The cost-of-living crisischallenges brands to step up
Sherraine Albert, Research Executive, Zofia Wilk, Intern and Joella Vera Bril, Director, have gotten together to think about some ways in which brands might support people, and retain them as customers, in the current economically turbulent times…
As daily news coverage continues to tell us, disruptions to supply chains, political unrest, post-pandemic shifts and soaring energy prices have led to a fall in ‘real’ disposable income. In human terms, this is manifesting in increased anxiety and uncertainty among people in the UK and around the world, where inflation is outstripping wage increases, leaving people unable to pay for products and services that they could previously afford.
According to The Resolution Foundation, low-income households will be particularly adversely affected, having to cut back spending by 24% on non-essentials to be able to afford the sharp increase in energy bills between January & March 2023. Though the government has recently announced some support, many will find themselves in a ’Heat-or-Eat’ conundrum – an impossible choice between eating a meal or keeping warm – highlights the severity of the circumstances that some people find themselves in. Unsurprisingly, the impact of this also stretches into people’s wellbeing, with one recent survey by McPin Foundation revealing that 59% of respondents stated, “over the last 12 months, concerns about money have impacted their mental health ‘a lot’”.
It’s clear that people are being forced to adapt their behaviour to deal with the current climate, presenting significant challenges for brands. Millions of UK households are feeling the effect of the cost-of-living crisis and, when incomes are squeezed, people begin to pay much closer attention to their spending. Consumers are making conscious decisions to spend less on essentials, cutting back on non-essentials, or investing more time in shopping around for the best price that fits their new budget.
In this context, it’s important that brands showcase their worth through initiatives that meet the needs of their audience, proving that they can offer good value for money, and communicating that sensitively, meaningfully and effectively. No mean feat but one that presents a great opportunity, with people looking to brands to make a difference – highlighted in a recent Reach survey that found 58% of respondents believing that brands should be helping customers through this period of economic instability.
At Firefish, we place human experience at the centre of brands and their strategy, and think there are a variety of things that brands can consider which could help them lead the way…
Consider launching budget options that are accessible to all
With consumers being increasingly price savvy, affordable options are more important than ever. We acknowledge that it isn’t easy to create and launch a line like this at pace, but the uncertainty we are experiencing isn’t going away anytime soon and, especially now, there is pride and social currency attached to finding and sharing cost-effective options. As an example in play, Boots has just launched an ‘everyday’ budget range for its own-label toiletries. All products within the 60-piece range (that includes period products, shampoo and toothpaste) will be priced at £1.50 or less. With this move, Boots are showcasing their awareness of the challenges ahead and aims to make it easier for people to find more affordable alternatives in its stores.
Provide cost stability in uncertain times
People are unsure of what lies ahead, with fears of further price increases across all areas of spending. While the government has made an attempt to stem the increases in energy prices with a revised price cap freeze, brands can offer further certainty and stability by offering price-caps or price locks on their products too. A key example here is Giffgaff who recently promoted that it has locked its prices until the end of 2023, stating that it wanted to offer customers ‘reassurance’ and ‘do as much as we can to help’ during this worrying time. With this, Giffgaff is extending its efforts from 2022 well ahead of the end of the year, alleviating stress and providing people with a little clarity and confidence as they head into the coming year.
With prices being top of mind for everyone, loyalty is no longer a given but, instead, must be earned through brands’ effort. While loyalty’s power to aid brand growth has been much debated by the likes of Byron Sharp and Binet & Field, in times of crisis when brand switching is more likely, a valid strategy is to support people in a way that aids consideration of your specific brand in a person’s repertoire. As an example, McDonald’s has recently launched their loyalty program, MyMcDonald’s Rewards in the UK, which offers points for every penny spent in their restaurants. With these points, people can claim free menu items from any of their restaurants, as well as giving the option to donate awarded points to a charity – a nice alternative for people, as food bank usage continues to rise. With money now needing to travel further, McDonald’s are seeking to drive affinity for the brand while also gaining the valuable data into consumer transactions, that will allow them to further alter their loyalty rewards and messaging to keep momentum and remain top-of-mind.
As the cost-of-living crisis is likely to intensify over the winter, it’s more important than ever to stay close to real human experiences in order to guide brand strategy, campaigns and activations. At Firefish, we are all about putting the human experience at the heart of your decision making and would love to support you navigate the uncertainty ahead. Just get in touch to talk.