The recent economic downturn has forced many brands to rethink their marketing strategy. Now more than ever, marketers need to be conscious of communicating the value brands bring to customers. A simple price increase or weight reduction (shrinkflation) may damage customer relations.
Customers often have a value equation in their heads when they are shopping. The customer-perceived value equation has two variables: 1) perception of the value as influenced by its practical, emotional, and social benefits. 2) perception of the cost as a combination of time, effort, and money. A brand to succeed needs to offer customers value that outweighs its costs.
In response to price increases, consumers can either move from premium to normal tiers, reduce their purchases, extend their usage, or explore alternatives. In these circumstances, trust has a significant impact on how customers perceive value and make decisions.
As a result, understanding the customers is crucial when creating a marketing narrative for a brand. Marketers need to speak with customers directly to understand their problems and how their attitudes and behaviors are shifting in reaction to price inflation.
Cash-strapped customers are increasingly seeking value and affordability. The strategy should be targeted and personalized rather than broad to create a sense of cost-effectiveness and value. One way to drive value perception is to offer personalized reward vouchers to customers who make fewer than a certain number of purchases.
For customers with limited cash, businesses can temporarily reduce the price to make small pack sizes more affordable. At the same time the cash-rich customers, should encourage multi-unit purchases ahead of the inevitable next price hike.
Customers who previously enjoyed the ease of purchasing a product, extras, and related services in one transaction may now ask for a detailed price breakdown. Your more price-conscious customers will appreciate the opportunity to pick and choose the features and services they need.
It’s a constant balancing act between communicating the value of your product and not scaring off potential customers. No one can predict how inflation will play out, but it is becoming evident that consumer behavior changes and economic uncertainty will transform the retail landscape.