The Rising Tide of Inflation Pricing
The Rising Tide of Inflation Pricing
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Just like a storm looming on the horizon, inflation is a force of nature that brands simply can’t escape—causing many to raise their prices just to stay afloat. But while it’s impossible to control the forecast, we can always mitigate potential damage through careful planning and preparation.
Since the start of 2022, market bubbles have been brewing across several verticals in response to pandemic-related labor shortages—from food and medicine to gasoline, utilities and beyond. This often means supply chain issues and pricing increases that can lead to significant drops in profit margin. As inflation continues to expand across markets, many companies are at risk of losing customers to a cheaper alternative. Or worse, becoming an unviable purchase option.
With this in mind, here are four tips to help brace your brand for the next impending wave of inflation while keeping your consumer relationships intact.
1. Be Transparent
With grocery prices 6.4% higher than they were in late 2020, it’s critical to let consumers know why this is the case. In an effort to cover up their increasing costs, brands will often resort to using cheaper packaging, decreasing their item counts, and other money-saving methods. However, what many of these companies don’t realize is that today’s consumers see right through these tactics—with recent studies from Stackla and Sprout Social indicating that 86% of Americans agree transparency and authenticity are more important than ever before.
[From Rising grocery prices force customers to buy less, change brands and switch stores, December 14, 2021]
[From The Consumer Content Report: Influence in the Digital Age, January 2022]
[From #BrandsGetReal: Social media & the evolution of transparency, April 2018]
2. Consider Using Coupons
In the last three months, 50% of our respondents have used a coupon or discount service. And with a 65% increase in discount store spending, such as Aldi and Dollar General, consumers are prioritizing savings on groceries and at-home essentials for home. By offering coupons to existing customers, you can fight back against inflation by promoting customer loyalty while expanding your audience.
3. Keep It Real
A recent study by Accenture shows that half of consumers agree that the pandemic has made them redefine what matters most in their lives. While it may not be as easy to define “quality of life” as it used to be, there is now a unique opportunity to connect with consumers on a deeper level. By identifying their most pressing needs and providing relevant support when they need it most, brands can become a reliable source during these uncertain times.
[From Life Reimagined: Mapping the motivations that matter for today’s consumers, 2021]
4. Expand Your Target
Adding to your audience, especially with higher spenders, can help brands offset the potential loss of existing customers. According to the EY Future Consumer Index, 61% of consumers became more willing to buy white label products. To help counter this, brands need to engage with consumers on a more personal level. Whether it’s targeting specific consumers based on their interests or values, focusing on audience growth can be an effective strategy for the short and long-term.
[From The Consumer Content Report: Influence in the Digital Age, January 2022]
Overcoming Inflation in 2022 and Beyond
While there are immediate strategies to help your brand weather the storm of inflation, it’s clear that deeply understanding your consumers is the key to overcoming market volatility and retaining brand loyalty. From utilizing the latest solutions in dynamic segmentation, diving deeper into consumer personas or investing in real-time market research, finding new ways to connect with audiences will always lead to the best business outcomes—no matter what comes next.