Trust me, we feel it too.
If consumers get priced out, is that bad for marketing? Maybe not…
This month we don’t have a specific plug, we just ask that you look into your local animal rescues and donate what you can, whether it be time, money, or resources. Your local animals thank you!
SOURCES
https://www.federalreserve.gov/publications/2025-economic-well-being-of-us-households-in-2024-banking-and-credit.htm
https://blog.hubspot.com/marketing/companies-that-thrived-during-the-recession
https://www.businessinsider.com/successful-startups-founded-during-great-recession-made-millions?op=1#scribd-2007-7
The Marketing Gateway is a weekly podcast hosted by Sean in St. Louis (Sean J. Jordan, President of https://www.researchplan.com/) and featuring guests from the St. Louis area and beyond.
Every week, Sean shares insights about the world of marketing and speaks to people who are working in various marketing roles – creative agencies, brand managers, MarCom professionals, PR pros, business owners, academics, entrepreneurs, researchers and more!
The goal of The Marketing Gateway is simple – we want to build a connection between all of our marketing mentors in the Midwest and learn from one another! And the best way to learn is to listen.
And the next best way is to share!
For more episodes: https://www.themarketinggateway.com
Copyright 2025, The Research & Planning Group, Inc.
TRANSCRIPT:
So last week, I mentioned that technology companies like Apple, Microsoft and Valve are having to raise prices on their hardware because of a major problem going on right now in the technology hardware supply chain for computer chips, particularly those used for memory. Many other companies have also announced they’re raising prices on consumer hardware – Nintendo, Sony, Nvidia and Samsung are just some of the many companies that have announced higher prices on electronics.
And the three major chip makers – Samsung again, along with Micron and SK Hynix – are currently being sued for a price-fixing scheme to decrease inventory and drive up the costs of dynamic random access memory, or DRAM, so they can make a fortune selling what’s left in a constrained market where AI companies have entered as a major buyer scooping 70% of what’s available along with consumer electronics, automotive and appliance manufacturers, all of whom are also reliant on these chips, fighting for the other 30%.
By the way, these three companies make 91% of the DRAM in the world, and two of the three have already been found guilty in the past of a similar price fixing scheme that sent some of their executives to jail. And Micron has already announced it’s leaving the consumer market entirely.
This is all objectively bad news, because it’s going to make anything that uses a computer chip objectively more expensive for consumers. Even older DRAM standards are selling for absurd premiums because of the supply issue. I recently had to buy a laptop for a family member and was shocked to find that unless you’re willing to spend into the thousands of dollars to get a decent setup, you’re going to either have to compromise on the amount of RAM you get or the amount of hard drive space you get, and both of those are absolutely crucial to have plenty of when you’re forced to run Windows 11 because Microsoft is no longer supporting older versions of its operating system.
In the meantime, costs are going up in many other industries as well. Food prices have skyrocketed because of a number of shocks to the supply chain, and the beef industry is particularly impacted. Rising fuel costs have made travel, shipping and transportation far more expensive, and the costs are generally being passed on to consumers since they’re being viewed as long-term increases that aren’t going to disappear anytime soon.
Service industries are also struggling with labor as a sizable portion of the population in the Western World heads into retirement while the Millennials enter middle age and birth rates are declining, providing fewer entry-level replacements for basic jobs. And while immigrants were once a reliable source of lower-cost labor in service industries, anti-immigration policies have led many service industries to struggle to find staff willing to accept low wages and no benefits for jobs. While I actually think it’s a good thing that the economy is shifting to give workers more power, the result is that the rising costs once again get passed on to the consumer because the companies paying those workers more tend to want to protect their profits.
All of this looks and sounds an awful lot like we’re heading into another recession or even a depression, and that sounds like it ought to be terrible news for marketers. And for those who refuse to change and evolve with the times, it definitely will be.
But you know that old saying about how the word crisis can also represent opportunity? It’s definitely there, and today we’re going to explore how marketers can survive in a world where everyday things cost too much.
I’m Sean in St. Louis, and this is the Marketing Gateway.
So let’s first understand how the consumer economy works in 2026, because I don’t think we marketers talk about this topic enough.
In the old days, when people didn’t have access to easy credit, the consumer economy was pretty simple. Consumers would have a source of income – usually employment – that would put a certain amount of money in their pocket every month and they would generally spend it until they ran out of money. Some of their money would go to obligations, some of it possibly would go to savings or investments, and a little of it would perhaps be given away to charity. But most of it didn’t stay with them for very long because they’d use it to purchase things.
