically, companies must weather the storm intelligently, without getting carried away by anxiety and always thinking about satisfying consumer needs to achieve greater loyalty in these times of such consumer volatility.
Many companies get carried away by nervousness and confusion and make decisions that can be disastrous, such as dispensing with marketing. But the truth is that most companies that do not cut their marketing investment in times of recession, achieve a return on investment once the economy recovers its normal pulse.
At a time of inflation, brands indeed face a lot of pressure since they must maintain their sales volume to avoid losing their positioning in the market, but not at any price. From my own experience, companies that decide to sacrifice marketing services in their organizational chart face many challenges that not all of them can face.
How do consumers react to rising prices?
It is obvious that consumers do not view price increases by brands favorably. The message they convey is that it is the customers who have to pay the price for the situation that we all suffer. Therefore, even if they finally have to resign themselves to this price increase, firms must deliver something in return to customers and that is where marketing has to work perfectly.
The objective of companies when prices skyrocket is to satisfy customer needs and demands. These may be totally different from the ones he had a year ago and the ones he may have in the following months. That is why the brand must be prepared to adapt flexibly and deploy all its available resources to maintain consumer loyalty; something not easy in the usual price war that usually occurs when there is inflation.
What should companies do in a period of inflation?
Most companies, with only 20% of their products, are able to generate 80% of their income. That means it’s more profitable to focus on products that work well and not on creating more products. If a good marketing job is done and the products with the most potential are well promoted, the result, most likely, will be very satisfactory. The idea is to stop investing time and effort in products that have not given good results to begin with, or that are unknown if they are completely new, and focus on those that are more profitable.
Marketing professionals must create strategies so that the customer will gladly pay that inevitable price increase as long as they feel the brand has thought of them in these difficult times. For example, you can include a higher percentage of products, a good promotion, or any other strategy that conveys a message to the customer that they are doing everything possible to continue trusting them.
This is where the effectiveness of a good marketing strategy is seen, since, if companies decide to sell at all costs during inflation, they will not survive. Consumers are going to look closely at the products or services they offer, along with the price, and they are not going to have any misgivings about changing brands if they do not consider it honest, transparent, and reasonably priced. The company must connect with the customer, pamper them, and whisper in their ear: “We know you are having a hard time. We are with you and we want to do our best to keep you buying our product.”
Marketing strategies in times of inflation
Brands should only consider strategies that benefit them if they think about the consumer. Therefore, the best recommendation in times of inflation is to use marketing efficiently to encourage consumption. This is what you should NOT do:
Wrong marketing strategies in times of inflation
Reduced quality: offering the same thing, at the same price but with lower quality means disappointing the customer who will not hesitate to change brands.
Reduce the quantity: depending on the product being offered, reducing the quantity is another strategy that the consumer will perceive negatively.
The importance of putting yourself in the hands of professionals: trying to reduce costs and trusting inexperienced marketing professionals is another important mistake. A good marketing team will analyze the brand’s situation and devise solutions to overcome obstacles.
Recommended marketing strategies in times of inflation
Loyalty: it is a very effective marketing technique if done well. Any consumer likes to belong to a club where he can get advice on the product he has in his hands and, above all, discounts. It is a way to reward the customer for his loyalty to the brand. For each purchase, the customer accumulates points, discounts, or gifts and encourages them to buy more and not change brands.
Samples: receiving a sample of a product is an easy way to encourage consumption, especially in times of high prices. For the company it does not represent a significant investment and the customer perceives that the brand wants to take care of them as they deserve.
Prizes and promotions: raffles and prizes always attract the consumer, especially if the gift is attractive. Discounts are also a good promotion if prices skyrocket and it is something that the consumer will perceive favorably.
Unification of orders: offering the customer the possibility of purchasing more volume at the same price, especially in digital environments, is an attractive strategy that the consumer will willingly assume.
Free deliveries: this strategy is always a plus over the competition and you only have to raise the minimum amount per purchase. It is a win-to-win solution for the company and the consumer.
Omnichannel: the brand must be present in different channels and offer a quality service in all of them to make it easy for the consumer to choose where they want to interact with the company.
At Eye Advertising, we want to help you with your company in these times of inflation. Call us and tell us about your business. We will find the solutions that fit perfectly with your company to adapt to the new situation. Contact Us NOW!
