Inflation and risk reduction: what brands can do
Brands need to respond to rising prices not simply by pivoting to “value”, but by considering how they reduce “risk” for consumers.
Inflationary cycles and economic downturns are typically viewed by marketers as value-seeking events, not risk-reduction events. This time, however, inflation is spiking in a way that brings more risk – not just less purchasing power. Inflation is presenting itself to consumers as a problem that is as much about risk reduction as value-seeking. Value always matters during economic disruptions, but a cheap price does not necessarily remedy a bad risk.
So, the response of marketers to the current – and likely, future – jump in prices must be more robust than simply pivoting to value. The primary focus must be on reducing risk. Brands that measure up to this challenge by taking out the risk through a focus on losses (the loss of comfort, peace of mind, security and assurance) will come through this wave of inflation stronger than ever and ready for a future of disruptions that will require more innovation and creativity.
With a focus on the US market but insights for marketers globally, our report looks at the main ways consumers will experience inflation this time round, and how brands can overcome these: the priorities to double down on in the current marketplace.