Marketing in an economic slowdown: 5 ways to connect with consumers

The bad vibes economy is coming. But it’s also kinda already here. And there’s a chance it’s not actually going to be that bad. We know, it’s confusing. 

On one hand, consumers are pruning their budgets, but they’re also indulging in life’s little treats, like exorbitant Beyonce concert tickets and $40 water bottles. And just a few months ago, consumer spending hit historic levels (hello, Cyber Monday). But now, 27% more consumers are spending less money.

Mixed signals, anyone?

Inflation hits everyone differently. As of Q4 2022, 25% of consumers in 9 markets say inflation has had a small or no impact, 43% say it had a moderate impact, 26% say it had a dramatic impact, and 6% aren’t sure. These numbers shifted from Q4 2021, where 29% of consumers said inflation had a small or no impact, 47% said it had a moderate impact, 21% said it had a dramatic impact, and 3% weren’t sure.

Because the slowdown story is such a sensitive topic, the only way for brands to survive this unpredictable time is to make sure their content marketing strategy is on the right track. Whether consumers are feeling the pinch or re-prioritizing their spending power, you need to understand how to connect with your target audience while they figure out their budgets and buying habits. 

Let’s fill in the blanks. 

5 ways to connect with consumers in an economic slowdown

1. Stay close to the data

2. Less is more with luxury consumers

3. Authenticity is everything

4. A little treat goes a long way

5. Talk to your next audience now

1. Stay close to the data

Meet your new best friend, data. From here forward, the two of you have to be inseparable. 

Data should be your go-to for crafting brand marketing that’s relevant, consumer-driven, and, most importantly, sensitive to what’s going on with your customer base. 

Data is king if you want to connect with people who are becoming more risk-averse and modest in their spending. 

But don’t be fooled – consumers are still buying things. That means it’s your job to know what messages will land by not only focusing on what motivates shoppers, but also tapping into the nuances behind buying behavior in different markets.

In places like Argentina where consumers are experiencing one of the highest inflation rates globally, people are actually less likely to say they’re price-conscious. Yet in Japan, where consumers are used to low inflation rates, they’re much more sensitive to rising prices. 

These small details have a huge impact. They give you the opportunity to fine-tune your marketing strategy to ensure you’re using the right concepts to reach the right audience. 

No more poking around in the dark for you.

2. Less is more with luxury consumers

When it comes to luxury advertising, the name of the game is discretion. Tasteful advertising is how you win. 

Big spenders aren’t into the pomp and circumstance of their pricey purchases – they’re not in the mood to show off right now. In fact, the number of US consumers who say they like being the center of attention has dropped by 13% since 2021. But, they’re still dropping cash. 

Recent retail trends reveal the highest income earners have big buying plans in the next 3-6 months compared to other income groups. 32% plan to buy a domestic vacation, 24% plan to buy new jewelry, and 21% plan to buy a new handbag. 

So, how do you reach audiences that are still spending? 38% of consumers say the most effective method to sell a product is an ad with content or promotions that focus on and adapt to their specific behavior. And right now, they’re conducting themselves like shoppers who prefer to keep their spending on the hush. 

The opportunities to reach out to luxury buyers are there, but it’s time to use your inside voice if you really want to connect with them. 

3. Authenticity is everything 

Things have come a long way since the ‘90s but one adage from that era holds true to this day: keep it real.

Nothing draws in a loyal customer like advertising that’s authentic, honest, and transparent. It’s all about consumer confidence and building trust with your audience so they feel comfortable spending – even if you need to make some changes they may not be too keen on. 

We can look to brands like Pret for guidance on how to break bad news in the best way. When they needed to raise the prices of their products, they offered their customers a clear, simple, and earnest explanation. 

The team sent out an email six weeks before the changes that explained why they were raising prices (inflation, staff wages, and VAT), when the changes would take effect, and why consumers were still getting a good deal.

This went over well with shoppers because it turns out that price is the last thing they care to know about. Consumers are more interested in knowing when a price increase will happen (30%), why it’s happening (28%), and how it will affect them (26%). 

Long story short: no need to beat around the bush. They just want it straight, no chaser. 

4. A little treat goes a long way

If you think consumers with lean budgets are depriving themselves, we need to talk about lipstick. Wait, we can explain.

As our senior trends manager, Katie Gilsenan, points out: “During the 2001 recession, the phenomenon known as the “lipstick index” was born, when Estée Lauder observed increases in lipstick sales. In 2023, we can expect to see a similar story.”

It makes sense, then, that brands like Ulta saw incredible Q2 earnings across all major categories and Walmart is now giving shoppers a break on cosmetic prices with inexpensive “Beauty Finds.”

People are spending less, but they’re also looking for more ways to sneak in affordable indulgences that make them feel good – which is even more important during hard times. 

The key to positioning your messaging and ads is to speak to your audience on an emotional level – whether you want them to go for a little treat or bigger goods. If you can tie your strategy to a feeling or an experience, you’ll find your in. 

5. Talk to your next audience now

Want to connect with the new class of consumers? Talk to Gen Z, millennials, and Zillennials. Yes, Zillenials. They’re like the middle child between Gen Z and millennials.

These generations are not only more likely to say they’ll spend on luxury and entertainment, but they’re also optimistic about the future of the economy and their finances. Oh, and they live with their parents (49% of Gen Z do in Western markets, and 72% in APAC).

Although they have less spending power than older groups, they have more to spend thanks to free rent. With the number of US consumers aged 16-24 saying they buy designer brands every 2-3 months up 13% and 25-34 year old consumers being the most frequent buyers of designed brands, it’s safe to consider them the new luxury shoppers. 

Brands like Nike and Under Armour got the memo. The infamous Just Do It brand is putting Gen Z in China on center stage with their latest marketing efforts and Under Armour just released a sneaker designed specifically for this high-rolling generation. 

Let’s bring it all together 

Now’s the time to make sure every move is backed by actionable insights that zoom in on how consumers are feeling, how their spending habits are shifting, and what they want from brands while the bad vibes economy rattles our purse strings. 

It’s essential to remember that not everyone will be feeling the effects of this economic uncertainty in the same way. 

Marketers are going to have to turn to data and learn to read the room in order to create campaigns that speaks to both the buyers and budgeters.