the cultural impact of inflation means for marketing

Inflation is high and the cost of living increases. Wages, while increasing, do not keep pace. It has an effect on our pocket. Inflation has subtle cultural effects as well. Marketers need to be aware of this.

Kate Muhl is a consumer insight expert and Gartner’s VP of analyst. She shared her insights. It’s important to consider that inflation is more than just an economic issue and consumer spending. These effects begin to fade. “We’re not at the same place we were last year, but many consumer attitudes and behavior are still ripples from that initial inflationary moment.”

What Gartner’s Cost-of-Living Survey and Price Sentiment Survey for 2023 revealed.

• Price increases caused financial hardship for a third of households, with low-income and low-to middle-income households feeling the greatest impact.
• 38% of respondents said they had reduced their discretionary income. This is a 15% increase YoY on 2022.
• More than one third of respondents have increased their spending on store-brand products and used coupons more often.
• More than 40% of respondents report switching from store brands to generics, or switching to less expensive products within a product category.
• Cost of living pressures prompted 57% to postpone a major milestone (such as a marriage or vacation).

In this context, marketers and consumers are divided over the appropriate responses. CMOs prioritize increasing availability, offering special offers and increasing rewards and perks. The customers agree that special offers are important, but they also want to see prices remain the same and, interestingly enough, no pay increases for high-level executives.

Muhl believes that this is a reflection of a growing feeling, particularly among younger consumers, the the system “rigged” to favor the wealthy. Muhl said that a lot of it is about culture and consumer sentiment. How does it feel?” What is the general opinion of people about how things work in the world? “Those things are important to brands.”

It doesn’t necessarily mean that marketers should switch blindly to the priorities of their customers. Muhl said, “Consumers will always be consumers.” Our job is to market, but we must also be aware of the disconnect and try to bridge it.

Digging deeper: Breaking the digital transformation of customer journeys today

The Right Responses According to Muhl, this would be the perfect time to focus on narratives that emphasize saving and thrift, and those brand values that are most relevant to customers’ experiences of inflationary pressures.

Mulh cited Tide’s Cold, Hard Savings campaign and Everlane’s Priced like It’s 2019. as examples of narratives that are responsive.

Muhl stated that “this is not the right time to start thinking about luxury positionings, except in a few cases — luxury as a standalone concept rather than quality or premium.” Brands should think carefully about their core values and take appropriate action based on them.

Why do we care? Over the past three years, we should have learned that our feelings, our culture does not always align with reality. Many of us felt deeply emotional responses to a pandemic, but these feelings did not always match the impact COVID-19 had in real time. Pandemic-induced behavior, as well as anxiety and uncertainty, persisted even after the pandemic had passed.

Inflation is no different. The fear of a recession has not been eased by positive economic indicators or a gradual but steady decline in the inflation rate. As inflation falls to a manageable level, the behaviors and attitudes that were triggered by it will not disappear. In order to respond to consumer sentiment, marketers must be sensitive, aware and transparent.

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