Changing with the times: What rising costs mean for marketing strategies

As the cost-of-living rises, research has shown that Kiwi shoppers are increasingly driven by necessity. NZ Marketing speaks to retail marketers about how they are acknowledging changing customer priorities and adapting their strategies to accommodate this.

The results of the latest JCDecaux IRIS audience research has revealed that consumers are scrutinising how much they spend on Fast Moving Consumer Goods as their budgets are increasingly stretched.

Victoria Parsons, Senior Strategy and Insights Manager JCDecaux New Zealand says the research found 91 percent of New Zealanders are noticing household budgets are being stretched and a quarter of respondents reported that they are actively reducing their spend.

“For New Zealanders noting reduced disposable incomes, grocery shopping is an easy place to make cuts. Shoppers are increasingly paying close attention to what goes onto lists and intro trolleys. It is interesting to understand consumer perceptions as to what is a necessity and what is a luxury; we see consumers justifying brand purchases as necessary for quite personal reasons.”

In terms of acknowledging this in marketing, Parsons says that Out-of-Home advertising can be a strong platform to impact and influence in-store and online shoppers throughout the day while consumers are mentally planning their shopping lists.

“Eighty three percent of survey participants agree that brands that advertise on Large Format are quality brands, which is key for consumers to overcome price sensitivity and avoid replacement by home brands.” 

Brands deemed an everyday luxury are most at risk to spending cuts with the research showing 58 percent of respondents are planning to stop buying everyday luxury items while 47 percent of respondents plan to adopt more home brands. 

However, Gary Rosewarne, Sales Director JCDecaux New Zealand says it is interesting what consumers deem as everyday luxury.

“Respondents told us items such as coffee and tea, bread, self-care and dairy are non-negotiable in terms of buying favourite or quality brands, whereas for canned and frozen goods, and cleaning products, people are shopping the category based on price. Luxury does not mean premium, it means moments where you expect quality FMCG experiences and won’t trade down – you justify the price premium.

“The research concludes that as inflationary pressures increase – due to growing interest rates and higher prices on most things we consume – brands should be focusing on protecting purchase intent and quality perceptions. Brands can get ahead of changes to consumer spending by communicating product benefits through Out-of-Home advertising, giving consumers confidence to continue buying quality brands.”

Annemarie Browne, Chief Marketing Officer at Lotto NZ, says acknowledging the current economic situation means the brand is focusing on getting a lot of people to spend a little rather than the other way around.

“We don’t want anyone to spend too much and we certainly don’t want anyone to spend money on Lotto tickets when they need to put food on the table and feed their family or pay for things that are important.

“The challenge for us is how do we make sure that our communications and the way that you experience Lotto instore or online support you to spend a little.”

Browne says the business has changed its strategies to get people to rethink their investments and make sure they are doing the right things by giving them more time to consider, having information in front of them to let them know how much time and money they have spent.

“We are already working hard on making sure that we have got that balance and I think there has never been a more important time than right now to get that balance right.”

Annemarie Browne Lotto NZ
Annemarie Browne.

The research also reveals that the emotion or promise of brands can overcome price sensitivity. Consumers seek validation to define which brands remain as necessities on shopping lists. Brands without meaningful quality cues or unique brand benefits may be swapped out for cheaper alternatives.

Andrew Cooper, Chief Marketing Officer Electric Kiwi Ltd, says the energy company is “very conscious” of the pressures faced by Kiwi families at the moment and is focusing on opportunities for customers to save money.

“One of the ways that we can help is by educating people on how they can save money. For example, loadshifting is a huge opportunity for consumers to save money on power, and it also has the added benefit of using electricity that tends to have less carbon associated with it. Put simply, at off peak times, power generation tends to be cheaper and greener.”

One example of this is the companies new MoveMaster plan which rewards people with up to half price power off peak.

Andrew Cooper.

“Families can save a lot of money if they get power moving to off-peak periods. Much of the electricity we use can be moved, and changing these habits will reward people with extra cash, and with the knowledge that they are doing their bit during the energy transition. We are just getting started in this space, and there is a lot more to come with innovation in EV charging, batteries, solar etc. Our goal is to help lead the conversation and innovation in this space – so that we help New Zealand transition from fossil fuels and from high power bills over time.”

The JCDecaux IRIS audience research was conducted in May 2022 from 600 consumers nationwide, sourced from a nationally representative Pureprofile panel. Access a copy here

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About Bernadette Basagre

Bernadette is a content writer across SCG Business titles, The Register and Idealog. To get in touch with her, email [email protected].

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