I remember passing by a gas station about ten years ago and
taking a look at the price of a gallon of regular. It had just risen to $1.79
that particular day. "I will never pay $1.79 for a gallon of gasoline!” I
remember stating to myself. Boy, was I right about that one. I certainly have
not paid anywhere close to $1.79 for a gallon of gas since then. Although I was
adamant that $1.79 was just too high, that price was just a blip on the chart
as gas prices climbed ever higher. I would like to recant my statement and say
that I would gladly pay $1.79 today, along with everyone else operating a
vehicle.
What has changed my mind is inflation. A gallon of gas has
inflated in price today to nearly 230% of the cost it was ten years ago. Like
so many commodities tied to energy, the price of fuel impacts the cost of so
many other products which are dependent on gas to run the machinery that is
involved in producing the products as well as transporting them to market. For
the past couple of years, economists have warned that inflation was the next
storm over the economic hill. They point to inflated prices of not only fossil
fuels, but also food (a combination of corn prices going up to meet the demand
of ethanol production and the rising cost of fuel to farm and transport food to
market.) Couple that with the fact that the federal government has devalued the
U.S. dollar by printing more money that is backed by nothing more than the good
faith of the federal government, and you have the makings of an inflationary
period that most of us have not experienced during our business careers.
If inflation is inevitable, your prices will have to go up
to reflect your rising costs of doing business. How do you market in times when
your prices are going up? Here are a few ideas that you should incorporate into
your marketing plans.
1. Market
to your functionality, not luxury.
Understand the times that we are living in. This is
not the opulent 90’s where everyone had a job. It is 2011 and it is time to get
down to earth with your target market. They don’t have a lot of excess dollars
to spend on fluff. Jack Trout has written more practical marketing books than
will fit on a library shelf. He comments in an interview that in inflationary
times, emphasizing the practical aspects of your product is key to marketing
well. "In this kind of environment, advertisers have to shift to a more
practical message. For example, in the US, Ford Motor Co. is introducing a new
generation of an F-150 truck which, historically, is a very big seller. In an
environment of high energy prices and a bad economy, what should it do? My
advice would be to admit the difficult times but use this to show how the truck
can increase the productivity of a contractor.”*
2. Don’t
dilute your brand.
In 1849, gold was discovered in
California. Tens of thousands of people flocked west to find their fortune. For
most prospectors, the California gold rush was a bust, but not for all. In
1853, a German merchant who had moved to San Francisco began selling pants to
the miners. The pants were made of a sturdy cotton that held up well in rough
conditions. They were simply called "Levis” for the merchant, Levi Strauss.
Levi Strauss branded his product and found the real gold was in denim blue
jeans.
There is always a temptation in
hard times for companies to extend their line of product offerings. This can
work to dilute your brand. In inflationary times, it is important that you
create brand recognition that stands for something in the mind of your target
market, not an extended line of products that really have nothing to do one
with the other. I suppose Strauss could have made tents out of blue denim,
saddle blankets out of the cotton blend, blue jean upholstered furniture, and called
them all "Levis.” He made sure that his brand stuck in the mind of his market
as a blue pair of pants that were both comfortable and durable… and made a
fortune doing it in a tough economy.
3. Creativity
in reaching the end consumer
In inflationary periods, consumers
get a lot more picky about where they spend their dollars. Inflation devalues
the dollar. It will not stretch as far as it once did. Your marketing should
focus on the benefits of the product or service that we spoke of in the first
point. But it should also capture the attention of the end consumer. This is
where taking a creative message directly to the end consumer can pay huge
dividends. Do you remember the Wendy’s Hamburger TV ads that ran in the mid
80’s? Three white-haired ladies examined the contents of a sandwich only to
find a very small hamburger hidden under a very large bun. That is when Clara
Peller blurted out the immortal line, "Where’s the beef?” (Take a look on
YouTube, click here.) That Wendy’s commercial is often cited as the most
effective TV advertisement of all time. It simply touted the fact that the
Wendy’s single (then their smallest burger) had more beef than the largest
burgers offered by McDonalds and Burger King. The more-for-your-money gimmick
did wonders for Wendy’s sales, which rose 31% in the wake of the "Where’s the
beef” campaign.
4. Reward
loyalty
It is really important to hold on
to your current clients during inflationary times. It is hard enough to get a
first sale and to cultivate a relationship with a client in good times. Your
customers are going to shop you during an inflationary period. They have to
justify spending money with you as opposed to your competition. You have to
find a way to reward loyalty. Retention marketing should be at the forefront of
your marketing efforts. Give your customer a reason to come back to you and no
reason to leave. That should include an examination of what your clients think
of your customer service, your quality (products or services), the ease of
doing business with your company, etc. Knock down any barriers that exist
between you and them. Two of the biggest things you can give your clients are
savings of dollars and savings of time. If there are price breaks that you can
give them by buying at a specific time, make this known to them and make it
part of your marketing message. If you have a way for them to recoup time, like
delivering the product to them instead of having them come to you, do so. Seal
up any cracks in the relationships that exist between you and them. Inflation
makes dollars scarce. Don’t let little things become the reason your customer
leaves you.
____________________________________________
*How will inflation hit brand value? July 8, 2008
Livemint.com http://www.livemint.com/2008/07/08224159/How-will-inflation-hit-brand-v.html
Inflation Is Here by Greg Hunter January 17, 2011
USAwatchdog.com
Levi Strauss The History of Blue Jeans by Mary Bellis About.com http://inventors.about.com/od/sstartinventors/a/Levi_Strauss.htm
Clara Peller, the Actress In 'Where's the Beef?' TV Ad, Obituaries NY Times, August 12, 1987 http://www.nytimes.com/1987/08/12/obituaries/clara-peller-the-actress-in-where-s-the-beef-tv-ad.html