Modern Marketing Dilemmas: How should your brand react when prices are going up?
During inflationary times, prices and pricing strategies are thrown into chaos. Evaluating your price position and Pricing Power is the most important thing to do right now.
The scary thing about inflation now is not that it’s the highest it’s been in 40 years, it’s that it’s high and trending up. The last time this happened – back in the late seventies and early eighties – recessions followed. Money supply was reduced, and interest rates were raised and, as in a perfectly built chain of dominoes, the last piece to fall was aggregate demand. Consumers spent less, unemployment rose, and, as a result, inflation gradually subsided.
The last two generations of consumers (and marketers) have only read about high levels of inflation in economic literature, they haven’t had to deal with it in real life. But for the last six months, the rate of change in the prices has been hard to miss. Labour shortages and rising energy, gas and oil costs have inflated consumers’ basket of goods and shrunk businesses’ margin potential.
History teaches us that strong growth isn’t on the immediate horizon. And that’s ok.