How to Respond to Inflation’s Impact on Consumer Behavior

Consumers do not behave the way they used to — how, where, and what they shop for has changed and will continue to shift as younger generations come into buying power and especially as we continue to navigate the events of the last few years. COVID lockdowns, supply chain issues, and the increasing cost of goods are impacting consumer behavior.

Shoppers are adapting their path to purchase in unpredictable ways, making old assumptions about the consumer mindset less useful or, at worst, ineffective. 

But how can marketers plan for such an unpredictable future? The answer is old… and new: by changing how they think about and use data. 

The first step is accepting that no one data source will be representative of a multi-dimensional consumer. As powerful as it is, first-party data is not scalable, and we can no longer get away with ascribing meaning without context. Finally, we need a holistic approach to identify new audiences. 

Fill in the gaps of single-source data

There’s a lot of data out there; it has changed the way companies reach their audiences and brands reach their customers. But with more data come more problems (pardon the Biggie pun, I’m from Brooklyn) — data overload, scalability, accuracy, relevancy, and privacy are all terms we are familiar with these days. 

Take first-party data, the presumed solution to all our marketing problems — turns out it’s not the holy grail we thought it was. It has obvious scalability issues and is limited to the platforms, publishers, and retailers who gatekeep their user interactions. But, beyond that, it’s typically a one-dimensional (at best) or outdated (at worst) view of the brand’s audience. 

The danger is that not only may the brand’s message or product be irrelevant to their assumed consumer, but they may be trying to reach an audience that has outgrown the brand altogether.

During lockdown, people were forced to get creative with where they purchased, which shifted daily purchase behaviors online. DTC brands were already eating off of the plate of traditional brick-and-mortar retailers, but this global event practically wiped the plate clean. 

So, the question of where to find your audience is no longer a question of physical location; it’s a question of lifestyle. The online retailer space is saturated. Getting people to care about your brand means finding them where they are and not expecting them to come to you. 

Elevate the context

Getting people to care about a brand is every marketer’s goal, but what happens when circumstances outside our control challenge brand loyalty? With the recent spike in prices and shifts in lifestyles, we’ve seen consumers put in a position where they have to compromise their brand love to meet essential needs. 

There’s only so much patience we can expect from consumers, especially millennial and Gen Z shoppers who have been conditioned by an always-on approach to consumerism compounded with a more thoughtful approach to where they spend their income. 

Gen Z cares a lot about a lot but specifically about where their money is going. Brands and their ambassadors are held to a much higher standard. It’s easy to dismiss this, but they are ramping up in buying power and influence, reshaping the foreseeable future of how consumers buy, sell and discover new brands (i.e. TikTok). 

So, while the need for accurate data remains paramount in the ad ecosystem, the greater issue may actually be how we interpret that data. Marketers need qualitative data to gather and apply to analytics and quantitative data to elevate context and meaningfully connect with their audience. 

Keep an eye out for the unexpected

Yes, data is still essential, but the insights derived from the data are the real game-changer. Insights are the connections we make across the multitude of data sources we have access to, which paint the full picture of the consumer. 

Unique consumer connections can be identified, such as that consumers with an affinity for KFC are also interested in beauty and wellness brands. Who would have guessed? This kind of insight, which would be missed through analytics alone, can identify much more interesting and unexpected audiences for brands to target. 

Whether expanding a target audience, poaching customers from the competition, or simply re-engaging brand loyalists distracted by a competitive environment, gaining the ability to uncover new consumer pathways can make an ad dollar go further and yield new growth opportunities. 

As audiences become more complex, it is vital for marketers to have more holistic and culturally relevant datasets to identify and create more authentic connections. Brands will be better positioned to break through the noise with supplemental data, context, and an emphasis on audience insights. When marketers fail to stay ahead of changing consumer behavior, they risk falling behind, especially when it comes to younger demographics.

Laia Pescetto is VP of Marketing at Helixa.

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