What does digital marketing during inflation have in common with a triathlon?
In both, you’re playing to your strengths, mitigating your weak points and budgeting your fuel or resources so that you can pull through.
Inflation, the general increase in prices and the decline of purchasing power, negatively affects marketing. Specifically, when there’s inflation, marketers are gun-shy about increasing their marketing spend since their customers are buying less.
However, contrary to this knee-jerk reflex of reducing marketing activity in the face of inflation, businesses should consider each inflationary period as a rich vein of innovation and creative marketing.
Going back to the triathlon analogy, you wouldn’t entirely take yourself out of the race. Instead, you would pace yourself until you reach your final sprint.
What we’re saying is that contrary to popular belief, inflationary periods, no matter how long, can still facilitate tremendous growth for your business.
The caveat is that you must optimize your digital marketing strategy to offer customers solutions for inflation-based challenges.
We’ll break down marketing strategies that can help you:
- Cast your net marketing wider to access underserved markets
- Optimize your digital marketing strategy for various market segments
- Keep your customers’ interest in your brand
Restructure Your Product Mix to Maximize Marketing Spend
Consumers are unhappy when brands raise their prices because they see this as passing the cost burden onto them. Worse yet is shrinkflation, the quiet reduction of package sizes without lowering prices.
Reevaluating your product mix is a great way to make these cost savings on the product and marketing without burdening your customer.
What does this look like in practice?
- The 80-20 rule probably applies to your product offering. Identify the 20% of products yielding 80% of the output and focus the marketing spend on them. Back burner the rest.
- During an ongoing inflationary period, you want to focus your marketing message to the masses around affordability, so keep prices steady.
- Leverage the upmarket segment of your customer base. The top 5% income bracket hardly changes their spending habits because of inflation. In fact, they expect prices to go up. Choose a product in your inventory that can be marketed as a marker of success and innovation and charge a premium for it.
Kraft Heinz exemplified the last tip by introducing a more expensive, chef-inspired line of sauces, the Heinz 57 Collection, to elevate their customers’ culinary experience.
Shifting focus towards a global marketing strategy can open up avenues for growth while your stronghold undergoes economic disruption and cannot yield the return you’re used to.
Marketing globally provides:
- New revenue growth opportunities
- Increased awareness of your brand and credibility
- Insights into where your product can improve
Lego, the toy company, is a stellar example of this. Lego limped into the 2008 financial crisis, mostly servicing the North American market, burdened with debt and an overloaded product portfolio.
When the toy manufacturer refocused on marketing their classic products in European and Asian markets, their sales rose by a third in 2009 despite the economic downturn.
With the reach of digital marketing, targeting the global market has never been easier.
Optimizing your marketing strategy globally isn’t so much about pushing new products; rather it’s repackaging your existing product for a new demographic.
- If you’re in e-commerce, Shopify and similar platforms can yield analytics on the locations where you have the biggest draw. This is a great place to start your new market research.
- For digital marketing campaigns, whether pay-per-click, email marketing, or content marketing, tools like Google Analytics, HubSpot, Semrush, and others can give insight into your untapped or under-serviced markets.
- Localize your differentiation and branding to fit the needs and culture of the segment you’re serving.
Localization can be as nuanced as McDonald’s adding cultural foods to their menu or as simple as having your marketing copy translated as Starbucks does in the US and Canada.
Differentiate and Double Down on Innovation
One important thing to note about consumers in ongoing inflation is that they’re cautious about spending, not unwilling to buy.
Giving them an innovative product can entice them to shift their perspective of your brand from expendable expense to permissible treat or essential purchase.
Apple makes a case for investing in innovation as a way to secure market share. The tech giant released the iPod in 2001 and launched iTunes in 2003, soon after the Dot-com bubble burst. Apple released the iPhone in 2007 on the cusp of the Great Recession and followed that up with the iPad in 2009.
They then heavily marketed these products aspirationally through product placement. Shows and characters that people loved used Apple products, solidifying the association between Apple and status.
The lesson here is that even in an economic downturn, optimizing your product and marketing to the needs of the market can still yield growth.
What can small businesses do without million-dollar marketing budgets?
- Push simple, affordable solutions. Zoom responded to the world’s urgent need for video meetings by offering a reasonable free option and an affordable, easy-to-understand pricing model—beating out its competitors.
- Kill the zombie products. Cut out products that underperform and bog down your R&D and marketing departments. Innovation packs a bigger punch when focused on a few great products rather than a ton of mediocre products. Your marketing spend will go further with the few rather than the many. For instance, Adobe jettisoned its packaged software in favor of SaaS, which tripled its revenue in a decade.
- Make sure your product innovation and improvements are customer-centric. Sharing with your customer the product developments centered on them means they will be invested. Hotjar, the user behavior analysis tool, grew from €1 million to €3 million average rates of return in a year partly because of their transparency and customer-centric approach to innovation.
Key Takeaways for Digital Marketing During Continued Inflation
Inflation is inevitable and can be long-lasting. It will impact your customer’s buying power, but that doesn’t mean you should cut back on marketing.
An economic downturn is the perfect time to return to the drawing board. Focus on growing the market share of your strongest products that will make it to consumers’ essential list.
Cast your digital marketing net wide into underserved markets, which may yield the growth you need to weather ongoing inflation.
Lastly, tailor the products and the marketing to the customer’s needs. They may be more cautious in spending, but this approach will land you in their must-haves.