Inflation is much in the news these days. Around the world as inputs costs go up, companies are revising the prices of their products upwards. That is true for FMCG goods companies as well. Higher prices combined with higher interest rates mean that consumers are buying less. They are buying only essential items and that too in lesser quantities. What should companies do in such a situation to grow or at least maintain their current customer base?
The 2008 recession gave us an important lesson – companies that upped their marketing spends by 8% during the recession increased their market shares by 4 times when the recovery began. But when sales are down and costs are up it is difficult for companies to justify increasing or even maintain market budgets.
Today, marketing analytics allows companies to allocate budgets judiciously in order to maximize volume and revenue. Here are few of the ways in which companies are doing this:
- Determine the products and markets where there is sales is either growing or constant. Increase marketing spends in these areas/products even while keeping total marketing budgets as constant. Coca Cola has a dynamic framework that allocates ad budgets to the country/category where growth is highest.
- Find out which consumer touchpoint is bringing the most conversions. Today, a consumer interacts with a brand across multiple touchpoints. Multi-touch attribution models can help companies determine which touch point gets the best conversions and focus advertising budgets on reaching consumers there. Procter & Gamble has movedlarge part of its marketing budget to digital marketing. Currently more than 50% of its total budget is spent on digital marketing. The Company says that they used analytics to ensure that they could reach out to as many people as possible with precision and without waste.
- Track changes in consumer behavior. Use analytics to pinpoint how, when and what consumers are buying. Diageo, one of the largest alcoholic beverages manufacturers, tracks consumer behavior and uses its supply chain to effect changes very quickly.
- Increasing promotions on lower priced products or smaller packs. In some categories, lower priced products do better during difficult times. The same applies for smaller pack sizes. McDonald’s says that on a market-to-market basisit might lean harder on promoting cheaper menu options.