Inflation Marketing Strategy – how to prepare for uncertainty?
Current inflation trends show a significant increase, with the impact of the protracted war in Ukraine now rippling through covid-ravaged economies around the world.
Goldman Sachs experts predict a 30% economic decline in the US, 40% in the euro area and 45% in the UK by 2023.
The future, as so often, is uncertain; the only thing that is constant is change. As marketers, how can we respond to current challenges and build an inflation-proof marketing strategy?
In this blog article, we provide useful tips to get you started.
How do customers and clients react to inflation expectations?
According to recently published Google data, shoppers show some typical behavioural patterns in relation to inflation expectations, or outright inflation panics.
In short, consumers react to inflationary expectations mainly by thinking ahead, hoarding – or the opposite, by cutting back on consumption – and looking for bargains.
The first typical behaviour is the new type of online searches triggered by inflation panics. As shoppers expect prices to rise, customer groups that previously ignored promotions have also turned to auspicious value for money offers – with a 30% increase in the volume of Google searches on topics such as “buy one, get one free” –, and are more open to loyalty schemes (where these offer tangible discounts).
The imminent economic stagnation or downturn, which is now being referred to as a fact in many areas, is prompting a reaction not only from consumers, but also from companies that offer their products or services for sale on the market and wish to generate revenue from them. The comfortable marketing activities of the past decades and the ability to plan one or more years ahead has been reduced to a few months. At the moment, most corporate marketers cannot see more than a few months ahead, as there are many uncertainties and open questions about the market trends for the near future.
As marketers, how can we prepare for the period ahead?
The future is uncertain. As a responsible marketer, we can prepare for the period ahead by considering different scenarios and developing action plans that are appropriate to each scenario, and by ensuring the highest degree of flexibility and responsiveness.
We must also be prepared for the fact that if the number of advertisers competing for a possibly reduced demand is unchanged compared to the past, marketing costs will increase significantly (e.g. in the case of Google search advertising, the higher the number of advertisers competing for a lower number of searches, the more the cost per click will increase). We cannot react to this situation by cutting our online advertising budget!
If we advertise online, we need to have a professional website – because a good website that delivers a good experience and works well will help us achieve our marketing goals and will also reduce our cost per clicks – and accurate website metrics!
Ask yourself the following questions:
- What changes and external events are you expecting?
- How should you react if a certain event occurs?
- What can you do now to prepare for the future?
If you offer products for sale
If you are offering a long-established, stable portfolio of products for sale, it is high time to consider whether you want to maintain the entire portfolio for the foreseeable future.
What are our best-selling, most profitable products?
What are your less popular, less profitable products?
How should you enforce the inevitable increase in selling price without significant customer loss?
If justified, you can narrow your product portfolio or develop new products to suit the new situation.
Is domestic demand falling? Target foreign markets!
An expected recession inevitably goes hand in hand with a possible fall in demand.
Think realistically about how competitive your product is compared to competing products.
Are there likely to be any changes at home that could cause a reduction in demand for your product?
Is your product suitable for foreign markets or is it specifically designed for the Hungarian market?
Is your product digital? Great! It will be even easier to sell abroad.
You should already start thinking about entering the foreign market. Choosing the right target market depends on a number of factors, and a specialised agency can help you find the right target market (WebMa has the knowledge and Google international growth partner agency certification).
Focus on marketing activities with a good return on investment!
The biggest pitfall of a recessionary economic situation is to plan for survival with a so-called cost-cutting approach. What is the very first item to be cut? Sales and marketing costs, of course. But this is effectively digging the grave of your company.
Let’s think about it: if you don’t advertise the product to the right target audience (marketing) and you fire the salesperson who sells directly to customers, don’t you zero out the revenue side in the same way?
The key to a company’s survival lies not in cost cutting, but in thoughtful, professional planning and implementation.
Start business planning not with a cost-focused approach, but with a return on investment (ROI) focused approach!
Do you know which of your marketing activities are currently generating a positive return (i.e. more revenue or profit than the amount invested) and which are not? Start by making your marketing channels and sales operations measurable!
Don’t rely on one marketing channel!
We often find that a particular customer is using only one online marketing channel, whether it’s working well or not.
This is a huge exposure! Don’t be afraid to research and try new online marketing channels long before something happens to your tried and tested marketing channel that has worked for a long time (e.g. your Meta ads are blocked).
Measure your marketing results accurately!
Data-data-data-data! Measurement data is needed for competent marketing planning and evaluation.
The expected uncertain economic situation provides a great opportunity to focus on marketing activities that pay off, rather than the comfortable marketing activities of the past.
Have we been advertising on TV so far? Switch to more measurable, optimisable and assessable marketing channels. At WebMa, we recommend, as a matter of course, online advertising solutions that meet all of the above criteria: they are well-designed, measurable and evaluable.
Don’t forget about the sophisticated solutions that can be used to achieve success, such as the value-based bidding strategies available in Google ads, which support your marketing objectives (e.g. gaining loyal customers, achieving a target return on investment – target-roas).
If you haven’t already started, pay close attention to the collection of 1st party data (building your own database of customers and enquirers) to make you less vulnerable to online advertising systems and be ready for 2024, when third-party cookies will be phased out in the Chrome browser.
Automate what you can!
As wage costs rise, it makes sense to spend valuable human resources on what is necessary. For routine tasks that can be automated, such as sending out newsletters and managing orders, it is worth using one of the marketing automation tools.
Focus on your loyal customers!
In an uncertain economy, your loyal customers and clients are even more valued. It is an old marketing saying that it costs 10 times more to acquire a new customer or client than to retain an existing one.
A customer who has been buying from you for years and is loyal to you could be the key to your survival for years to come.
It is useless to build the most effective strategy for attracting new customers if your product or service is not good enough to make them make further purchases once they have bought from you, i.e. become loyal customers. And in the case of service, customers who sign up with your company should still be your customers after one or two years.
Even if you are successful in attracting new customers, if you cannot retain them in the long term, you will not be profitable.
The same applies if you already have loyal customers but you can’t attract new ones, which is a barrier to growth.
Don’t sell at a loss!
This is easy to say, but much harder to do. When market demand falls, supply prices fall. All market parties try to sell their products cheaper in order to gain a competitive advantage over their competitors.
But let’s think about it: if you are operating at a loss, does that help your medium and long-term survival? It doesn’t, does it? Instead of competing on price, try to differentiate yourself from your competitors, offer better, more, different or higher quality than the rest!
It can always be cheaper, but if you offer real value, a quality product or service, or something completely different from your competitors and exactly what your customers need, that’s the key to long-term success.
Examine why those who didn’t buy from you didn’t do so. Understanding the reasons can help you find a solution. Was your price too high? Was your value proposition not specific enough? Were they put off by something else?
Advertise where your customers are
If you run a physical shop, it costs a lot of overheads (renting premises, payroll, etc.).
As your stock is already available and in the last couple of years internet users have become more comfortable and willing to shop online, it makes sense to start a webshop.
Whether it’s B2C sales or B2B sales, you can certainly reach your target audience in the online space. Invest the time and energy to understand the potential of online marketing. An agency that specializes on online marketing will be happy to answer any questions you may have.
Summary
Today, only one thing is certain, and that is change. Think ahead, prepare for every possibility, plan for action and react quickly to any negative processes.
If you don’t start preparing in time, you will almost certainly be among the losers of the recession, while with flexibility, creativity, professional planning and ingenuity you can be among the winners.