Though pet food inflation continues to decline month over month in the U.S. and other markets, retail prices are still 23% higher than at this time three years ago (2021). Of course, that’s because most of you have experienced price increases for everything you need for making and distributing pet food, from ingredients and packaging materials to energy and transportation. According to the U.S. pet food producer price index, costs to make dog and cat food are up 24% over 2021 and 30.6% over 2019, pre-pandemic.
(These figures come from the U.S. Bureau of Labor Statistics (BLS) and are compiled and analyzed by John Gibbons of PetBusinessProfessor.com.)
Pet food doesn’t exist in an economic vacuum; many other consumer product goods (CPG) categories are also experiencing a declining rate of inflation offset by the reality of stark price differences compared to previous years. For example, the most recent BLS data shows prices for food at home (essentially groceries) are nearly 20% higher than this time in 2021 and 26.4% higher than 2019.
Thus, tips and insights for how CPG brands in general can more effectively market in this type of economy easily apply to pet food specifically.
4 tips for marketing success during inflationary times
Research firm Nieslen IQ (NIQ) recently issued four strategies for “marketing in an inflationary economy,” as its blog post is titled:
- For new products, maximize marketing effectiveness from the launch phase on by focusing on “high-ROI (return on investment) activities” and pulling back on less effective tactics, the blog reads. To do that, you need to market in channels and use tools that provide measurable results and high-level targeting capabilities. Examples of tools include marketing automation and data analytics, which can help you identify the most effective channels and strategies to allocate your budget to.
A separate post from NIQ recommends using retail media, like Amazon, Walmart and Target, to advertise your products, not only because of the platforms’ vast reach but also due to the proprietary consumer data they mine and own, which helps with developing targeted, personalized ads. (This may also be the case with Chewy.com.) - Focus relentlessly on the consumer. That may seem like a no-brainer, yet NIQ says it doesn’t mean basing your marketing strategy on price alone. “While consumers work with limited budgets, they still expect value and quality,” the blog post reads. “Marketers should emphasize the quality and value proposition of their products.” In fact, NIQ data shows 91% of consider quality a crucial factor when making purchasing decisions.
“Also, consumers needs and inclinations are geared toward personalization, health and wellness, and sustainability,” the post says. “The right messaging can help the consumer connect the dots.” - Explore innovative pricing strategies. Of course, you can’t ignore the elephant in the room: higher prices. NIQ recommends bundling products to create the perception of value, featuring the product’s benefits that justify the price in your marketing messages and offering smaller package sizes at lower price points. (Though I would think the prices for those would have to be low enough to avoid the perception that you’re practicing “shrinkflation.”)
- Use data, data and more data. Particularly data that provides insights into price sensitivity and purchasing patterns, which can inform promotions and help set competitive prices without eroding margins. Presumably, NIQ offers such data! But if your company doesn’t have the resources to conduct research for generating similar data, there may be other sources, including industry-specific ones.
Focus on value
This information may not apply to all pet food brands, or it may offer nothing new for your company; perhaps you’re already implementing such strategies and tactics. Yet advice to focus on value in this type of economy will always make sense.
