Amusement Park-goers thrive on the flood of hormones from high-speed thrill rides. But even the boldest of adrenaline junkies will have their limits, as the human body can only withstand so many Gs before we just pass out. With its ups and downs, the COVID pandemic can feel like the rollercoaster of our nightmares that we all just can’t seem to get off. As if that weren’t enough, we now have to face the latest nauseating set of twists and turns: supply-side turbulence and inventory issues.
Factory closures across the globe, cargo ships hovering on coastlines and in ports with containers in limbo, semi-conductor outages, and worker shortages are all part of the pains shoppers and brands are feeling right now. With the holiday season coming up, these shortages will only intensify when demand reaches its highest. So, what are marketing departments to do when demand is high, and inventory is low? Conventional wisdom might drive advertisers to pause ad spending until they have the inventory to fulfill the demand. But that short-term thinking could be harmful for brands in the long run, particularly when competitors are likely facing the same inventory issues.
The question that looms is still: Should brands advertise during a crisis even when they have no inventory to sell? I know this is going to feel wrong, but the answer is YES, keep advertising.
We know from the seminal work of Byron Sharp and Jenni Romaniuk in How Brands Grow that brands need both mental and physical availability. When inventory issues present physical limitations, it is important to rely on the long-term approach and continue to invest in the brand to maintain salience for future purchases. But let’s not kid ourselves, brands need both mental and physical availability. So, here are some important marketing principles that brands should rely on even during an inventory crisis:
- Lean on branding. Brand building is a long-term job involving conditioning the consumer through repeated exposure. It takes time. We must be in communication with people long before they are in the market to buy. Use this time to maintain your brand awareness initiatives. Continue to rely heavily on emotional priming to cut through the clutter, regardless of people’s interests in products right now. Keep building those memory structures. You should also resist going off-brand and pandering with “we are all in this together” or “we will get through this” messages. Stay the course.
- Focus on the inventory you do have. Redirect consumers to inventory you do have and amp up creative media to make it as desirable as possible. COVID is leaving an imprint on all areas of life. Brands can redirect consumers to trying new alternatives. Consumers are ripe for brand switching and trying something new. McKinsey & Company research continues to show that consumers are open to trying new things, new brands, and new retailers to satisfy their needs.
- Expand the 4Ps and look beyond promotion. When you have inventory issues, look beyond promotion, and focus on the other available 4Ps of marketing. That does not mean price gouging consumers, but it could mean reducing promotions and BOGO events. Limit purchases per shopper. The increased margin may not make up for the short-term loss in volume, but it will help the bottom-line overall.
- Reward your loyalists and build your 1st party data. Now can be the time to really reward your loyal customers. Give them a sneak peek at products and let them in on exclusive opportunities. Show love and appreciation to your customers in other ways.
- Be transparent and leverage social media for two-way conversations. Don’t over-promise or take advantage of consumers. Be as clear with consumers as you can throughout the process. For big ticket or high involvement categories, take time to educate the consumer on the product or service to reinforce what makes the brand special. You can skillfully guide them up the emotional benefits ladder and gain future brand ambassadors.
- Be careful with search bids. Watch inventory levels and ensure you’re not pushing your text-based search ads to out-of-stock inventory. Other ad formats (shopping, retail sponsored search, etc.) should be automatically paused once inventory depletes, whereas text-based formats need to be monitored more closely. As always, keep your digital and search teams up to date on current and potential OOS issues.
- Sufficiency planning could require adjustments. If you have the formula nailed down in healthy times, you will know what the right weight levels are to be successful in driving business results. But if budgets are cut or reduced, you could struggle to hit the sufficiency levels. Consider flighting your efforts. Media half-lives will carry brands through dark weeks but resist long periods of being dark altogether. In lieu of pulsating on and off, lower always-on levels can reduce budgets and also achieve similar business results, just over a longer period of time.
- Competition is likely in the same boat. It’s time to take the lead. Your competition is likely in the same position with inventory issues. Brands can take advantage of their competition’s dark periods and increase ESOV to gain market share.
- Take a flexible media approach. If all the principles above make your CFO nervous, invest in media that allows you the flexibility to cancel or move your investment. Digital marketing continues to offer this for brands.
Now is the time to leverage creative marketing solutions to help mitigate the inventory supply issues. There is no doubt that transparency is becoming a must across the entire business spectrum, and that includes the supply side, where a glass pipeline is more important than ever. Until that happens, brands should work with marketing experts to help maintain positive mental availability in the minds of consumers.
These tried-and-true principles are a good starting point to help withstand the latest white-knuckling loop-de-loops in this COVID carnival ride. No matter how long the rollercoaster’s track is, it will end. We just need to hold on tight in the meantime.