How brands can survive Nigeria’s rapidly increasing inflation-experts
By Kasim Bakare
Worried by the alarming inflationary trend and the resultant decrease in the spending power of consumers in the country, brand experts in the integrated marketing communication(IMC) industry have expressed their views on how brands can deploy survival strategies to survive the ugly situation.
Recall that in April, the National Bureau of Statistics(NBS) released the inflation figures for the month of March, 2021 which stood at 18.17%., The last time Nigeria recorded an inflation rate higher than 18.17%, was in January 2017 when headline inflation stood at 18.72%. The latest figure is a far cry from the 17.33% rate recorded in February 2021 which represents 0.82% points higher than the February figures.
For brands, their survival rests solely on the patronage of their customers. On the consumers(customers) part, a spiraling inflation and continuing increase in the prices of goods and services leads to a reduction in their spending or purchasing power. With no hope of the worsening economic situation abating, brands would have to adapt with the consumers’ economic situation by adopting marketing strategies to align with the consumers’ position.
Commenting on the issue, Dolapo Otegbayi, Specialized Nutrition Director, Frieslandcampina WAMCO, noted that inflation as an important indicator, measures how much more expensive a set of goods and services has become over certain period, usually a year.
According to the foremost marketer and brand strategist, the situation is worsened by the wide gap created by reduction in wages as against the continuous increase in prices.
“ In April 2020, inflation was 12.26% , and currently, our inflation rate has surged to 18.17% . This suggests that in a year, branded and unbranded products and services have become 1.5xs more expensive. In a country where 70% live below poverty is extremely high! This also suggests that spending power of Nigerian consumers will become more squeezed as the gap between wage and price inflation grows. Overall, the ideal as argued by many Economists suggests that predictable inflation can be and is beneficial for any economy. This argument is built on the premise that low and predictable inflation makes it easier for service industry for example to take advantage of impact of inflation to carry out a price-adjustment on contracts and interest rates, thereby lessening its distortionary impact”.
She added:” Furthermore, being aware of possible future increase in price is enough trigger for consumers to bring forward their plans and decisions to make purchases; and all these actions and activities support to boost business and economic activity irrespective of the industry and category by the way.
Speaking further, she said: “As it is presently, prices of branded and unbranded food soared more than 50%, this has put unquantifiable financial pressure on families and households who are experiencing the worst recession, unemployment, stagnant economy, increasing insecurity are all unfavourable situation Nigerians are experiencing at the moment.
Expressing her optimism on the reversal of current situation, Dolapo expressed confidence in the economy to bounce back despite the challenges.
“Inflation pressures would probably remain high in coming months, nevertheless, I’d like to encourage Nigerians to not panic. I am optimistic and positive that we will sooner than later get out of the current state of affairs”.
She stated further,”As brand enthusiasts, we could argue that it’s not all bad news. This is driven by high probability of consumers spurred to spend more and now especially for high involvement categories. To encourage and drive increased spending, it’s imperative for brands to offer and drive its distinctiveness via superior offering, excellent customer service and customer engagement”.
On marketing strategies to survive the inflationary period, Dolapo noted that brands must continue to put consumer and their needs at the center of the brand marketing strategies.
“Brands should put forward all the brand benefits which reassures consumers they are doing the right thing. Brands should stay close with continuous pulse check via surveys to ask Consumers what will convince them to purchase today. From time to time, reward Consumers for their loyalty.
On his part, Tunji Adeyinka, GMD Republicom Group, noted that brands would have to deploy new strategies and move with the consumers as a result of the present economic realities
Hear him:”As the rate of inflation increases and prices go up, consumers spend less and they trade down. Brands maintain the value they offer but adjust to the situation with smaller pack sizes. Brands that have value brands in their portfolio try to ensure that if at all consumers are trading down they buy their value brands.
On whether it is advisable for brands to invest in advertising considering the propensity by brands to reduce adspend during a tough economic period, Tunji noted that brands should rather sustain their investment in advertising to help consumers choose.
In his words, “At the end of the day quality means the consumer does not pay twice when they move to a lower priced brand that does not deliver on quality”. He concluded.
RECOMMENDED ARTICLES
Comment
No comments found.