With the world facing painful cost-of-living issues, WARC Asia Editor Rica Facundo examines how marketers can deal with inflation, growth and other multiple disruptive forces simultaneously.
Doesn’t life feel more expensive lately?
The outlook varies per market with some countries in Asia, such as the Philippines and India, more familiar with dealing with inflationary pressures.
Starbucks Philippines increased the price of drinks by PHP 5 due to rising sugar prices. In Indonesia, the price of instant noodles (a staple for low-income consumers), may soon triple. “Lunchflation” is hitting more developed markets from Singapore to Sydney.
Categories that can take advantage of the “lipstick effect” will be more immune because consumers are still splurging on affordable luxuries or doing some revenge spending. For example, according to a YouGov survey, slightly fewer online Indonesians would cut back on overseas holidays (19%), personal care and beauty products (19%), and household electronics (18%).
Source: Kantar Beauty & Inflation Webinar, September 2022
What makes this era different?
While rising prices is not a new phenomenon, it’s critical to understand that this is not a typical downturn. There are three key factors that make this period different.
From a macro-economic standpoint, there’s a convergence of multiple factors at play, from soaring energy prices to supply chain issues and unseasonable weather caused by climate change.
There are also industry headwinds to keep in mind, from the sustainability imperative to the invertible demise of the cookie. In June, the strategist JP Castlin, speaking on the WARC stage in Cannes, said that tech is facing a “(Jerry) Macguire moment” where it’s the end of profitless prosperity for digital commerce.
But if you dig deeper, from a consumer perspective, this era is not just about money. I echo what J Walker Smith, knowledge lead at Kantar, wrote in a WARC exclusive.
“A feeling of risk exposure is troubling people. Because it’s not just inflation. It’s inflation in the wider context of pandemic, war and political turmoil. People want pocketbook relief but they also want risk reduction… It’s an unsettling lifestyle experience.”
So how can marketers deal with inflation, growth and other multiple disruptive forces simultaneously?
A keen understanding of your customers is key during “normal times” but it’s even more important during a crisis – how much more an era of them!
Our recent WARC Guide on the Consumer Crunch put the spotlight on tactics such as pricing. But I want to zoom in on what it means to provide value during uncertain times, specifically from a “human-centred lens”.
It’s a time of heightened sacrifice
One way or another, consumers must make sacrifices and it impacts more than just the wallet. When you give up a taxi to commute, you're sacrificing time. When you buy fast food instead of a healthier meal, you are sacrificing your health.
For Asian customers, one of the key sacrifices comes in the form of delayed purchases. In our WARC exclusive, Kantar’s Soumya Mohanty and Surbhi Gupta writes that for 74% of Indians, the increasing cost of living and other issues of concern are having an impact on their big life plan.
All of these sacrifices have an emotional toll. According to author Eldar Shafir, making sacrifices doesn’t actually make people feel better, it can leave them with a feeling of scarcity and anxiety.
That’s why in a time of heightened sacrifices, it’s even more important to take a human-centred approach to reframe value. It helps to flip the narrative and positively reframe the “sacrifices” that consumers are making.
There are two key reframes to consider.
Reframe #1: From cost conscious to quality confident
In your briefs, don’t refer to your customers as “cost conscious”. It reinforces the feeling of anxiety and scarcity that I mentioned earlier.
Is there a way you can make them feel “quality confident” instead? At the heart of this is helping customers feel like they are making smarter choices and reducing mental availability. There are a few ways you can do this:
- Communicating the multifunctionality of your product
- Helping consumers navigate choice and solve problems through personalised recommendations, product comparisons and price calculators
- Provide flexibility to customers
Case in point: In the Philippines, McDonald’s introduces McSavers Mix and Match that allows customers to customise their snack combo at a lower cost. Coles in Australia bundles products, offering not just A$1 or less specials across a variety of items but provides recipes to feed a family of four for less than A$10.
Reframe #2: From value for money to value for life
Lewis Moberly’s Ben Sillence writes that “Budget-conscious consumers are looking for value for life, not just value for money. With the current cost-of-living crisis, the role that brands play in enabling quality of life has come into sharp focus.”
Sacrifices means that consumers will be compromising on their quality of life. So it’s important to think about how your products add value for life and not just bang for buck. Our contributors say there are few ways to do this:
- Celebrate the achievement of learning new skills
- Reduce the stigma around frugality, using creativity to inject excitement and experimentation around basic products
- Demonstrate how your brand works for the common good of all
Positioning loyalty programs is a great way to promote a more value for life narrative. To manage rising cost of living, NTUC Fairprice Singapore is driving usage of its app by providing a 10% discount for NTUC members when they buy their meals from Kopitiam outlets. Additionally this promotes the use of digital payments, which enables the brand to gain deeper insight into its customers through every cashless transaction.
Conclusion: Empathy drives deeper customer relationships
Providing value-centred around core human needs and delivered with an empathetic lens will take centre stage during times of uncertainty.
“In a changing world where convenience, affordability and delivery are becoming hygiene factors, retail brands need to ensure they don’t lose sight of the deeper meaning they hold in consumers’ lives and continue to develop and nurture that deeper relationship,” says Coley Porter Bell’s Andy Humphreys.
It’s the emotional resonance and stickiness that will make the meaningful difference and retain customer loyalty during the long and volatile era of crises ahead.