Over the last year, inflation in the UK has bobbled around the double-digit figure, causing increases to energy and food prices, as well as higher cost of living pressures for families across the United Kingdom, with little sign of them abating anytime soon. Against this looming backdrop, it’s understandable that brands are reacting – from reducing the size of products, to increasing prices or offering discounts to loyal customers - in an attempt to avoid feeling the crunch themselves and to head-off a mass switching by shoppers for alternative products.
But instead of getting wrapped up in ‘shrinkflation’ and the vicious pricing war, there are other factors at play which can help brands stand out at shelf and continue being considered by shoppers in stores. Powerfully articulated by Mark Ritson in a recent podcast, analysis across financial recessions over the last century show that brands that invest in – rather than cut – their marketing spend, do better.
Pricing is inherently linked to a brand’s equity, helping to position it as either premium, expensive, good value for money or cheap. Changing a brand’s price (and / or sizing) has the potential to impact the brand’s equity positioning. If this is incongruent with the wider marketing, it can create a tension of price versus positioning, thereby eroding equity. Once a price or size change has been implemented, the brand is setting a different expectation for itself, which can lead to unexpected reactions if it moves the brand away from the positioning (and pricing architecture) that consumers know and love. In turn, this opens the door for shoppers to reconsider their choice, thereby fulfilling the prophecy that brands are trying to avoid – that of shoppers switching away.
There is also, of course, the shopper perspective to take into consideration. In 2023, PRS IN VIVO undertook an online community study with a cross section of UK shoppers to capture their attitudes, behaviours and purchase habits amidst the Cost-of-Living Crisis. Though it might seem obvious that shoppers will turn to cheaper alternatives, we find that becoming more price sensitive is the third cost-saving strategy they take. Shoppers are more likely to reduce their purchase frequency first or give more consideration to meal and shopping planning before changing brands.
Attitudes, behaviours and purchase habits of UK shoppers amidst the Cost-of-Living Crisis
| Shopper Habits | Order of importance |
| Shop less frequently | 1st |
| Greater planning | 2nd |
| More price sensitive | 3rd |
| Changed stores | 4th |
Source: PRS IN VIVO Cost of Living Study
Whilst you might lose shoppers who do trade down to a cheaper alternative, you may also gain shoppers who trade down to you – either from pricier competitors or brands from outside the category, entirely. Perhaps the most vivid example of this is the impact on date nights. Where previously a date night might be dinner out at a Mexican restaurant, consumers are “trading down” from a restaurant to a Mexican meal-kit and having date night at home. And often in these cases, shoppers will seek the more premium brands to keep the occasion special.
If knee-jerk reactions by brands are to be avoided, what else can a brand do to navigate the cost living crisis? Learnings from our community, and wider PRS IN VIVO case studies, suggest that there are four key questions that brands can ask themselves. The answers to which might guide on potential solutions to navigating the cost-of-living crisis.
Four key questions brands can ask themselves
THE 4 QUESTIONS:
1. Category: Who are you competing against
2. Pack: Are you speaking to your category needs
3. Shelf: Do you have an effective level of visibility
4. Store: Are you considering in-store as a marketing medium?
1. Who are you competing against?
It can be easy to assume that your competition are solely the brands in your category, and therefore the way to win is to outcompete them. In many ways this is true, of course, but it doesn’t necessarily fit with the shoppers’ mindset.
Clayton Christensen’s – the eminent Harvard Business school professor – theory of Jobs To Be Done (JTBD), is a useful way of seeing categories from the consumer mindset. Christensen’s hypothesis was that consumers do not buy products, but rather employ them for specific jobs. This frees us from category blinkers, and we can think of products across all the different categories that could fulfil that specific job. Take snacks - if the job to be done is to provide a tasty interlude between meals, this can be achieved by a whole range of product categories – chocolate bars, biscuits, fruit, granola bars, crisps, yoghurt pouches, etc.
Looked at from this perspective, brands can identify who their real competitors are from a JTBD positioning – even if they sit outside their category. A good example of this from our community is Birds Eye peas. Their campaign identified a potential JTBD for frozen peas as an ingredient in dishes and meals, rather than as a separate side-dish. In doing so, Birds Eye changed who they were competing against – reframing how shoppers could consider them, as a potential alternative to fresh vegetables
Yes, some shoppers might still trade down to own/private label, but Birds Eye is also encouraging others to trade down to them, swapping more expensive avocados for cheaper frozen peas. And their website and social media channels support this by sharing different recipe ideas and inspirations.
