A recent study by Reach Solutions in the UK illustrates this point when looking at the likely impact of economic uncertainty on quality of life by income bracket; unsurprisingly, it is those in the 20-40K bracket who are experiencing a deeper level of emotional impact when you compare 2022 with 2020. Furthermore, while most people (61%) are optimistic they will still be able to afford the essentials over the coming year, more than a third (38%) of shoppers say they have already started to swap their tried and trusted brands for supermarket value ranges or cheaper alternatives.
A similar picture can be seen in the US, with Forrester data highlighting that only 35% of Gen Z consumers are confident about how to manage finances in an economic downturn, compared to 49% of Gen X. Spending behaviour is already prioritised towards essentials, with discretionary spending on items such as leisure travel, cosmetics, and fitness memberships forecast to see the biggest decline
While this data might suggest some sectors are more at risk than others, the universal nature of this current economic crisis means that every sector in every market around the world will need to adapt their plans to meet the needs of a more financially squeezed consumer. Offering consumers ‘good value’ will play a key part in coming out on top in this period of flux, but it is by no means the only lever at brands’ disposal during this time.
Take the beauty market as an example. The Lipstick effect has long been cited as the category’s leading economic indicator - the concept being that in times of a recession and other economic stresses, women will indulge in discretionary purchases that provide an emotional uplift without breaking the budget. Lipstick fits the brief perfectly, both by virtue of being a relatively affordable luxury, but also given the transformational impact that it can have on the wearer – as beauty entrepreneur Poppy King puts it “Give a woman the right lipstick and she can conquer the world.”
This makes complete sense when you consider the confidence that comes from feeling your best – but does this ‘feel-good factor’ begin and end with the beauty sector? Can brands in other less glamorous sectors achieve the same connection to secure their place on consumers’ short-list? We believe they can, by adopting the same consumer-centric approach to their marketing.
Think cohorts not demographics
The term "cohort" refers to specific experiences, events or other factors shared by a group of consumers. While they will often share a similar demographic profile, cohorts are the things that separate specific groups of people even within their demographic groupings. So where a demographic targeting approach for a foundation might purely look at women, in the 25-50 age bracket, a cohort based approach would consider what determines their attitudes and behaviour within the category. There are many advantages to this approach – not only does it ensure a more inclusive targeting approach as we move beyond gender / age, it also allows us to understand them as people, what motivates their purchasing behaviour, and to use that insight to inform our strategic approach.
Create a flowing omni-channel experience
The rules of marketing have changed dramatically in the digital age that we now live in, with the consumer enjoying greater control over their purchasing power, which includes how they are marketed to. Purchasing journeys are no longer as predictable & linear, with final sales conversion as likely to be prompted through a social video as a sales consultant in store. Understanding the way people use channels and screens and platforms and apps alongside traditional channels is fundamental to brands’ success, not just in terms of reaching audiences, but engaging them on their terms. We refer to this as Flow, building a communication pathway that meets people ‘where they are’, and learning and optimising the plan as audience flow grows and evolves.
Speak honestly and with purpose
Brands that highlight their values & purpose in their communications are far more likely to build stronger connections with consumers, particularly younger audiences, with 60% of 16- 24 year-olds claiming to notice ads more if they deal with important issues. Adopting a values led approach is not without risk however, as people have very clear expectations about what they want from brands operating in this space. A disingenuous brand, claiming to be something that it isn’t risks far more damage than any possible gain could warrant. The dangers of green-washing are well known, in terms of undermining a brand’s image and eroding consumer trust – not to mention the adverse environmental impact and legal implications if a brand to have misled the public.
Build a community
There is huge value in creating a community around your brand, and this is employed to great effect in the beauty sector. Clearly there is a value exchange that brands must adhere to in exchange for consumers’ time and attention – but done well, the opportunity for members to discuss your content, share advice, and help each other make the most of your products goes way beyond their transactional value as customers - it is the potential for them to become loyal customers, and advocate on the brand’s behalf that carries the most benefit in the long-term. The world of social influence has its place within community building, but it should by no means be the only outlet available for consumers to feel good about their purchases.
As the effects of rising inflation alongside other economic pressures continue to erode consumer confidence, brands will need to give consumers ever more reasons to ensure their loyalty or encourage trial. Adopting a consumer centric approach will ensure that brands reflect their consumers’ reality and that marketing campaigns are designed around consumers needs and interests. It requires a prioritization of customers over any other factor, using a blend of intuition, common sense, overlaid with solid data about customer behaviour. In short, it involves thinking about consumers as people not prospects – what’s not to feel good about that?