Storytelling matters, and no less for inflation than for anything else. Marketers know narrative rules. The essence of marketing is telling the story of a brand, thereby shoring up pricing power. That’s brand equity in a nutshell. Storytelling is also the paradox of this inflationary moment in the marketplace.
Broadly speaking, brands tell stories to encourage aspirational spending. Aspirational in the sense of a better quality of life, not spending like a billionaire. Even in everyday purchases, people are looking to enrich the experience of their lives. Sometimes, better quality; other times, better price. But always something better, and spending to get it.
Narrative is how we make sense of the world, and thus how we make sense of brands. It’s also how we navigate disruptions like inflation. Former Federal Reserve chair Ben Bernanke’s new book is a history of monetary policy since the 1970s. His main takeaway is the power of what the Fed communicates, the stories it tells. Monetary tools are ever evolving because prior tools tend to be unsuited for new circumstances. Only the words used to communicate intent and commitment have undiminished power over time. When the Fed makes a statement, markets respond, and that has mattered a lot in years past when fighting inflation.
The idea that stories matter in economics is not new, although under-appreciated. Economist Marc Levinson’s global history of inflation and unemployment during the 1970s and 1980s shows this in detail. Nobel Prize-winner Robert Shiller is pioneering an approach to understanding economic events he calls ‘narrative economics.’ As shown in these books and others, controlling inflation is elusive unless and until governments communicate an aggressive posture. That sort of story calms markets.
Brand storytelling and anti-inflation storytelling are inherently in conflict. Governments fighting inflation want people to spend less. Brands tell people to spend more.
Governments fighting inflation want responsible spending. Brands push aspirational spending. But in doing so, brands are working against their own long-term interests because uncontrolled inflation eventually means a recession, during which name brand products lose share and pricing power—i.e., brands lose equity—that is costly to regain.
There’s no ready answer. Brands should calm markets, too. Yet, competitive pressures and growth objectives work against telling a story to slow spending. Perhaps the opportunity today is for brands to leverage this moment of heightened societal consciousness and find ways to build equity by making responsible spending aspirational, too.
Contributed to Branding Strategy Insider By: Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar
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