All of this, by simply taking a step back and reconsidering who the competition is from a shopper’s perspective.
2. Are you speaking to your category needs?
In general, grocery shoppers don’t browse; rather they shop on a mission. And in line with the JTBD thinking, the mission is to look for brands which satisfy their needs. In the realm of food and drink, this is primarily related to taste and flavour; with detergents and cleaning agents, this can be efficacy; and in personal care and laundry, it is often led by fragrance.
| Category | Sausages | Laundry | Shampoo |
| Primary need | Taste | Brand | Brand |
| Secondary need | Brand | Fragrance | Quantity |
| Tertiary need | Texture | Quantity | Fragrance |
Source: PRS IN VIVO Cost of Living Study
In a recent study amongst global shoppers, we see this hold true across varied categories such as Sausages, Laundry, and Shampoo. Other top needs are very much related to the shoppers’ mission – “is it a brand I am familiar with?” and “is it in the quantity I need?” This underscores how important it is to signal the key benefit of the product to consumers.
We know from our extensive database of learnings that the more that pack designs focus on the leading shopper needs – in a visually engaging way – the more it immediately resonates with shoppers and improves purchase rate.
We see this clearly in this example from Lu’s Granola, where moving to a design that more centrally places and celebrates the product visual helps to drive immediate taste associations and leads to a strong increase in purchase rate. Following the guidance of ‘show, don’t tell’, the ‘extra cookies’ claim is made more recessive on pack, allowing the visual of the delicious-looking cookie to stand out.
During the Cost-of-Living Crisis, it is even more important to make sure your designs are shopper-proof, and that they clearly and effectively communicate the key shopper needs, allowing your brand to reinforce the value for money of its existing price point.
3. Do you have an effective level of visibility?
The influence of a brand in a supermarket can resonate far beyond the front of pack. Indeed, there are a myriad of point of sales marketing (POSM) tools that can act as helpful points of disruption along the shopper path-to-purchase, influencing their ultimate purchase.
Our database of learnings shows the very strong relationship that visibility has with purchase rate.
Source: PRS IN VIVO Norms Database
This means that the more a brand increases its opportunities to be visible to shoppers, the greater its likelihood of being purchased.
SRPs, shelf strips, shelf fins, floor stickers, bay takeovers… the different point of sale strategies for a brand are immense, and the potential combinations are effectively limitless. Across our community, the influence of these POSM tools to influence purchase was apparent.
EXAMPLES OF POINT-OF-SALE STRATEGIES WHICH RESONATED WITH OUR COST-OF-LIVING COMMUNITY MEMBERS
In a brand’s broader marketing, ESOV – or Excess Share of Voice – has been linked to brand growth; that is, the louder you shout versus your brand size, the more potential for gaining market share. This same philosophy can be applied to the microcosm of the supermarket; the greater visibility your brand can generate in-store above the competition, the more opportunity for purchase you create.
Of course, the quality of the POSM creative makes a significant difference. Again, turning to our database of learnings we know that a POSM that simply amplifies the brand logo is not as effective as a POSM that amplifies the brand positioning.
Yes, visibility is important, but visibility that communicates a benefit is even more powerful.
4. Are you considering in-store as a marketing medium?
Increasingly, as the media landscape becomes more fragmented, in-store is becoming the dominant way that consumers are first introduced to new products. In fact, a recent NielsenIQ study found that 64% of consumers discovered new CPG products in physical stores. The remaining 1/3 of consumers’ discovery was splintered across social media, on-demand, TVC, OOH, online retail, and a multitude of other mediums.
Given the significant role that in-store has, it can be an opportunity not just for in-the-moment activation tactics, but also larger, equity building campaigns. Therefore, in-store should be considered a marketing medium in its own right, not just a sales channel.
This point was further highlighted in our community, where equity advertising from brands in store clearly resonated with shoppers. And the completely immersive nature of going into a grocery store can further heighten the impact, whether it influences immediate purchase, or drives brand salience that pays off later when shopping online.
Navigating the Cost-Of-Living Crisis
It is in no doubt that shoppers are being more mindful of their spending at the moment, specifically being more choiceful in their decisions, and so brands need to work harder to make sure they benefit from that choice decision.
Ultimately, price is going to be a decision factor for consumers, but it is not a decision taken in isolation. Rather, it is the overall value of the brand that drives consumer choice. Yes, price is part of that equation, but we should not underestimate the benefit that a brand brings to the consumer.
In sum, to help you and your brand navigate against the Cost-of-Living crisis, ask yourself our four questions:
