SUMMARY:
- More brands are going to be raising prices because of supply chain issues.
- Consumers may have more cash, but they’re not stupid when it comes to paying higher prices.
- The rise in food prices is really hurting shoppers, and it’s expected to continue.
- Brands will find that the equity they thought they had is gone as consumers switch to lower-priced products.
- Marketers should focus on basics like ensuring the customer is delighted with the product.
Unilever announced that it was under considerable pressure to raise prices because the supply chain is constrained and rising costs. With that announcement, Unilever is giving consumers another reason to leave its brands and use private labels.
The media likes to talk about consumers who are flush with cash, but they are missing the point to a large extent. Just because they may have saved more money during the pandemic doesn’t mean they are willing to piss it away on higher-priced products.
According to NBC News, consumers saw price hikes for the third straight month in June, jumping 5.4 percent year over year as demand outweighs supply. From the price of gas to the grocery store, there’s no way around the fact that as the world reopens, we’ll be paying more to get our usual goods, including that morning cup of coffee. And it could get worse.
Food prices could rocket a further 14% by October, John Catsimatidis, the owner and CEO of New York City supermarket chain Gristedes, told Fox Business. We’re seeing anywhere from 10% to 14% by October 1,” Catsimatidis told Fox Business.
Consumers accustomed to years of low inflation are beginning to pay sharply higher prices for goods and services as the economy strains to rev back up and the pandemic wanes. As the country gradually returns to normal, a supply shortage is competing with an increased demand for goods and services. Inflation soared to 5.4% in June, according to the U.S. Bureau of Labor Statistics*, its highest rate since the 2008 financial crisis. How are consumers responding to this marked change in the cost of the essentials they need and non-essentials they want?
In the auto market, there are now 15 models for above MSRP as brands lose control of franchisees looking to rake in extra profits. Many auto insiders say now is not a good time to buy a car as even used car prices surge in double digits.
For marketers, this all means one thing; consumers are going to have to choose between brands that have increased prices and new brands, including private labels, that are less expensive; it’s going to be a great wakeup call to marketers who thought they had a lot of brand equity.
On top of the changing economy, consulting firms are reporting that CEOs want more accountability from marketing. While most brands are investing more in social media executives, they want to better connect social media marketing to bottom-line results.
It’s hard to understand why ANY marketing person would increase social media marketing budgets, but the hype has a loyal following. I’m not saying you don’t need social media am saying is that brands need social media to listen and for customer service, not for using platforms just for ads.
Brands should be focusing on two things right now. First, they need to analyze their supply chains and look for ways to make them more efficient. Second, there should be a focus on retaining customers as prices inevitably rise.
A lot of the consulting work I do has to do with analyzing marketing tactics to draw a straight line to ROI. It’s time-consuming, but it can be done. When I showed, for example, that a brand’s social media marketing strategy resulted in inferior metrics, the brand manager said, “but we’re getting more engagement.” This was true, but links to buy the product on their website had a 94% bounce rate. Instead, we experimented with some ads on Amazon.com, leading to an increase in orders on the site.
Going forward, marketers are going to have to get used to more accountability and answer questions like “are running more TV ads providing more customers?” and “can we do more with less?”. So many executives see marketing as an expense rather than investment because too many marketers have been spending money in the wrong places.
Frankly, I’m amazed at the stupidity of some people in marketing. They list all the skills people need to be successful but forget the most important things are listening to consumers and ensuring that they’re happy when they use the product. All the big data and copywriting skills are not going to lead to customer happiness. It’s time to get back to basics.