In the modern era, consumers tend to have more of an instant gratification approach to purchasing because they do have access to credit, and that means that consumers who want something now and who are willing to pay for it later have very few barriers to preventing them from buying what they want.
I of course recognize that there are plenty of people who live hand to mouth and for whom credit isn’t always available or in large supply – according to the Fed, 6% of American adults are “unbanked” and 13% use nonbank check cashing or money orders – but the same report says 81% of American adults use a credit card, 46% carry a balance and 62% feel confident their credit applications will be approved while only 33% of those who applied for credit in 2024 reported being denied or offered a lower amount than requested.
And those who have a six-figure income are far more likely to pay off their balances immediately while the likelihood of paying banking or credit card fees is higher among those making a five-figure income, rising the lower you go and also, of course, disproportionately impacting young people, people of color and the differently abled.
So, credit is definitely something most Americans have at their disposal. This is a plus for marketers because it allows tools such as digital marketing to be far more effective at driving purchases – you can serve an ad to a person within a target market and use a variety of metrics to capture engagement and purchase rates through digital channels. Those retailers, product companies and distributors who have omnichannel strategies that link their data together have an even broader view of what their target markets are doing, and the influence of ad buys for products or low involvement services can be inferred far better than ever before because there’s so little time between exposure and purchase.
We have credit to thank for that. It’s removed most of the barriers to purchasing.
But in a world in which things are becoming more expensive, consumers do tend to be mindful of using credit less and monitoring their spending more. They may use apps that allow them to budget their spending and which send them alerts when they have deviated from their normal patterns. They may also reduce the amount of credit cards they have to keep themselves from being tempted to use them or take drastic measures like freezing their cards in a block of ice to ensure they don’t use them rashly.
And before you knock it, I’ve heard from several people that this technique works when you’re trying to slow down your spending… assuming those cards aren’t already linked to your preferred online shopping platforms, that is!
So over the next 3-5 years, as consumer prices are predicted to rise due to a number of factors, marketers can expect to see three things.
The first is more value-conscious buying behavior. The markets for lifestyle brands, upgrades, indulgences and mid-level luxury products or services will decline; deal-seeking behaviors, patronizing discount stores and rediscovery of cheaper alternatives will rise. One example is that restaurants will see fewer diners but takeout places, particularly lower-cost choices like pizza or fast food value menus, will see an uptick.
You might think the market for luxury products would decline, but the reality is that those tend to do as well or better during tough times because the people who have disposable income tend to like to spend it. And micro-luxuries like conspicuous trendy items, cosmetics and fast fashion will still do well because even people with little money to spend like to feel good about themselves – that’s a phenomenon known as the “lipstick effect.”
The second is a lower interest in having the latest and greatest. This is a little different from where we were in 2008 during the last recession because, at the time, people were really interested in having smartphones and they needed to be upgraded regularly enough that people were willing to spend on them.
There’s really not a “latest and greatest” right now because the big technology is AI and people aren’t buying that; it’s getting shoved into everything they own. And upgrading technology is becoming cost-prohibitive, so we can instead expect to see people more interested in hanging on to their computers, tablets, smartphones and game consoles or seeking sale or value-priced items instead of buying the new flagship products.
The third is a greater interest in distraction. During hard times, people are far more likely to seek out novel and interesting things to avoid having to focus on the harsh realities around them, especially if those things are free.
In the 2008 recession, a lot of traditional brands perished, especially in the retail space. But many novel new brands and platforms grew during that time. Some of the biggest success stories included online services like Dropbox, Glassdoor, Groupon, Airbnb, Venmo, Pinterest, Square, Whatsapp and Uber.
There were also food brands like Beyond Meat, Smashburger and Kona Ice and service brands like Rent the Runway, Zocdoc, Zulily, Kabbage and LearnVest. And let’s not forget Fitbit, which joined several other personal fitness trackers as a big trend post-recession!
But another brand that grew greatly during the last recession was Netflix. Originally a DVD rental-by-mail service, Netflix launched its streaming video service in 2007 with a bunch of not-so-desirable content but gradually transitioned away from physical media, launching Netflix Originals in 2009 and even attempting to divest from its rental business entirely in 2011.
Netflix inspired several different competing streaming video on demand platforms like Hulu and Vudu, and even though these largely required computers or specialized media players to utilize at the time, the appeal of video on demand decoupled from a cable subscription appealed to those seeking value and novelty.
