The world economy will experience a recession in 2023.
The global economy crossed the $100 trillion mark for the first time in 2022.
67 percent of people have already changed their shopping habits.
The world economy is undergoing a strong change, so in 2022 many countries have registered high inflation that is affecting everyone. Given this, many specialists are already beginning to face 2023, which is why they have launched some recommendations so that brands can combat this inflation and recession that could also occur in this new year.
All this panorama has been presented this 2022, so according to a report published in December by the Center for Business and Economic Research, the world economy will experience a recession in 2023, due to the increase in the prices of loans intended to combat inflation.
In that sense, the study indicated that the global economy surpassed the 100 trillion dollar mark for the first time in 2022, but it has stalled in 2023 as policymakers continue their fight against rising prices.
Around this, the International Monetary Fund (IMF) issued a warning last October stating that more than a third of the world’s economies will contract and that there is a 25 percent chance that by 2023, when the world’s Gross Domestic Product (GDP) grows less than 2 percent, there is a recession.
What brands have to do
This year it was seen very marked in all companies the increase in the costs of their products and services, and all this due to the rise in raw materials and common resources that were affected by the two years of pandemic and by the war between Ukraine and Russia.
In this sense, Mexico does not escape this economic reality, since according to data from the National Institute of Statistics and Geography (INEGI), the country registered inflation in November of 7.80 percent, and as reflected in the IPSOS survey of August 2022, 43 percent of the Mexican population mentions inflation as the country’s main problem.
Given this, Rebold, the ISPD group’s marketing and communication company, has published the study “How can brands combat inflation and future recessions?”revealing key data to design marketing strategies in the current socioeconomic context and in the coming year.
According to the report, marketing teams must continue to invest in their brands to justify cost increases and fend off sharp market downgrades.
“You cannot ignore the pricing strategy. Modeling helps brands understand the appropriate price elasticity for their category and gauge the impact that marketing spend will have on them,” the research reveals.
In this sense, the study also mentions that it is key to know if a brand is more exposed than its competitors in terms of price, since the strongest and most valuable brands enjoy higher growth.
“Consistent and effective advertising increases the control that the brand has over its prices regardless of the economic situation,” they add.
Another recommendation is that each company should avoid cutting investment in advertising, since it contributes decisively to current business volume.
“You should not fall into the trap of pessimistic and poorly differentiated communications. As long as they are aligned with the tone of the brand, humor or optimism will be effective in attracting our audience”, they indicate.
In a world increasingly connected to digital, it must be taken into account that transparency is key, because customers can easily find out the reason behind a price increase and even understand it.
“Based on what we’ve learned from past experience and Rebold’s data analysis, cutting ad spend is a mistake, 50 percent of brands that increased their marketing spend during the last recession enjoyed higher ROI on consecutive years and 17 percent more incremental sales and conversely, 15 percent of the business can be lost if a competitor of our same size doubles its investment in marketing”, explains Diana Jiménez, director of Intelligence at Rebold Mexico.
In conclusion, in recent years there have been strong changes in behavior among global consumers, which is why brands and companies have had to adapt to survive the various scenarios that have arisen and even the new generations that are the main current customers.
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