Reach out to help out

Life is challenging at times. Rarely has it been so challenging for so many at one time as now. Covid is still in the shadows, households are faced with unprecedented cost increases in basic goods and services. So, while energy costs are skyrocketing and show little sign of coming back to earth, inflation is eroding spending power, and interest rates sucking more out of domestic budgets, consumers will always look for ways to enjoy life and maintain their lifestyles as best they can.

“Economics of a helping hand”

It’s realistic to expect discretionary spend will take a big hit. Both in terms of amount and frequency of spend – less will be spent less often. Any brand able to mitigate the effects of the cost-of-living crisis can only be seen in a positive light.  Can it make much of a difference though?

We believe it can. And we believe the economics stack up to allow households to counter these challenges head-on.  For example. A family is likely to have a hit to their disposable income of £2,000 a year or more.  They also like to spend on meals out, going to the cinema, enjoying days out at theme parks and attractions, indulging themselves at hair salons and beauty parlours. All the things that make us feel good, feel alive and feel fulfilled.

To illustrate. Take the headline Office of National Statistics figures. Housing, fuel and power take the biggest chunk of household budgets (16%). Interestingly the second largest spend is recreation and culture (15%) - add in restaurants and hotels and you account for over a quarter of household spend.  So, if you consider the median, inflation adjusted, household disposable income of £30,000, an increase in £2k in housing and heat costs is significant and pressures every other expenditure group.  Let’s suppose this increase is absorbed equally across all other expenditure groups then the ‘good things in life’ will be hit by 25% of that £2k. Or £500.

“Give back to keep up”

Here's the deal.  A low-cost, high-value, promotional marketing reward can go a long way to accommodate this amount. Cinema discounts, 2-for-1 dining, reduced entry costs to attractions and experiences, and all manner of offers and incentives in travel, beauty, lifestyle and entertainment can rapidly reduce the amount a family needs to spend. These activities account for £7,500 out of that median disposable income, so it’s reasonable to think that a single powerful brand offer can deliver the £500 saving. Add in offers and rewards suitable for FMCG, food and drink and it becomes clear that brands can ‘give back’ in a hugely material way without requiring drastic sacrifices in household behaviour.  As a sidenote –tightening belts also affect promotional partners directly so offers and incentives can be negotiated to be even more attractive and compound this ‘saving’ effect.

We’re fully aware that statistics are one thing and recognise that decisions by households will be personal and based on their individual circumstances. However, we also know that brands can help sustain economic activity, do their brand reputation a power of good, and enable families to maintain lifestyles and keep a more positive outlook in these testing times. And that represents real value to everyone.

If this is something you would like to discuss with us, please give us a call!