The Great Toilet Paper Panic of 2020 demonstrated how fragile our supply chains are and how vulnerable we are to disruptions. The
biggest takeaway from global crises
and inflation is that how brands respond to customer behavior determines who survives after the dust settles.
Inflation generally makes customers spend less, buy cheaper, and postpone non-essential purchases. The longer the inflation lasts, the more these habits are amplified. That said, consumers don't have a blanket response to inflation.
While many consumers cut back, some make exceptions for discretionary purchases they consider affordable and morale-raising - think luxury perfume or staycations. Others, especially top earners, simply continue spending as usual.
Presented with this mixed bag of customers, how can marketers adapt their messaging and marketing strategies to meet the customers where they are?
Maintain Marketing Spending for Long-Term Growth
It seems counterintuitive to maintain marketing and advertising during an economic downturn. In fact, many businesses deliberately slash marketing budgets first while funneling resources into production costs and short-term, measurable activations, such as digital and point-of-sale ads.
After all, aren't consumers spending less? Yes, but they also weigh their purchases more keenly and scrutinize brands.
The key to effective marketing during a recession is to lean more towards
a long-term brand-building strategy
rather than short-term activations. Since demand is lower during inflation, there's more value in building brand awareness long-term than in pushing current sales.
What does a long-term brand-building strategy look like?
Bolster trust in your brand
Create empathetic, reassuring messages around your brand
that bolster your customer's trust in your brand. One way to do this is to partner with or spotlight charities and causes that benefit the community. Show humanity, generosity and warmth.
For example, Coca-Cola
spotlighted the contribution of frontline responders
at the height of the Covid-19 pandemic in 2020. Their brand placement is subtle but reminds the consumer of the company's commitment to the community.
Adidas tackled a global issue that the fashion industry contributes to - plastic waste. In May 2022, the sportswear giant launched the
#RunForTheOceans campaign
in partnership with a nonprofit environmental organization. The initiative targeted cleaning up the oceans one plastic bottle at a time for every 10 minutes run by individuals.
The brand aligned itself with a long-term message around sustainability, pulling customers into participating in the positive movement.
Spending on brand awareness protects your share of voice within the market. In some cases, it may be cheaper to advertise during inflation since many brands advertise less.
Tailor your marketing to the customer's context
Tailor your marketing strategies to appeal to each customer segment your business serves.
You might serve conservative non-spenders and customers who are comfortably well-off and hardly change their spending habits in response to inflation. Your marketing strategy should address these differences.
The table below compares the different marketing strategies you would employ if you were marketing essential and discretionary products to various customer segments.
For example, Louis Vuitton's thousand-dollar bags are a discretionary item that the comfortably well-off would buy with no qualms. However, Louis Vuitton launched their keyring in 2009 to expand into the cautious buyer segment, which retailed at $300.
It was a signal to the customers with reduced purchasing power that there was a luxury option for their smaller budgets. When purchasing power was again on the uptick post-crisis, these customers bought bigger luxury items, increasing Louis Vuitton's sales.
We've all experienced the freemium pricing model and how it nurtures us as consumers down the funnel to eventually purchase more product features. Spot...
