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How to communicate your value proposition in a recession

bigstock-Financial-Wealth-Money-Savin-437303423 (1)The UK is currently navigating a technical recession after GBP shrank by 0.3% in the last quarter of 2023. With an inflation rate still hovering around 4% and historically high energy prices, the art of effectively communicating your value proposition has become crucial for brands, regardless of their place in the market. So, how can marketers balance cost-saving messaging with maintaining a premium image?

Understanding the value proposition

At its core, a value proposition is a clear statement that explains how a product or service solves a pain point, improves a situation, delivers specific benefits, and tells the ideal customer why they should buy from this particular business instead of the competition. In the current economic climate, where consumers are tightening their belts, understanding and communicating this value becomes paramount. Brands that once thrived on luxury or convenience alone now find themselves needing to justify their price points and value more than ever.

Effective communication

Clear, simple communication that connects with the consumer on an emotional level is essential. It's about articulating not just the functional benefits but also how the product or service makes life better or more convenient for the customer. It’s arguably easier for companies that have always fished in those waters – value and own-label brands have experienced growth as people trade down. In fact, own-label sales grew twice as fast as branded goods in 2023. As higher-end brands have faced increased competition, their marketing has had to adapt…

Examples of effective communication

American Express: Amex’s platinum card comes with a high price tag – an annual fee of £650 in the UK. Recent campaigns have seen the brand highlighting the potential savings that justify the annual fee, in addition to their more usual lifestyle and experience-based marketing. This demonstrates an understanding of current consumer hesitancy around high upfront costs.

Ninja Air Fryers: By focusing on the energy-saving benefits, Ninja Air Fryers have tapped into the consumer desire to reduce bills, illustrating the power of aligning product benefits with current economic concerns. Their messaging, essentially save 75% on your energy bill by purchasing a Ninja, directly addresses a pain point while showcasing the practical benefits of their product.

Ocado: The upmarket online grocer is currently price matching Tesco in an effort to reassure customers they're getting value for money, a simple yet effective way to communicate their value proposition.

Waitrose: Cutting prices up to 14% helps reposition the premium brand as more accessible without diluting its premium perception, addressing the balance between quality and affordability.

Challenges and Opportunities

However, not all brands have found success in communicating their value proposition amidst the current financial backdrop. Brands like Peloton, which thrived during the pandemic, have faced challenges in maintaining their momentum.

Despite offering premium fitness experiences, Peloton struggled to justify its value proposition amidst heightened cost consciousness and shifting post-pandemic behaviours such as heading back to the gym. The company was worth around $50 billion but is now valued at a fraction of that - around $1.5 billion.

To effectively navigate these challenges and seize opportunities, it’s important to regularly reassess and refine their value propositions with a strategic lens. Here’s some actionable tips to help elevate your value proposition:

Understand your audience: Conduct thorough market research to gain insights into evolving consumer needs, preferences, and pain points. Tailor your value proposition to resonate with specific audience segments and address their most pressing concerns.

Highlight tangible benefits: Emphasise the practical advantages and outcomes that your product or service delivers. Whether it's cost savings, time efficiency, or enhanced convenience, focus on tangible benefits that directly impact the consumer's life.

Provide comparative value: In a competitive landscape, demonstrate how your offering outperforms alternatives in terms of value and quality. Whether it's price matching, cost-saving features, or superior performance, highlight what sets you apart from the competition.

Foster trust: Build credibility and trust with your audience by being transparent about your value proposition. Provide evidence, testimonials, and real-world examples to substantiate your claims and reassure customers of the value they can expect.

Adapt and Innovate: Stay agile and responsive to changing market dynamics by continuously refining and evolving your value proposition. Innovate proactively to address emerging needs and trends, ensuring that your offering remains relevant and compelling.

In an economic climate characterised by uncertainty, effectively communicating your value proposition is key. Long form content such as native articles can help position your brand as a trusted ally that delivers meaningful value and resonates with consumers in even the most challenging times.