Crisis Communication: 80% of Consumers Expect Transparency Around Price Increases and Inflation
Inflation rates are hitting new highs around the world – and impacting people’s shopping habits, too. As consumers continue to tighten their purse strings, we wanted to take a closer look at how brands should be responding during times of crises.
Read our ultimate guide to marketing in a crisis
For businesses, it’s never been more important to think long term and plan how your brand will navigate these headwinds. But that does not mean tightening your belt is the only way.
Our Insights team surveyed a nationally representative sample of 2006 consumers across Germany to understand what shoppers expect from brands when it comes to communication, price increases, honesty and loyalty. The results offer concrete recommendations for brands to navigate the current times, and show that the vast majority of respondents (81%) are understanding of price increases. However, younger people are less so than older people: only 42% of 23- to 35-year-olds show understanding for price increases, compared to 56% of 56- to 69-year-olds.
While consumers understand why prices for their favourite products are increasing, that doesn’t mean they will necessarily stay loyal. Particularly when it comes to food and beverages, the majority of respondents would only tolerate price increases of 5-10% before considering switching to non-branded or cheaper alternatives.
How should brands adapt their marketing strategy for inflation?
When it comes to communicating around inflation, honesty is key: 80% of respondents say brands need to be transparent about price increases. However, there is a significant difference between two age groups: just 42% of 23- to 35-year-olds expect honest communication, compared to 56% of 56- to 69-year-olds do.
The majority of respondents also expect brands to show solidarity with their consumers in times of high inflation. In total, 68% (35% “strongly” agree, 33% “somewhat” agree) believe that brands should not raise prices and forego profits in order to show solidarity with their customers. On top, 59% consumers believe brands should go one step further and use their influence on politics to demand relief measures for the population.
Above all else, brands should avoid the temptation to reduce the size of a product while maintaining its usual price – otherwise known as “shrinkflation”. 82% of respondents called this practise “dishonest”.
Best marketing practises for inflation
So, how can brands continue to build loyalty and trust among consumers? Shaheen Maassen, Head of Brand Strategy at DCMN, says that these results show that even at a time of low consumer spending, customers expect active and honest communications from companies: “After all, when consumers open their wallets, it is for the brands that are top of mind and connected with them on an emotional level. Ultimately, it comes down to the fact that people want to spend money with brands they know, like and trust. Not only does this mean continuing to spend money on branding activities, but companies also need to work out how to humanise their brand for the current climate.”
Matthias Riedl, CEO and co-founder at DCMN, emphasises that brands can’t afford to go quiet during hard times: “It’s never been more important for companies to articulate the value of their brand and products within their campaigns – and as media costs typically go down during times of crises, brands can reach more consumers at low prices.”
Looking for more resources on how to survive and thrive in the current economic climate? Download our guide to learn how you can adapt your marketing strategy during times of crises.
