Media plans must see Big Picture despite this cost crisis
Focus on your long-term value equation over short-term price cuts, or you risk eroding loyalty and inflicting lasting damage.
The cost of living crisis is now the national conversation.
Recent research from Bauer suggests that 96% of the population have already been affected. Worries about inflation are the highest they have been for thirty years, which means there are very few planners or marketers that have been through a time like this.
Beware of the law of averages
Consumer Confidence sat at minus-31 in March and has fallen even lower to minus-38 in April (the lowest levels since Oct/Nov 2020). But that is an average. The one thing we know about times of crisis is that existing extremities widen. For instance, there is a 58% difference in Consumer Confidence between men and women (-24 vs -38).
This is just one extreme example – there are countless others. Those in Northern Ireland are worried about paying for heating, Londoners are much less concerned. Baby Boomers are 83% more worried about paying their household bills than Gen Z.
Don’t assume everyone is equally affected. Think about difference across gender, age, social grade and location to identify whom and which locations could benefit most from your brand’s help.
Don’t make it a race to the bottom
During the last recession there was a 10% decrease in loyalty at supermarkets due to price promotions. This taught people to shop around. And according to WARC there was a 14% decrease in value of one over the counter pharmaceutical category when brands started a price-war. Brand loyalty in the category also reduced from 81% to 55%. But we know that the strongest brands (Brand Z Top 100) outperformed the S&P500 post the last recession to the tune of 41.8% vs -3.7%.
Brands will need to justify their benefits and build their brands even more than before in the battle to win discretionary spend. Whilst it will be tempting and undoubtedly necessary to drive short-term sales and keep your brand ‘ticking over’, focus on your long-term value equation over short-term price cuts, or you risk eroding loyalty and inflicting lasting damage. When seas are choppy, we all look for the lighthouse, in this case reliable brands, to guide us.
Help beyond just price
While price will be keenly important to every household, we should also remember that value for money is much more nuanced than simply price, and other factors, such as, quality, helpfulness, rewards, time etc. are all part of the value equation
How can you practically save families 36% within a transaction with your brand? Perhaps it could be a quicker and slicker user journey taking 36% less time and using 36% less electricity? Or how about a family and friends purchasing mechanic to allow them to take advantage of special offers and bulk buying? Or what about highlighting how your brand can maximise things for customers – the price+ benefit? There are ways beyond just price that your brand could help.
Consider how you play the ‘Pay Day Effect’
With 85% of workers paid monthly businesses typically see an upturn in sales around pay weeks. Many brands upweight media spends to capitalise. But as the cost-of-living crisis and accompanying media noise increases we could reasonably expect to see an amplification of this pattern as consumers hold back on ad hoc shopping sprees, pull back on discretionary spending and scale back large purchases.
Payday will become an ever more important date not only for consumers but for brands competing for consumer attention and budgets. So, will we see a battle as more brands look to upweight spending around key weeks with an increasingly cluttered market making media spend less efficient?
And should brands pile in or hold back spend? Tactics for brands to navigate this should differ depending on the customer purchase cycle, price point and objectives. There may be more value in avoiding pay weeks for certain categories and brands to cut through.
This is a national crisis. But as the adage goes, ‘in crisis there is opportunity’ and for media planners this gives us a great opportunity to help our brands see the bigger picture, stay close to the mood of the nation, and represent the many different voices of the national conversation.
Katy Harkness is strategy director at WPP media agency MediaCom UK
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