Marketing Minute: How to survive “election anxiety” through marketing – July 2024

By Paul Friederichsen

Many flooring retailers have noticed a slowdown in store traffic and sales. Activity on the loading docks of flooring distributors isn’t what it used to be. Manufacturers aren’t seeing the volume of orders they once were. Have consumers come down with a bad case of “election anxiety”? What many in the media have labeled the most important presidential election in American history has a lot of voters on edge. And uncertainty does have a way of making consumers wary of committing to a major purchase, especially one that can be easily deferred.

AN ANXIETY-INDUCING SITUATION
In most cases, a flooring purchase can be deferred, unless the water heater flooded or the kitchen caught on fire. We saw this during the recession of ’08, and there are some similarities now. But while some chalk it up to the pre-election jitters, others argue that elections themselves have really nothing to do with the consumer’s reluctance to spend; that it instead has everything to do with the confluence of several economic realities. As J.P. Morgan states, “Elections have little impact on stock performance. The economic backdrop does.”

In the June 2024 “Marketing Minute,” we took a closer look at Generation Y, also known as Millennials. As a group, their average age is about 35 years old, and many are at the midpoint in their age bracket and floor purchasing potential. But they, like all flooring customers, are experiencing an “economic backdrop” that especially affects them:
• Inflation (excluding food and energy) is staying stubbornly high at 3.3% as of May 2024.
• The average 30-year fixed rate mortgage interest rate remains high at just under 7%.
• Credit card interest rates are at an all-time high. New credit cards have climbed to 24.8%.
• Average Millennial debt load is about $30,000, including credit cards, student loans, personal loans and auto loans.
• The U.S. Index of Consumer Sentiment has been in steady decline since January 2024, dropping to 65.6 in June.

Election year news and campaign rhetoric does tend to exacerbate the problem by focusing on these issues for months on end via social and news media. In essence, this becomes a perfect storm for the flooring industry and every other home furnishing and home décor manufacturer.

In fact, there are too few available homes, which are too expensive to qualify for and own by a generation too burdened with debt and with a cost of living that is too high. The latest McKinsey research notes that “consumers planned to pare back their spending on discretionary items. … Consumers also said they plan to reduce their home-related spending, such as on furniture and décor.”

All the marketing in the world cannot reverse these external challenges. In anyone’s SWOT (strengths, weaknesses, opportunities and threats) analysis, the current situation should be at the top of their “threats” list. Marketing can, however, use the situation as leverage. J.P. Morgan’s article on election-year investment jitters noted, “Brands can seize the moment to associate with key economic themes discussed during presidential debates, such as environmental responsibility, smart spending and family, providing a platform for their products and services that goes beyond frugality or apprehension. Trust and confidence, already critical to consumers, gain amplified relevance during an election year, affording savvy marketers the chance to underscore their commitment to transparency and authenticity.”

INSTILLING TRUST THROUGH MARKETING
The insight here is to practice the art of empathy with your customer. They are going through a disruptive economic experience. This is your brand’s opportunity to say, “We hear you.” Resist the temptation to cut prices. Pricing is never, in and of itself, a strategy for success. Why? It can always be pre-empted by your competitor.

In his article “7 Keys to Marketing Under Economic Adversity,” Larry Light, a regular contributor to Branding Strategy Insider, outlines his advice during times such as these:
• Do not confuse price and value. A sign of troubled marketing is defining value as merely low price. A brand’s worth depends on a lot more than price. Value can happen at any price point. Value is in the eye of the customer-every customer is value conscious.
• Maintain relative price. Do not increase price in the hopes of making up for lost sales. Avoid this losing strategy that sacrifices long-term value creation. Do not focus on deals. Deals destroy brand loyalty. Deals increase price elasticity.
• Make sure your brand’s perceived value is seen as a fair value for the promised experience. Marketers do not determine fair value; customers do. Marketers set price; consumers decide fair value: Is this brand a fair value relative to competitive alternatives that I am considering?
• Focus on maintaining and maximizing trustworthy brand value, not merely messaging. Do not allow marketing to focus solely on how to best communicate with customers, when to communicate with customers or across which devices.
• Create and implement a “plan to win.” A plan to win aligns the entire enterprise around creating and strengthening trustworthy brand value.
• Maintain or increase product/service quality. Cutting quality to reduce costs is wrong. Data shows there is better return on investment performance after bad times if a brand maintains quality.
• Defend the profitable business that you already have. It is risky to focus on new products at the expense of beloved, existing brands.

As marketers know, when a brand ceases to grow, it begins to die. There is no room in the flooring industry, or in any industry for that matter, for a brand to simply coast. We may be in a state of “election anxiety” for now, but fight against the result of slowing momentum. Brands must adapt to the circumstances yet stay consistent with the brand’s essence and value proposition.

A very astute observation on brand growth comes from Walker Smith at Kantar: “For brands, it’s a story of buyers-when the number of new buyers drops, brand growth is directly affected. The primary driver of brand growth is greater penetration, or more buyers. (Price increases can also grow dollar volume, but only for so long.) If brands and their categories don’t grow their customer base at least as fast as population growth, they will steadily lose share and value. Slower population growth intensifies this challenge with fiercer, costlier competition for a shrinking pool of new customers.”

Translation: Keep marketing! And if you haven’t developed, maintained and supported your brand through marketing before now, it is for times like these that you should.

Copyright 2024 Floor Focus 

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