How CPG Marketers Can Use Price Hikes to Their Advantage
Meghan Howard is the VP of Sales here at Chicory, the contextual commerce advertising platform.
Grocery prices continue to rise as inflation hits a new high and supply chain disruptions persist. This creates challenges for CPG brands and retailers since price is the number one driver of repeat purchases and brand swaps. However, it also gives brands the opportunity to hone in on competitive advantages and test new go-to-market strategies. With the right marketing tactics, consumers will be less focused on price, and more focused on purchasing products that deliver on quality and consistency.
Brand marketers that are successful in diverting the shopper’s attention away from price will be those that are willing to lean into their brand’s story and invest in the right advertising tools. Below I outline my shortlist of recommendations for CPGs looking to capitalize on rising grocery prices and win the in-store and digital shelf.
Re-Evaluate and Identify Your Competitive Advantage
During times of inflation, when you can’t win on price, it’s critical to focus on the quality of your product or its main selling points. Determine how consumers currently perceive your product by familiarizing yourself with product reviews (on and off-site), social media mentions, influencer blogs and other channels where your brand lives. A brand evaluation like this is critical because, after recipes, personal recommendations are most likely to inspire shoppers to try new grocery products.
Use available customer feedback to identify which parts of your brand’s story are strongest, and which need improvement. With this knowledge, you can double down on what makes your product special or more purchase-worthy than private labels, which customers turn to during times of inflation. For some brands, this may look like prioritizing the advertising of signature items. If a shopper already has purchased your signature items or is considering purchasing your signature items, they will likely be less deterred by their higher price anyway.
Re-Examine or Increase Your Marketing Budget
When inflation hits, our instinct is to slash budgets over concern that customers will slow their spending. The reality, however, is that increasing your marketing budget may be more valuable, as it will help retain and gain new customers — especially as other brands pull back on spending.
Since consumers are the ones that will feel the price hikes the most, it’s important to reassure them that your product is worth the purchase. If supply chain disruptions and other budgeting concerns make it difficult to improve the product itself, then a robust marketing budget becomes even more essential to communicate this. Strategically boosting your overall marketing spend can help quell consumer doubts, as well as your own concerns that shoppers will switch brands, choose the store brand or skip the purchase altogether.
Specifically, brands may want to use their new budget to invest in advertising technologies that help them reach a larger, more valuable audience. For example, if your brand currently focuses on the on-site and in-store experience, take advantage of your bigger marketing budget by investing more in off-site channels too, like food and recipe sites. These channels will help expand your brand’s footprint, reach new and lapsed customers and drive more items to cart. Plus, investing in these channels is a great alternative to investing in coupons, for instance, which camouflage price, but don’t boost the overall perception of your brand.
Prioritize New and Lapsed Customers
In times of instability or heightened concern, brands often focus on retention instead of acquisition. While this has its merits, it's not the most effective strategy in the long run. Brands that are successful in winning the shelf, in spite of high prices, are likely attracting more loyal customers in the first place, solving for both retention and acquisition.
To reach new and lapsed customers, brands need to think beyond traditional advertising by prioritizing contextual commerce tactics on off-platform channels, sites that are not the retailers’. A significant portion of digital meal planning and shopping occurs off-platform before shoppers go to their preferred retailer. According to consumer survey research conducted by the Chicory team, of shoppers who had not visited the retailer's website or app in the last 60 days, the majority (57%) still did their meal planning online, but not on the retailer's platforms. We also discovered that 83% of shoppers use digital recipes to prepare for their grocery shopping trips.
This illustrates how important off-site content, like digital recipes, is to the omnichannel shopper’s path to purchase. Brands that leverage off-site content have more opportunities to win — and, without a doubt, the online shopper is one worth winning. Online-only shoppers are 3.5 times more likely to be loyal to brands, with 93% having specific brands in mind when creating their shopping list. Brands that prioritize and win the digital shelf, therefore, have greater opportunities to increase overall retention and sales, even in times of inflation.