INFLATION
Inflation : Marketers Need To Redraw Innovation Plans To Keep Pace With Consumer Behavior
By Chris Githaiga
Supply disruptions caused by Covid-19 pandemic and the Russian invasion of Ukraine has led to the spiraling of commodities prices across the world .
Latest statistics show that inflation in sub-Saharan Africa was set to reach 12.2 percent in 2022 , after increasing steadily from the onset of the pandemic in 2020 onwards . The rate is estimated to decrease although it will remain high in the coming years . In North Africa , prices have also increased constantly from 2020 to peak in 2022 .
Inflation is always driven by supply and demand . When consumers demand more goods than inventory can supply , or when the prices of production and shipping go up , consumer prices also rise .
According to Statistica . com , inflation in Africa varied deeply among the continent ’ s regions . By 2022 , the rate was projected at its highest in East Africa , at 24 percent . This was mainly due to factors such as reduced agricultural productivity and local issues , like the currency devaluation on domestic prices in Sudan . Central Africa , however , recorded the lowest inflation rate in the continent , at three percent .
According to Ipsos on inflation , three in four consumers globally are concerned that price increases in 2022 will outpace their income growth . On the other side , leaders in the consumer goods
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One performance that continuously stands out as showing high correlation with price resilience is differentiation . Innovations that offer distinctive benefits reduce substitutability and consistently outperform competitors in withstanding price increases . sector have faced disruption to their innovation pipelines as they fire-fight emerging priorities such as rising cost of goods , stock shortages and rapidly shifting consumer sentiments .
In terms of consumer behavior , the world has seen many taking up a variety of steps to cope with the new reality where prices are rising more quickly than incomes making it difficult for many to afford basic commodities .
Studies show that many are preferring discounted stores with Bloomberg recent report showing that 50 % of consumers are responding to inflation by pursuing promotions more aggressively .
Data from recent Ipsos research ( globally ) indicates around 20 % of consumers surveyed noted that they will or already had switched to cheaper brands . Around 17 % also stated that they ’ d changed where they shopped , opting for retailers and discount stores with consistently lower prices . And another 17 % noted that they often shopped sales or used coupons .
Other studies have also shown that consumers are now buying less often or not at all as prices go up . For instance , many consumers are slashing electronics purchases from their budgets entirely . Around 30 % of adults are also skipping upgrades for personal devices such as phones and laptops . In short , they are shunning non-essential items and going for only basic commodities to keep pace with the rising inflation .
There has also been increased tendency by some consumers to buy in bulk to combat the high cost of food . Though with no numbers , this is a phenomenon we have observed locally in Kenya .
As consumers devise new ways to keep pace with the soaring cost of goods , brands are facing disruption to their innovation pipelines as they fire-fight emerging priorities like stock shortages and the rapidly shifting consumer priorities .
Innovation leaders face choices to completely redraw their pipeline , launch inflation-resilient innovations or renovate to reduce pricing vulnerability . Even when price increases are inevitable , whether to directly raise prices , downsize or use other indirect methods still present tough choices to make .
Innovating during inflationary times is tough but successful
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