Well, inflation. galloping. At levels none of us ever remembered.
Everything goes up and the decision criteria in any product start to change.
And companies and marketing are starting to have to evaluate and adapt, as well as the processes that influence all internal and consumer processes.
Understanding why we have inflation is one of the points that should be part of the process of looking for the answer to the challenges that already arise.
That and how it affects consumers and the way it will approach the market.
And if you think that this is more for consumer products, you are wrong.
It's one of those curious things that affects everyone regardless of their so-called "social class".
As it changes the form and decision times in products as in the financial areas. That instability is something that affects everyone's perception of what the future can be and how to face it.
Of course, we are not going to go into areas of economics or geopolitics and how they are influencing all contexts, particularly at a time when we are not yet out of the pandemic period, nor have we recovered from the shock it caused.
There are always many things that we cannot influence in order to maintain price levels, not least because the costs of context, production, raw materials, etc., continue to influence activity in the most varied ways.
And how the amounts available for expenses (the so-called "wallet share" by the marketing people) continue to have to be distributed among the different options and, mainly, by the goods that are essential.
But being something over which we have no control (inflation, of course), what can we influence to improve (reduce, attenuate, etc.) the consumer's experience in relation to the evolution of prices and decision-making processes?
First, let's remember what is inflation?
Inflation is defined as the continued and sustained growth in prices.
In a "normal" economic period it is something beneficial and "healthy". As with anything, when it reaches one of the extremes, particularly when analyzed in conjunction with economic growth, it negatively affects our ways of life and behavior.
If it is deflation (there is, or almost, no inflation) it deteriorates the economic fabric and the capacity for growth as prices go down, for example, because of instability or fears among the population, and consumers reduce spending as a precaution.
Stagflation, which is one of the scenarios that is currently on the table, happens when there is strong inflation and weak or no growth.
Something similar to what is happening right now.
But inflation is not just a bad thing. Inflation, in an economy that is "healthy" is a dynamic and desired thing, also because it stimulates wages and makes the economy maintain a necessary activity of valorization of its various assets.
But right now we are in a situation that some have dubbed the "perfect storm".
Even with the pandemic present, even if relatively controlled, its effects have not disappeared. Particularly in the distribution chains and in the activity of many industries.
The escalation of energy and fuel costs were already having repercussions, and with the conflict situation in Ukraine the situation has worsened.
Average inflation figures skyrocket, with Friday's EU flash estimate of 7.5% in the Eurozone. In Portugal above 5%.
With all these factors associated, naturally we are witnessing an increase in prices. And that start with essential goods and spread to other goods.
But if this affects the behavior and shopping experience of consumers, how will it be possible to minimize its impacts and maintain a relationship that does not destroy the perceived value of the product and its notoriety or relevance?
Consumers increasingly (particularly in the younger strata) react to directness and clarity in a positive way.
As well as the relationships developed around a purpose or companies and products built around criteria such as sustainability and which have a receptivity and acceptance by the audiences, the actions developed in situations of this type also need clarity and frontality in order to with the consumer.
Demonstrating openness and transparency towards your customer, explaining how and why prices (or related aspects) may fluctuate, is essential to keep your current or prospective customer with the information they need to decide, in addition to increasing their empathy towards the adversities that companies are going through.
A positive relationship always reaps benefits as it keeps the consumer aware of situations, especially before they happen.
Don't expect him to be kept informed by other sources, or that the news in the media will be enough for him to understand everything that goes on in your business.
If you can act in anticipation, so much the better.
If it is possible to demonstrate that, despite the circumstances, you are still making an effort so that the consequences of difficulties are not fully transferred to the consumer, or that you are trying to lessen the impacts, you will still gain an ally and a "friend" for life.
You will eventually enter a quasi-crisis communication mode.
But here in a totally positive way.
Brands must be able to defend the positive value that is associated with their assets and the associated added value - and above all, the associated value.
For this, and as Kantar demonstrates in its article on this subject (which you can read here), it must be able to defend its positive and "premium" perception that the brand has in the consumer's mind.
Especially compared to an unbranded product.
It's about defending how significantly different the brand is in the consumer's perception in terms of value in their mind.
This is as relevant in a B2B as a B2C approach.
If you can demonstrate that you remain relevant to your perceived value as a brand, the consumer will never completely (or definitively) abandon you.
It's about openness, transparency and clarity of the message you have to get across to the consumer.
If it cannot keep this perspective in the consumer's mind, then the value as a brand and its increased price were not correctly associated or firmly in the consumer's perception of the brand.
The value margin that the brand has is relevant and represents the additional price/margin that is required for its acquisition. And it is something that contributes to the distinction in the market.
Naturally, the price elasticity for the consumer has a limit, as economic theory teaches us at this level.
We must always be aware that brands do not all have the same range of elasticity in the face of a consumer decision situation.
"Commodities" have less room for manoeuvre, and therefore may need to adjust to consumer circumstances and needs and market constraints.
Something that brands usually tend to do is "tighten their belts" and start cutting costs, namely in their communication actions.
What the experience of past crisis situations has shown us (even with regard to inflation, which despite being absent in our country for a long time, continues to persist in other territories), is that this cut always ends up being more harmful than how beneficial.
Namely because it removes the possibility of establishing the aforementioned bridge of transparency and empathy.
And if empathy has been talked about a lot in recent years by actors in the marketing area (among others), it now assumes a leading role to place brands as relevant and "necessary" for their consumers.
Ensure that your "voice" reaches those who matter to your business and your brand, as well as that empathy is real and that you care about the situation and its results.
Demonstrate that you take measures to mitigate their impacts on the market and that you play your part in the economic game, and with regard to the effects of final price adjustments.
Don't lose contact, don't forget to be a point of interaction with your customers.
Adjust your offer if necessary, especially whenever this ensures value and relevance (as well as financial benefits) in this uncertain environment.
Concealing the situation, even if cutting some costs, will not have meaning for your customer (mainly because he should not even know about it as he may have closed the most relevant communication channels with him).
Whoever overcomes complex crisis situations, ends up coming out stronger and with a more loyal and devoted customer and, who knows, worried about the future of their brand.