When you think of inflation, you probably cringe a little, especially if you work in the marketing industry. However, marketing and inflation are not necessarily adversaries.
They can work together to help you and your team develop campaigns that add value when consumer purchasing power seems limited. Brace yourself, but there are more marketing opportunities during an inflationary period.
You may be asking yourself how that is possible. It’s fairly straightforward. Let’s look at inflation in marketing and how it impacts business both positively and negatively. Take a moment to review the steps to combat the adverse effects on your business.
Key Takeaways:
- While consumers purchase fewer goods during inflationary periods, savvy marketers launch campaigns that drive value on items considered a want versus a need.
- Inflation impacts consumer buying power, advertising costs, and how consumers prioritize spending on necessities and low-cost nonessentials.
- To combat the negative effects of inflation, you must understand inflation and how that changes purchasing behaviors and establish a unique value position for your brand.
- Whether you primarily run digital marketing campaigns or publish printed ads, opt for audience targeting, known as retargeting. Use insights to send valuable ads to target markets.
What Is Inflation in Marketing?
Inflation is one of the immediate economic marketing factors impacting customers’ buying power. It represents how prices increase on goods and services and consumers’ purchasing ability.
Also, tax rates on real capital gains increases. That shrinks the dollar’s purchasing power, making consumers purchase fewer goods. Prices go up, and profits and revenue go down. Until stability returns, the economy slows.
It also affects the stock market. However, volumes of articles could (and have been) written about that subject.
While it does impact marketing and inflation, let’s not get bogged down in the wealth of information this article could cover on stock market fluctuations (the video below can sum some of that up for you if you’re interested).
Impact of Inflation on Marketing and Advertising Costs
When you think of consumer buying power, you probably think of the end customer, but what about your company’s purchasing power? Or that of your competition?
Advertising costs are increasing along with the price of goods. While consumer price inflation has gone up 7.9%, currently, industry experts expect media buying costs in the U.S. to rise to 5.4% throughout the rest of 2022.
Television media has been hit the hardest with a nearly 15% increase to do demand issues. With the rise of streaming services, TV ads are less valuable than in years before streaming services.
Interestingly, while inflation increased costs for TV and digital marketing channels, print ads for magazines and newspapers have been the least impacted by this inflationary period.
Impact of Inflation on Consumer Buying Decisions
During an inflationary period, consumers must now choose what goods and services are necessary and how they prioritize them. They sacrifice things they want or luxury items they need by either wait to buy or purchasing the downgraded version.
They focus more on the essentials and do less impulse buying. Here are the most significant ways inflation impacts consumer buying decisions:
- Only 23% of consumers in the U.S. say they are unaffected by inflation
- Approximately 90% of Americans do worry about inflation
- Around 80% have or plan to reduce essential spending on products throughout the rest of the year
- Absence of a stimulus drastically changing discretionary spending
- Less than one-fourth of the population has not changed their buying habits
3 Steps to Combat the Inflation Effect on Marketing
When there is an economic downturn, brands generally deprioritize advertising spending and often cut marketing budgets. However, experts strongly urge against this, touting that it is not a profitable strategy.
During the Great Recession of 2008 – the last time there was an economic downturn resulting in an inflationary period – the brands that remained successful never stopped advertising.
Even though the cost of advertising had risen, they could combat the inflation effect on advertising costs with marketing. Here’s how:
1. Understand Changing Purchase Behaviors
Evaluating changing consumer buying patterns requires insights available only with automation tools that enable your teams to determine the best strategies. For example, a CRM (customer relationship management) platform can help you track vital metrics on customer purchasing behavior.
These insights will help you glean data so they can develop the most relevant marketing strategies based on changing purchasing behavior.
Also, consider what other purchasing behaviors corporations are making. Even if you don’t sell B2B, knowing how other businesses cater to buying patterns of the consumers and improve operations will give you a competitive edge essential in a downed economy.
As you can see, digital transformation and automation are how CEOs invest their corporate spending to ensure a strong financial future.
2. Establish Your Brand’s Unique Value Position
Distinguishing your brand from competitors shows consumers why they should choose your brand’s product or services over any other. If possible, offer something at distinct ends of the price spectrum. If your brand can’t compete on pricing, you can make further adjustments to meet customer demands, like launching loyalty or rewards programs, running promotions, and offering bundles.
3. Opt for Audience Targeting Ads (for print and digital media)
When consumer purchasing power is down, lead targeting should be your brand’s priority. Reach customers you know are ready to buy using targeting ads via social media or another media channel.
Whether you primarily run digital marketing campaigns or publish printed ads, opt for audience targeting, known as retargeting.
Use insights to send valuable ads to target markets using demographical data, purchasing habits, and tracking search patterns. It’s effective for both print and digital ads.
Working Together to Develop Strategies for Marketing and Inflation
Even though inflation is at an all-time high, people still spend money. Working with us at Share Moving Media can help get your organization through this economic downturn.
We can help you develop strategies that will help you combat inflation and encourage customers to choose your brand above the competition.
Contact us today at Share Moving Media to boost your visibility online and off during the current inflationary period.