By: Shea Posey, Senior Account Executive, and Jake McKenzie, Chief Executive Officer
You hear it on the news. You see it in the grocery store. You feel it at the gas pump. Inflation is dominating everyone’s economic concerns, including brands that have had to increase the costs of their own goods and services to cover more expensive supplies and cost-of-living pay increases for employees. As consumers are paying closer attention to prices than ever before, some brands may be tempted to cut marketing budgets in an effort to stay off raising prices. But, could that do more harm than good?
The answer is yes. According to a study by Gain Theory, a 10% increase in share of voice can decrease people’s price sensitivity by as much as 20%.
What does that mean? Your marketing spend has a direct correlation to consumers’ price sensitivity. That’s right! The more you spend, the more price insensitive your customers become and are willing to tolerate a higher price.
This goes back to everything we know about consumer psychology and the importance of brand awareness. The whole concept of brand building relies on System 1 processing where the brain is looking for simple answers to complex questions. A strong brand gives the brain a simple solution, which means other factors, such as price, become less important when it comes to making purchase decisions.
More Media Spend = More Brand Exposure = Increased Brand Awareness = Increased Brand Affinity
People are willing to pay more for strong, familiar, popular brands.
Now, we’re not saying that price isn’t a factor as long as your brand-building efforts are on point. However, having strong brand awareness gives you an edge over your competitors when the time comes to make necessary price increases.
To discuss how we can help you turn psychological insights into great creative advertising, give us a call at 833-579-1905 or email us at [email protected].
