Economic Crisis: How Brands Navigate Money & Emotions

In Argentina, if you were born in the ‘80s, you have lived almost half of your life in recession. Annual inflation has been above 50% since 2018. And the probability that Argentina enters another recession in the next six months is 70.12%. 

By contrast, in the US, people born in the 80s have only spent about 10% of their lives in recession, with each downturn separated by an average of eight years. The average rate of inflation in the US between 1960 and 2021 is 3.8%. For that reason, it’s no wonder developed countries panic at the earliest sign of an economic crisis. 

Entrepreneurs and company executives may wonder how marketing and communication works in a country whose inflation for the first seven months of 2022 is 46.2%.

At Slap Global Argentina, we are accustomed to marketing in challenging economic times. Typically, our briefs begin with phrases like “our consumers can no longer afford our products” or “B-brands are gaining market share, while we are losing it”. And while each brief, each brand and each product are different and require subjective analysis, there are a few principles that guide our approach to navigating economic uncertainty.

Economics is a social science.

First, there is an assumption that we need to break. The economy and economics of business are not cold, mathematical, and scientific. Many tend to label it as such, perhaps because numbers are the driving force used to describe what the economy or business is and where it is going. Instead, we encourage our clients to view economics as a social science whose determining factor is the behaviour of people. Brand economics therefore becomes a science that studies human emotions and behaviour tied to money and resources.

Rather than see the numbers, see the people behind the numbers.

Be the calm in the storm.

If we start from the basis that people have a connection to the brands in their lives, it is important that during periods of crisis, brands maintain and nurture their connections. As the UK government said famously during WWII, “keep calm and carry on.”

Studies show that economic crises lead to an emotional response of difficulty, despair, disappointment and bewilderment. To help people cope with these feelings a brand can bring calm by doing things to add stability to turbulent times. 

Argentinian brands are accustomed to playing this role, Carrefour supermarket, for example, developed an accessibility platform called ‘Courageous Prices’ showing a commitment from the brand to customers during an economic crisis. This platform guarantees a fixed price for more than 3,000 products (many of which are their own private-label brands) despite the country's inflation rates.  The guaranteed prices were even recorded on metal plates in the aisles, symbolising the strength of their commitment. This is a smart and empathic move for the retail chain that has created even more loyal shoppers. 

Become emotionally indispensable.

Data shows that during inflation, the total value of the cart is maintained, while the items in the cart decrease. Which begs the question, how can marketers make sure their brands remain in the cart and are not discarded for a cheaper option (or no option at all)?

For this, marketers must appeal to the emotion behind decision making in the aisle.  Brands that remain in the cart, do so for emotional reasons more than rational. They may be symbolic to a person’s identity, “How does this product define me?” or to uncompromising emotional importance, “What does this brand mean to me?” 

In 2017, Coca-Cola Argentina developed a campaign that spoke directly to these emotional ties with the brand through the line, “There is nothing like taking a Coca-Cola home.” This idea fought directly against the rational desire to switch to a cheaper option and was further enhanced by giving the more expensive purchase emotional meaning: Coke represented an act of caregiving for friends and family by paying a little extra for the best. 

Invest in your customers. 

77% of consumers worldwide expect brands to show support to people in times of crisis. Brands must see that support as an investment in the future. Guillermo Oliveto, an Argentinian specialist in human behaviour, consumers and markets said "the brand that stays in the bad, will be rewarded in the good".

Let’s take Mercado Libre as an example. Mercado Libre is the biggest online retailer in LATAM. During the pandemic, they made a number of investments in both their business and customer relationships.  For businesses, they lowered commissions for all those who sold products on their platform. For customers, they removed delivery charges helping to ease the burden on customers’ wallets. In this way, they were supporting not only their clients (the businesses), but their clients’ clients too. Moreover, they changed their logo to signal their support in an emotional way. Their shaking hands turned into touching elbows, and their tagline was changed from “lo mejor está llegando” (the best is coming) to “codo a codo hasta que llegue lo mejor” (side by side until the best comes). 

Thanks to this, the brand became a top brand in Argentina in 2020 and the country’s lead destination for online shopping.

This is how we treat economics like a social science. This is a time when the link between people and brands must be nurtured and strengthened. Just as one takes care of loved ones in times of crisis. The economy runs on exchanges of goods, but the best brands recognise the emotionality attached to these goods. That is why, in the face of recession, inflation, and the economic crisis, the most important thing we can do is continue to put people at the centre, understand what happens to them, and work from that human truth so as not to lose the links that connect us with them.