As the UK economy slides deeper into crisis, WARC's Brian Carruthers looks at inspiration for marketers from brands in Egypt, Turkey and Argentina – along with some words of wisdom from Monty Python and Ernest Hemingway.
At the end of Monty Python’s Life of Brian, a now-iconic comedy film released in 1979, Eric Idle is depicted as being nailed to a cross as he sings ‘Always look on the bright side of life’. This tongue-in-cheek plea for optimism came just as Margaret Thatcher got to work on the UK economy as Prime Minister, heralding a new era of social and financial dislocation with broad, and enduring, implications.
It’s hard to think that Idle could write a similar song today as Thatcher’s heirs, led by new PM Liz Truss, set about applying their particular medicine to the body economic.
Financial markets took a dim view of last week’s ‘fiscal event’ from the Truss government (banking giant Nomura, for instance, pithily remarked that ‘Hope is not a strategy’), which featured significant tax cuts for the wealthy but did little to help people with lower incomes. The theory behind these moves largely reflects the classical, but deeply contested, tenets of trickle-down economics. And, in response to Truss’s revival of this approach, the pound dropped to a new low against the dollar, adding to the multiple pressures already facing the UK economy: the fallout from the COVID-19 pandemic, rising energy prices, climate change, Brexit trade barriers … Interest rates will increase further in due course, too, so there’s another one.
No government would find it easy to tackle all these issues coming at once, but, uniquely, this one seems determined to add to them. And while the Truss government pursues its ideological agenda, it is consumers who will pay the price, both figuratively and literally.
Rising import costs may lead to more price increases
The inevitable consequence of sterling’s collapse in currency markets is that import costs rise – and that hits a wide range of sectors which, unless the situation changes soon, will have little option but to start passing on those costs in the form of higher prices, a tactic many brands have already sought to pursue because of surging inflation.
The currency collapse affects everything from beer to building products. As the head of brewer Marston’s explained, “Many of the hops used in this country are imported . . . particularly from the [United] States. Changes in currency are worrying for our industry, for sure.”
Just as fracking and new North Sea drilling licences aren’t an answer to the energy crisis, so planting new hop farms in Kent isn’t an answer to the country’s looming beer shortage (did I mention the problems with carbon dioxide supplies?).
When even crying into your beer may not be an option, you know things are bad. We’ve not reached the stage of a full-blown currency crisis, but it might be time to recall the words of the character in Ernest Hemingway’s novel The Sun Also Rises, who, when asked how he went bankrupt, replies, “Two ways. Gradually, then suddenly.”
Learning from brands across the globe
The world is changing. Marketers will need to be prepared for all eventualities and remember that crisis can also be a source of opportunity; WARC’s archives offer up a few useful examples of how to proceed in this regard.
No-one is suggesting the UK in 2022 is comparable to Argentina in 2002, but the experience of a pasta brand from the South American country two decades ago is undoubtedly educational. Helped by a smart, strategic new product launch, Lucchetti rode out that economic crunch and went from being a functional brand to being a strongly emotional brand. (In a more recent, and highly mischievous, campaign from the same country, budget airline Flybondi aimed its messaging squarely at lawmakers by encouraging them to travel on its planes to help save public money.)
Elsewhere, coffee brand Nescafé was forced to rethink its strategy in Egypt following a sudden currency devaluation in November 2016; as purchasing power dropped by half overnight, the staple household ingredient became a luxury. By focusing its marketing efforts on its single-serve sachet and university students it not only addressed the immediate issue of falling sales but built a new generation of consumers for the long term.
In Turkey, Finish detergent also showed how marketers can stay focused on important issues despite near-term economic challenges. In the midst of a national obsession about currency values, the brand used its advertising clout to promote a new index that highlighted fluctuations in the country’s usable water resources, bringing attention to this vital topic by reminding people that some things are much more important than money.
These brands emerged from the crises happening in their countries in a better place than before – an approach that brands in the UK might do well to emulate.
It’s tempting to think that things can’t get that bad in the UK, which recently slipped to sixth place in the global economic league table (it’s 30th in terms of purchasing power parity). But adopting this kind of exceptionalist mindset can work in two ways; by thinking we’re better than others, we can end up worse off than them.
In the meantime, keep looking on the bright side if you can.