Similarly, social networks like Facebook and Twitter and media services like iTunes, YouTube, Pandora and Spotify all either were founded or saw rapid growth during this time. It wasn’t just because they were new and novel – it’s because they were welcome, low-cost distractions to the poor economic news people were receiving daily. These platforms grew far more once the recession ended and consumers began more rapidly adopting smartphones, but they emerged from the recession with a base of users already obsessed with them.
OK, so we have these three shifts – value-conscious, lower interest in the latest and greatest and higher interest in distraction – and marketers have to be really savvy about how important these are to consumers.
And a fourth characteristic that is always important, but which can become even more prominent, is relationship-building, because caring for consumers during the hard times makes them tend to feel more attached to brands, products and services during the good times.
So, how do marketers take advantage of these shifts?
Let’s first understand that these four shifts all suggest a general tonal change in how marketers communicate with consumers.
One thing Marketers need to do is get away from hype, which is a fun distraction, but not very actionable when people don’t have any money. Getting people excited about something that then is coming in at a high price doesn’t work well.
Instead, marketers have to position their brands, products and services as being something easy to try for cheap or free and which is helpful, valuable, interesting and relatable, which means thinking less about features and attributes and more about storytelling, humor, novelty or social virality to get those points across.
As it happens, the timing couldn’t be better for this – marketers who are making use of AI tools in their production are probably really well-positioned to provide that level of engagement, at least for now. I don’t want to turn this episode into a discussion on AI, because we can save that for another time, but the rapid ability to produce creative content that’s fun and interesting and disposable really suits the times we’re heading into.
But beyond the rapid pace at which AI tools allow production to proceed, marketers who are creative and fun are going to drive engagement and interest a lot more than those who try to focus on persuading customers to spend.
And that leads me to a second point. I’ve seen a lot of talk recently about brands trying to double down on their current customers, which is actually the opposite of what they should be doing right now unless they have a strong service relationship with them that makes that move feel natural. The customers who can afford to spend more are a rarer and rarer sight in an economy where consumer prices are rising. What you have to do instead is focus on customer retention and organic growth by caring for customers and meeting their needs and providing them real value.
This is one of the reasons that old brands tend to wither and die during recessions while new ones spring up – the old ones don’t want to cut into their profits, but the new ones subsidize their service to try to attract most customers. Mature brands should really focus on delivering value and communicating how they’re doing it. Waiting until sales dip is too late – it should be part of your strategy now for the remainder of the decade.
So, for example, if I were running a steakhouse right now, I’d probably be looking for other products to pivot some customers to in order to keep my high beef costs from driving customers away. As I discussed last week, that’s been a winning strategy for Longhorn Steakhouse, which is offering parmesan-crusted lamb chops that have been a viral sensation on TikTok. Lamb is cheaper than beef right now and also novel for a lot of people who aren’t used to eating it regularly. Offering it as an alternative is a very savvy move.
If I were running a service business right now and I was worried customers were going to cut back, I would probably conduct some research with them, understand what their pain points are and then try to offer an add-on service to meet those needs at an affordable price. For example, if the service I was offering had to do with pet boarding and I found out that many of my customers needed help with on-demand dog walkers who could be booked through a simple text message, I might explore offering that new service at as low a cost as possible to retain those customers for my more profitable boarding service.
A third point is that marketers need to recognize that as prices increase, consumers are going to respond less to urgent messages and spend more time evaluating purchases, even for goods and services that might have been low-involvement in the past. Even very simple staple goods can become the sort consumers will shop around for to find deals or alternatives, and you cannot take for granted that they’re going to continue to purchase as readily or as willingly if they feel a need to control their spending.
So, beyond offering deals and promotions, looking for ways to communicate value is important, particularly if you can’t lower prices to compete with low-cost providers. In products, quality is always a differentiator, and customers will pay more for perceived benefits that differentiate a product, like better ingredients or materials, more ethical sourcing, stronger warranties and so forth. In services, customer service is a big differentiator, and customers will spend more to get better service if they feel like it will help them avoid frustration down the road.
Look. It’s going to be a rough road ahead for consumer pricing. But marketers have the unbelievable advantage of being able to roll with the punches and shift along with the culture. It’s happened before and it’ll happen again. So adjust your strategy, look out for your customers, and enjoy the ride ahead – if you go in knowing what to expect, you’ll be better-positioned when prices start to come down again in the years to come!
I’m Sean in St. Louis, and this has been The Marketing Gateway. See ya next time!
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