People need to buy their everyday necessities. But when you’re in a period of economic turmoil, how do you convince customers to purchase the non-essentials?
The past few years have been a rollercoaster for consumer spending. The economic environment of a global pandemic followed by a war, energy crisis, prices skyrocketing and economic uncertainty has meant that consumer spending hasn’t been steady. After the pandemic consumers were eager to spend and enjoy their newfound freedom. But further economic uncertainty means spending has once again declined.
Now brands need to show the value of their products. You need to prove your worth to encourage consumers to spend with you.
The lipstick effect
During times of economic crisis, research suggests that people will be willing to buy small luxuries. Lipstick sales soared for the first time following the Great Depression from 1929 to 1933. Similarly, during the Second World War sales rose. Churchill ordered the rationing of all cosmetics except lipstick as he believed red lipstick helped raise morale.
The Lipstick Index, as the president of Estée Lauder called the trend, was given further evidence when Estée Lauder saw a rise in sales following the 2001 recession. In particular, lipstick sales increased by 11%. After the 2008 financial crisis, lipstick was once again on trend. Last year, with a new war, rising prices and economic turmoil, NPD reported a 44% increase in lipstick sales in the first quarter of 2022.
But this trend isn’t limited to lipsticks. When the pandemic and mandatory mask use made it harder to wear lipsticks, brands commented on the rise of other small luxury products.
When times are hard, people want to turn to retail therapy, but with budgets tighter they know they can't, which makes small luxuries what they turn to. You need to showcase how your product adds value to a customer's life.
What does value mean?
Value has two meanings when it comes to customer purchasing, both of which are incredibly important in your marketing strategy right now. The value of your product in terms of financial value is what will make a customer feel like they have found a good deal with you. You need to make your customer feel like they’ve made a smart financial decision. For example, showcase how your product will save them money in the long run or provide a good deal.
When life is difficult you also need to showcase the value you are adding to their life. How are you improving their life? How are you making them happier? Lipstick may seem like a luxury when a person is budgeting but if it makes them happy every time they wear it for the buyer it is a sensible decision.
How do you communicate your value?
Recommendations from journalists highlighting the value of your product over competitors. They have the power to show why customers should choose your product over competitors as it will bring more financial value. Yours doesn’t have to be the cheapest for this to be true. Financial value can mean your product will last longer, is made better, or will deliver better results for example.
Content showcasing your positive values. Consumers want to shop with better brands. You can showcase with creative storytelling why shoppers should choose your brand.
Build brand trust. A customer needs to see your company multiple times to build trust. People are looking for brands that can bring them happiness during these difficult times. Consumers are weighing up the level of happiness the products can bring them and making a purchasing decision from this. If your product has a higher price tag you need to be shouting about the value added. Showcase case studies of your customers and the value it adds to their life or share results from the effect of your product.
If you’re looking to show customers your value and convince them to purchase your product when budgets are tighter, you can book a free PR Strategy Audit with us.