By Richard Ryan, Creative Director, Something Different
With gas averaging over $4.22 a gallon nationwide and inflation running at a hot 9.1%, Americans have become more price conscious than they have been in years. Fears of a recession aren’t exactly helping.
This is tough territory for any brand whose prices aren’t the lowest in their category – which is most of them. But companies that offer good value with the right messaging can compete and win without resorting to the spiraling price cuts that erode profits and brand confidence.
Here are five strategies brands can use to navigate inflation and convince consumers their products are worth the cost.
1. Give the people what they want
Sounds obvious. But the best way to convince consumers to buy a pricier product during a recession is to make sure you sell something they want. Once you’ve established desire, price becomes less of an issue. Sure, Dollar General does gangbuster business when the chips are down. But luxury brands are equally adept at handling a recession. For example, even less affluent shoppers will splurge on a Coach bag because it represents value and exclusivity.
The consumer mindset is that luxury products are of higher quality. Coach bags “are crafted to last,” according to the company. It backs up that claim with its customer service promise. If a Coach bag breaks, send it back for repairs. During tough times, that kind of value messaging resonates.
2. Offer exclusivity
Consumers can comparison shop hundreds of stores in seconds. Services will send you instant alerts on price drops or special offers. So, offer something the competition doesn’t have. It doesn’t hurt to be in a category of one. Department stores carry labels, for example, exclusive to their outlets. Mattress retailers have long sold products made by name brands like Sealy and Serta but with exclusive lines.
Those are not solutions you can implement overnight. But the right kinds of bundled services and packages can also carry an air of exclusivity. When your rivals try to undercut your business, be creative and put together new offers.
3. Be the answer to the chaos
Your product can’t be everything to everyone. Niche products are coming online daily, making it hard to compare your product with the others in the category. That’s especially true when new brands have lower price points.
But too much choice makes buying more stressful and less fulfilling for the customer. A simplified and well-structured message can help ease the burden. Set your brand up as the answer to the chaos.
Consider, for example, Citi’s Double Cash card, which routinely comes up on best credit card lists. It may not have the lowest interest rate or even the most cash-back rewards but 1% back when you spend and 1% back when you pay your bill is a resonant message. The card offers value in a straightforward, understandable way. Don’t underestimate the power of simplicity.
4. Communicate your product’s enhanced value
Brands can rise above price wars by reframing a price message as a value message.
Spectrum Mobile, a Something Different client, is a good example. Spectrum’s $29.99 mobile price wasn’t the lowest but it communicated its value by highlighting that customers are tapping into a billion-dollar network, stores, customer service, and more.
It moved Spectrum away from the “who has the lowest price” shouting matches to a campaign focused on superior offerings. Awareness and sign-ups skyrocketed as a result. People will pay a little more to get a lot more.
5. Use inertia to your advantage
People don’t like change, which can be to your advantage in keeping customers, even if your product or service is a little more costly. Just be sure those services remain up to snuff. Reinforce your relationships. And don’t leave the exit door open.
But inertia cuts both ways. Attracting new customers is hard during inflationary periods. A timely ad campaign that explains why your product or service costs a little more can make the difference. It also helps to offer a smooth transition with as few hiccups as possible. Simplifying the process of switching can be just as important as the price.
The bottom line: The best way to win a price war is to avoid engaging in one. Make your product one that people want, trust and appreciate. Communicate that value to the consumer with the right messaging and explain why consumers should choose your brand. Ultimately, most shoppers know that cheaper isn’t always better. Especially during tough times, that adage rings true: you get what you pay for.