David Wellisch, Collage Group CEO and cofounder.
getty
Inflation is at a 40-year high, the stock market has entered the bear market territory and predictions of a recession (paywall) are growing. Beyond Wall Street and media outlets, most chief marketing officers view inflation negatively, with some considering plans to retrench in the upcoming months.
To adapt to the current economic reality and effectively engage American consumers, I believe brands need clear insights on how spending is likely to shift and why. To position your brand to flourish in an atmosphere that seemingly grows more competitive by the day, consider these recommendations, which can be helpful during these trying times.
Key Recommendation #1: Guard against an uncertain future by putting multicultural segments at the center of marketing efforts.
Not only are multicultural consumer segments irrevocably dominating U.S. population and expenditure growth, but based on a study my company conducted in September 2021 surveying 3,785 Americans, these segments are also increasingly likely to allocate their spending in the direction of brands that embrace them specifically because of their diversity. So, making them the focus would be a great first step toward guarding against the uncertainty ahead.
The unknown aside, what is clear about the coming months and years is that the modern American demographic and cultural landscape requires redefining the mainstream and placing multicultural segments at the center. To survive and thrive, spending on multicultural segments needs to be non-negotiable. As the demographics of America continue to diversify, so should marketing strategies.
Recommendation #2: It’s good to be realistic—just don’t get caught up in the doom loop.
My second recommendation calls for optimism. As we see prices for fuel and foods soar, the weight of these economic conditions can lead to stress and trigger anxiety. The pressures can overshadow everything if you let it. However, there is a great deal that inspires optimism. When Covid hit over a year ago, stimulus checks were issued to keep the nation afloat. The stimulus is still supporting consumer spending, and the labor market is strong, likely a result of consumers’ current confidence in their ability to generate future income.
Granted, things aren’t perfect, but there is no reason for hopelessness. Optimism is a proven trait among Americans, especially multicultural Americans. When offering an outlook, brands can connect with consumers by maintaining realistic yet positive communication.
Key Recommendation #3: Understand how category spending tradeoffs differ across racial and ethnic segments.
Remember the importance of understanding category spending tradeoffs. These adjustments and transactions differ across racial and ethnic segments, so brands should take heed. Each segment approaches decision making with unique and different motivations and group traits, and subsequently, spending tradeoffs and solutions differ. Embrace nuance and abandon the so-called “one-size-fits-all” approach. Understanding how cultural differences translate to spending differences can make this possible.
Another study my company performed in August 2021, surveying 3,900 Americans, sheds light on how consumers across race and ethnicity are adjusting to higher grocery bills. The most popular responses were for shoppers to simply select cheaper brands or purchase fewer items. However, Hispanic, Black and Asian American consumers were more likely to report changing where they shop and report reducing bulk purchases. Again, I think brands must be ready to react to consumer spending tradeoffs that rely on a wide range of strategies.
Key Recommendation #4: Prepare for greater competition for consumer dollars by incorporating cultural nuance into marketing strategies.
My final recommendation involves your marketing approach. Brands can prepare for greater competition for consumer dollars by integrating cultural nuance into their marketing strategies. As the economy faces the prospect of waning further, it’s evident brands will have to fight even harder for fewer available dollars.
Traditional expenditure models incorporate a wide range of fact-based components, including inflation, employment, real income, availability of credit, tax rates, supply surplus or shortfall and the effect of substitutes and innovation. Nevertheless, human behavior is not defined by such inputs, as they are only a piece of the equation. I find that subjective aspects—including enjoyment, short-sightedness, generosity, miscalculation, respect for tradition and symbolism—play a role in how one opts to spend hard-earned money. So, an understanding of cultural diversity is vital.
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