Brand loyalty at risk as inflation starts to sting
Nearly half (48 percent) Indian consumers have switched to less expensive brands and are making less purchases than before
Rising cost of living is starting to impact consumers, according to a recent survey of more than 1,000 Indian adults by global advertising technology leader, The Trade Desk (Nasdaq: TTD). The survey shows that 71 percent of adults in India are feeling the impact of the rising cost of living and nearly half (48 percent) have switched to less expensive brands or stores to ease the pressure on their household budgets.
There was a brief period since the easing of Covid restrictions when consumers were spending near or above pre-pandemic levels. This uptick was short-lived as geopolitical developments in recent months drove a steady rise in inflation, raising fears of a worldwide recession. Reflecting the prevailing environment, the research data also revealed that nearly half of Indians are now making less purchases than before, while one in three are putting discretionary purchases on hold. Furthermore, nearly one in two Indians now prefer to buy items on sale or in bulk.
“The rising cost of living is clearly impacting Indian households. There is a real risk to brand loyalty as consumers look to cut household budgets amidst increasing expenses. Rather than reduce their advertising investments, marketers have an opportunity to reinforce brand loyalty by tailoring their offerings and ad campaigns to meet consumers’ changing needs. Programmatic advertising allows marketers to launch and pause campaigns in real time and change creatives on the fly. This flexible approach can help brands to stay top-of-mind even in uncertain times.” says Tejinder Gill, General Manager, The Trade Desk in India.
Despite the rising inflation, Indians are looking to the future with optimism. The survey found that 28 percent believe that inflation will maintain its current level, while an even larger number (41 percent) believe that it will ease off by next year. Nearly half of the respondents also believe that wages will grow between 2022 and 2023.
“Brands have indicated they are likely to increase ad spend above pre-Covid levels. However, we know that market conditions can change suddenly. In fact, the inflation situation has put a lot more pressure on brands to be deliberate and to make every media dollar work as hard as possible. We expect brands to continue to take a thoughtful approach to media planning. Prioritizing media that is measurable and comparable is key.” Gill affirms.