Adapting Your Marketing Through The Current Climate.
Wednesday, September 7, 2022
Every day you can guarantee that news around the economy, borrowing and the current cost of living crisis will feature in some way across media outlets.
There are some glimmers of hope on the horizon as the government looks to be gearing up to tackle the financial issues that the UK faces. But there’s still a lot of questions unanswered and that’s leading to a lot of consumer (and brand) uncertainty.
Businesses can’t afford to sit and wait for those glimmers of hope to materialise, but it’s also difficult to know what to do in the face of rising inflation and declining consumer confidence.
So where do we go from here?
The current state of play.
I’m not going to claim that I magically have all of the answers for you, but I am going to share some of the research that I’ve conducted recently to inform our strategies. Let’s start with the current state of play.
The spiralling cost of living is set to impact the lowest income households the most.
According to the Institute for Government, “poorer households are currently experiencing higher inflation – on average – than better-off households”.
If your business has a higher proportion of lower income consumers then the above is likely to affect you. However, if you’re targeting higher income consumers then you’re likely to see purchase behaviour remain stable (or even increase) – that’s according to a recent Saks Pulse Report. Saks also report that we’re likely to see more investment in wellness/fitness from higher income individuals.
Buy now, pay later services are likely to increase in popularity.
A recent insights survey produced by McKinsey in June 2022 found that Gen X, Millennials and Gen Z consumers may look towards buy now, pay later services to help spread the cost of their purchases. A point to note on this would be the significant losses that companies such as Klarna are experiencing at the moment. Those losses might see lending criteria become more stringent.
Consumers plan to spend more on groceries and fuel.
The McKinsey report cited above also highlights the fact that consumers anticipate spending more on fuel and groceries over the coming months. This is likely more to do with the actual price per unit of fuel/grocery products increasing.
More than two-thirds of consumers are likely to switch brands/try private labels.
As costs rise, consumer loyalty may begin to decrease – particularly if you’re competing with brands that are able to beat you on price. Consumers are also beginning to explore private label brands.
Consumers are switching to ‘discounter’ brands.
This feeds into the above, but with rising prices many consumers are opting to switch to brands that can offer them tangible savings on their purchases.
In the UK, pricing and value for money encourage brand switching.
In the current economy, consumers are searching for new brands to purchase from based on better prices and value for money. Stock levels also play into this, but the big driver appears to be value and pricing. This is particularly prevalent in Boomers & Gen X.
Gen Z are more likely to support local and consider sustainability/ethics.
In contrast to other age groups, Gen Z consumers seem to be less focused on price/value and more on supporting local businesses. They’re also more likely to be led by a brand’s sustainability policies, values and treatment of employees.
Consumers are more likely to buy from/switch to brands they know and trust.
This is a pretty obvious one, but as purse strings are tightened, consumers are going to be more selective with just who they trust with their money. This is going to be a challenge for lesser known brands.
Revolut’s August spend data shows 18-34 & 55+ have the largest increases in spend YoY.
According to data shared from Revolut in their debit card spending report, spend is up across all age groups in the UK for August YoY, but the highest increases have come from 18-34 and 55+ year olds.
How brands can use this information
There’s a lot more data out there on consumer trends, but based on the above, here are 6 ways in which I believe brands can adapt their marketing strategy to weather the coming months.
Adopt an agile approach to budgets.
This isn’t connected to the above as such, but I thought it’d be a good one to start on. The market is going to change rapidly as things continue to play out. Speaking from my own experience, the brands that fared the best during the turmoil of 2020 (and 2021 to an extent) were the ones that were agile with budgets and marketing activity.
Focus on building your brand.
I mentioned above that consumers are now more likely to buy from brands that they know and trust. This is going to be particularly true for more considered purchases. Building a recognisable, trustworthy, authoritative brand is going to be key. From a channel perspective, you might focus on:
Paid Search / Performance Max – advertising across not just the search network but display, video and shopping should help to get your brand in front of more customers to build familiarity
Content marketing – consumers are going to be researching around their purchases – content marketing gives you the chance to answer their questions and position you as trustworthy/authoritative
Paid social – Whilst it’s getting more difficult to prove direct revenue impact of paid social, it still undoubtedly has an impact on brand (which you can measure through brand searches/sentiment across social)
Digital PR – amplifying your content and capitalising on reactive opportunities through digital PR is a tried and tested way of getting consumers familiar with your brand
Adapt your pricing/value messaging.
Hopefully the above research showed just how price & value focused consumers are becoming in the current market. I’m not going to recommend slashing prices or adding silly discounts – that’s just a race to the bottom and would probably harm your brand over time. Here are a few things that you could opt to do:
Partner with a BNPL (buy now pay later) provider and include this in messaging – we’re very likely to see the criteria for BNPL lending tighten, but that shouldn’t stop you from offering this to your customers
Value – before reducing RRPs, value messaging is where your head should be at. What tangible impact does your product have that competitors’ products might not?
Risk free/de-risking messaging – an age old tactic used by copywriters for years, risk free messaging can be an effective way of getting around objections to price. Money-back guarantees are bold but can work well if you’re 100% confident in your product, but they are a risk. The other option is to de-risk a purchase slightly – offering some money back or a similar compromise is another potential option
Changes in messaging should be consistent across Paid/Organic Search, Paid/Organic Social, Content & PR as well as on your site itself. Test your price led messaging using channels such as paid search and then use the strongest performing message across your marketing. It goes without saying that you should probably re-test this regularly too.
A caveat to this would be for those targeting higher income consumers (top 15%). You’re unlikely to see aggressive price-led switching from your users, so I’d avoid any large scale changes to pricing. Instead, focus on continuing to build your brand image to stand out against wider competitors.
Highlight your brand’s commitment to CSR and sustainability.
CSR and sustainability are features that consumers will place some degree of importance on when deciding who to purchase from. Research suggests that Gen Z will over index on this too.
Committing to CSR and sustainability has more benefits than just helping to attract users in the short term – it’s a sign of a progressive, ethical brand. That’s going to help improve consumer trust and sentiment regardless of the situation. Highlight the ways in which your brand acts sustainably, as well as the ways in which you give back.
Roll out referral schemes.
Another insight from the research above was that consumers might look to recommendations from friends/family. With that in mind, you might want to consider referral schemes as part of your strategy. Think about your typical CAC/accepted CAC and use this to decide how much you’d be willing to offer as part of a referral scheme.
But it’s not just current customers you could offer this to. Why not use retargeting to focus on people that are already familiar with your brand/close to purchase and offer them a discount off their purchase if they refer someone too? They might find a friend who would also be interested in the product and split the whole total purchase 50/50 (similar to two people investing in a BOGOF offer).
Consider audience led bid adjustments.
If you’re running paid advertising activity, you might also want to consider using bid adjustments based on audience types. If your business has users in the 18-45 category, for example, you might opt to slightly upweight bids for 18-24 year olds based on the spending data seen in Revolut’s most recent report.
Obviously this will need to be tested and updated over time as it will change by sector, but using audience insights to adjust your bids could be a good way of getting more for your advertising spend.
The wrap up.
We’re heading into some uncertain times from an economical and sociological point of view, and there’s no way we can completely predict what might unfold over the coming months/years.
What we can do is control how we act/react as businesses in the face of those tough times. Hopefully the above research and recommendations have provided food for thought as you prepare to enter the final quarter of 2022.
As always, if you’d like to chat to myself or a member of the team about the upcoming market changes and how we’re helping clients to navigate them then please get in touch.