Get to The Point with our monthly take on the hottest topics. This time, we explore what inflation means for culture, consumers and brands.
A coming together of global factors has given consumers another thing to add to their shopping list: inflation. Here we look at the implications and opportunities this presents for brands and how they can navigate these stormy waters.
At the time of writing, UK and US prices are rising at their fastest in a 40 year period. What were shopping list no-brainers are now starting to give people second thoughts, as they ponder what products – and what brands – they can actually afford to buy.
As the cultural conversation turns to tightening belts and purse strings, it’s tempting to jump to the conclusion that what brands can offer is as black and white as the barcode on their products – it’s just about keeping prices low. But not all brands can do a Coca-Cola and keep prices lower than they were a decade ago.
And anyhow, it’s not as simple as that. If you’re a brand, your response to inflation shouldn’t be about cost but value. We’re not talking value for money - but the value you offer to people in their lives over and above price.
Because though rational sacrifices will be made, we know that people don’t always make decisions rationally. Which explains why 71% of UK respondents said they did not plan to cut back on wellness spending (a space that just keeps on growing; see Kate Moss’s wellness brand Cosmoss for proof), why Nike’s sales are still increasing 8% year on year, and why beer sales across the board still soared this summer.
We explore what value means for consumers and how your brand can still offer value while avoiding an all-out price war.
What do we want from brands in these times? A recent poll by the Institute of Practitioners in Advertising (IPA)
shows that it’s not just about keeping prices fair (which 57% of respondents wanted) but also about offering more value on promotions (33%) and rewarding loyalty too (30%). In other words, people are looking for brands to demonstrate their worth. They don’t just want value – but want to feel valued too.
Reward schemes are a classic way of achieving that. Both McDonald’s and Burger King’s recent rewards app launches point to an understanding that they have to make consumers feel loved in hard times. The McDonald’s app lets burger-lovers earn points for every penny spent for free menu items, and for a brand that’s always been about easy-access joy, it makes sense.
But it's not enough to just offer an extra something with each purchase - as E.ON found out when they sent their customers socks to keep warm in the face of rising bills - causing discontent and Twitter backlash. As with any brand decision, proving value is about reading the room and being relevant.
In the race to prove value to customers, brands can often get caught up and churn out overly earnest comms, all set to the same, slow piano soundtrack. But by trying to let us know you get it more than other brands, you sound exactly like... all other brands. So what else can you do?
You can start by making sure your value is well defined (and well executed). Mint Mobile, a cellular network in the US, position themselves as the value-oriented, disruptive consumer-champion in an industry of out-of-touch corporate giants, all delivered in a refreshingly knowing tone of voice. So, when they talk directly about price, (like in a recent ad campaign, fronted by megastar and part owner Ryan Reynolds), it’s still true to their brand.
Alternatively, you can offer something that lets you create value in a completely new way – like UK value supermarket Iceland did when they began offering affordable loans to help with the weekly shop.
Or, when you can’t beat them, join them. Borrow value from another brand with a good old-fashioned collab. The recent Gucci x Adidas partnership brings a touch of credibility, accessibility and creativity to previously out-of-reach luxury icons.
Whichever you choose, one thing’s certain - it’s got to be authentic to you and your brand positioning. Could a more premium supermarket offer microloans without feeling disingenuous? Overextend, or choose the wrong partner, and you could end up eroding your brand’s equity. Whatever the opposite of a halo effect is, that’s what this could prove to be.
It’s not about cost, but value.
Value does not mean price. It’s the meaning you’ve built up over time.
Consumers want value, but they want to feel valued too.
Value is best created in consumers' minds when it is linked to what your brand means to them
Connected and consistent experiences will help the value you offer influence consumer loyalty and preference