Marketers expect the squeeze on disposable incomes to continue at least until next summer with inflation continuing to outstrip wage increases and consumer spending remaining subdued.
Research from Verdict says that growth in consumer spending, at 1.2%, will be the lowest in 40 years, while the Institute for Public Policy Research recently said economic growth will be even lower than the 0.9% predicted by the government and unemployment higher.
Against this backdrop, marketers are preparing for consumers becoming increasingly savvy. It is expected that they will research more - through forums, social media and word of mouth - to compare brands not just on price but on the service offered.
Mike Hoban, chief marketing officer of Confused.com, says brands that do not cater to what many are calling the “professional” shopper will suffer.
“Unless you can say ‘I’m offering good value’ be prepared to go to the wall,” he adds.
Rick Vlemmiks, the departing commercial director of British Gas, says that marketers’ biggest challenge will be balancing price and customer experience.
“Next year will be all about value, value, value. It won’t be about discounting and selling things for cheap, it will be about communicating to consumers what they get for their money.
“It’s all about value, not being the cheapest. It’s about reassuring customers and giving them relevant propositions and brilliant products.”
Offering differentiation will be particularly important in sectors at the coal face of the UK’s economic downturn. In retail, for example, where growth is expected to be flat at best, marketers say that customer experience will help brands steal share from rivals in stagnant markets.
Craig Inglis, marketing director of John Lewis, says: “The economy is really challenging and for us next year it is about leveraging our differentials like Never Knowingly Undersold, which we will continue with next year because it’s really cutting through.”
Chris Lawson, Guardian News and Media’s content sales and marketing director, adds that brands need to continue to invest in customer insight despite a tighter rein on spending.
“You need to keep the customer the focus and truly understand your audience and the relationship you have with them by making the products and services that are the best for your market.
“You need to build a direct relationship, ensure you have a continuous dialogue and take into account the rapidly evolving media choices and platforms.”
Away from the UK, marketers with international brands are faced with very different challenges. Global marketers say the growth of the middle class in emerging economies such as China and India will continue to present opportunities that the depressed economies in Europe and North America will not.
Richard Munturo, global chief marketing officer at Volvo, says: “I look at the whole world and get to be a bit more of an optimist than someone focussing on just the UK in another year of austerity, or the EU and the drama in the Eurozone.
“On the optimistic side, there is no time in human history when more people are becoming middle class. When you start thinking about the level of economic and class mobility in places like China, you can’t help but feel that there is hope.”
Author: Russell Parson, Mktg Week