CPG Brands and the Rising Cost of Living
The last several years have been a rollercoaster for businesses in all sectors, of all shapes and sizes. From COVID to the current geopolitical crisis, the business landscape has changed immeasurably, and business leaders are under more pressure than ever to make sound decisions at breakneck speed.
CPG brands in particular now find themselves in a bind. Inflation is soaring and consumers and businesses alike face a new problem—the cost of living crunch.
A Changing Consumer Landscape
The latest stats show that the prices of goods for consumers in the eurozone have risen by over 5%, hitting their highest level in thirteen years. Indeed, according to data analytics company Kantar, it’s official that inflation has replaced the pandemic as the driving factor behind consumer behavior.
For CPG companies, properly understanding the complexities of the consumer landscape in which they operate has never been more vital. In the face of rising costs, consumers are taking further care around what purchases they deem to be essential versus “nice to haves.”
With everything from profits to brand loyalty on the line, it’s make or break for CPG brands. Two main questions present themselves:
1. Do CPG brands offset their own inflation costs by passing it along to consumers through raising prices and risk alienating already pinched customers?
2. How can CPG brands determine how long the issues they’re facing will last—and how do they change their business’ positioning as a result?
Mitigating Risks Using Data Insights
Any decision made in this current environment is a risk, that’s a given. What’s essential to success is making a calculated risk using the strongest insights available.
For example, raising prices is always a risk. If a CPG brand raises its prices too high, it opens itself up to the risk that customers will jump to the next cheapest product and take their hard-won but easily-lost brand loyalty along with them. Shopping habits are like muscle memory—once a consumer leaves your brand, winning them back is no easy task. Using actionable insights from the first-party consumer data at their disposal, CPG brands can ensure any price raise is reasonable. They can maintain profits without taking a simultaneous hit to consumer loyalty.
With the right tools and technology, the data can reveal granular information about receptive geographic regions, or even individuals. Using these data insights, CPG brands can understand customer lifetime value and make the determination as to which customers should be incentivized to stay. These valuable customers could be offered discounts or special promotions to offset a potentially damaging price raise.
How CPG Brands Can Stay Ahead of the Curve
Consumer loyalty, or even more crucially, advocacy, is hard won and easily lost in an ever-shifting, unpredictable market. With high inflation driving up the cost of living, and looking unlikely to dip anytime soon—CPG brands must ensure they’re properly equipped to utilize their biggest asset—data.
Through using smart data, CPG brands can understand the myriad ways the cost of living crunch will impact consumers’ shopping intentions, and be able to pivot their strategy accordingly to stay ahead in this post-pandemic era of change.
Want to know more about how cloud-based data solutions can enable CPG brands to meet the challenges of inflation and the rising cost of living? Download our “Better Decisions in the Age of Unpredictability” report here, and discover how you can unlock data insights to understand the latest customer trends that will affect your business.