Rising Inflation May Sideline Cause-Related Marketing


Rising Inflation May Sideline Cause-Related Marketing



by , August 26, 2022

The following was previously published in an earlier edition of Marketing Insider.



Let’s take it back to 2021, when everyone dreamed vividly about the post-pandemic world and all its potential, forecasting post-COVID realities where masks would become a thing of the past and the economy would right itself.


Unfortunately, it’s safe to say that not only is COVID still part of our daily lives, but that 2022 has been economically complicated so far. Gas prices are far higher than we would like. The inflation rate in the U.S. rose to 7.9% in February—an issue that is echoed around the globe.


Much talk is swirling around the changes in spending power and the impact on American households. With that mindset, some interesting questions arise, namely: How will inflation impact spending choices? And within that, as dollars need to be found and prioritized, what programs and initiatives will be cast aside?


Some tough roads lay ahead—and with them, some tough decisions.


Who foots the bill?


Organizations need an inflation strategy to plan for what is to come, deciding whether to absorb increased costs or pass them on to customers. Of course, there will be enormous pressure to focus on short-term commercial returns.


Notably, inflation will strain most sustainability commitments brands have made over the last few years. And within that lens of rising inflation, organizations will likely put their marketing strategies under review.


But killing purpose-filled initiatives is rarely the strongest strategy for long-term success. Companies should make their mission and sustainability pledges clearer and more tangible, because balance is required.


What changes can you proactively make? Hint: Get real and embrace purpose.


People are stressed, and their concerns are valid. It’s important for brands to exhibit active listening and empathetic understanding, and avoid throwaway comments masquerading as guidance.


Don’t pretend that rising costs aren’t impacting everyday consumers and creating tangible priority shifts. Right now, nine in 10 Americans are worried about inflation, according to a New York Times survey.


It all comes down to brand purpose. People will pay more (to varying degrees, of course) for brands that show a commitment to society and the environment. In the current economic climate, companies that want to maintain their margins will need to double down on purpose.


Inflation also raises employee compensation expectations, which were already at a high level due to the recent wave of resignations. Some organizations may struggle to satisfy income demands, and they may lose some of their best talent as a result.


Organizations that show a demonstrated commitment to their workers and communities have considerably higher employee retention rates. Case in point: Patagonia takes a purposeful approach to everything it does, managing to defy the retail industry’s 13% turnover average by clocking it at just 4%.


Millennials and Gen Z, who will increasingly make up a larger part of the workforce, expect their employers to take strong stands on social and environmental concerns. This isn’t to say that you should pay them less just because you “stand” for something as a brand. Rather, strike a balance by intentionally leading with purpose to secure their interest and their buy-in.


Companies should make their mission and sustainability pledges clearer and more tangible, because balance is required.

 

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