• by Maria Topken , August 17, 2022

Consumers and brands continue to deal with an uncertain economy. The current U.S. inflation rate is over 8%.  The consequence of inflation is, brands will see consumer shopping, spending, and loyalty change.  The brands that won during one of our more recent downturns, the Great Recession of 2008/2009, were those that continued advertising and focused on promoting the right message to the right people at the right times.  While the current unemployment rate is low, consumer behavior is beginning to shift, so it’s critical for brands to prepare now.

Targeting and audience segmenting is key.  Some consumers have already pulled back on spending, while others have not – yet.  Walmart’s grocery business is strong, but it has lost sales in general merchandise, as its customers are focusing on the essentials.  Consumers frequenting retailers like Macy’s have reported they are concerned about the economy, but their actions aren’t reflecting that sentiment. 

Brands will win by understanding who their customer is, staying in tune with their current behavior, and being nimble to pivot quickly.  Many brands have several different customer segments, each of whom require different messaging that resonates.  From a media perspective, narrow targeting is easy given the digital advertising options.

In 2008 we saw brand-switching. The key to preventing that loss is to understand why  customers shop with you.  Likely price isn’t the only component, but consumers are wise to tactics like brands that shrink packaging to maintain price.

Brands should focus on value & innovation to appeal to various consumer segments.  P&G’s Tide does this with its Tide Power Pods, Tide Regular Pods, and its Simply Tide Pods, all with different price points that provide consumer choice.  The voice of the customer is critical, and  research and monitoring your brand’s social channels in real time will help reveal insights into customer behavior.

What is your brand’s value proposition?  Why should consumers choose you?  What the customer wants and needs today may be different from a year ago, or even three months ago.   Brands must be careful not to focus just on deals; the deal-hunter is not brand loyal.  And brands must be able to articulate the value they provide.

Strong reward programs can help brands remain the customer’s brand of choice.  The key here is to make it easy to collect the rewards.  While rewards can be monetary, rewards can also be intangible such as providing private access to an event (for its best customers).  Sephora has allowed members to turn their points into charitable donations, which engages and provides a “good for the community” sentiment – the idea that customers can continue to help others even when money is tight.     

During the pandemic we saw buying online, delivery, and curbside pick-up become popular overnight for many brands.  Given the current economic situation, we’re now seeing more brands offering “buy now, pay later” options, as this tactic benefits both the consumer and the brand.

For brands to win during this time of uncertainty, it’s important to defend the share of voice.  Now is the time to understand customer segments and deliver meaningful messages.  Home in on customer wants and needs, as well as reminding customer segments why they love your brand.