Why You Shouldn’t Cut Your Marketing Budget When Inflation Bites

Over the past two weeks, many companies have issued price increase notices to their customers. Even schools have indicated their intention to increase tuition and transport fees due to the sharp increase in fuel prices and other basic needs.

This is the main indicator that we are in the midst of inflation and that we need to take decisive action to weather the storm.

Basically, inflation is a measure of the gradual increase in the price of goods and services over time. Inflation is a normal ongoing process, but when it happens too quickly, it becomes a serious problem that can drive you out of business or make you poor if not handled well.

The first effect of inflation is to reduce the purchasing power of consumers who start to buy less. This leads to low overall business sales.

It should be noted that among many companies that increase the prices of their products, very few increase the salaries of their employees who are also affected by inflation because they are consumers in various industries.

Rising prices make it expensive to run a business and reduce or wipe out your profit margin.

Raising prices to stay profitable may have the risk of reducing sales even further as some customers may not want to buy or may not be able to afford it.

However, it may be the only option available to stay in business. That said, your price increase must be accompanied by expense management such as reducing overhead and increasing efficiency so you can produce more with less.

A common mistake that should be avoided at all costs is cutting the marketing budget. This is when you need to market more in order to increase sales. You can effectively manage the marketing budget by ensuring that you invest every coin in areas with higher returns on investment.

Get creative with positioning your products to offer already busy customers value or the opportunity to cut costs. Remember that everyone is looking for ways to cut costs and gain value and if your products can do that, you win.

It’s also important to avoid another common mistake of avoiding spending or investing to preserve money.

What you need is to distinguish between strategic and non-strategic spending. Spend money on areas that align with your long-term growth strategy. Don’t compromise your long-term goals on the altar of the current need for cash. You need to balance because things will go back to normal after a while.

Avoid keeping large sums of cash in times of inflation. This is because your money loses purchasing power and you end up buying less in the future. Instead, put it in tangible assets or stocks that don’t depreciate. If you have loans, you can repay them to ease the interest burden.

Also invest in your employees as they are your greatest asset. Think about how you can help them cope with inflation and stay on the job to help you make customers happy.

Mr. Kiunga is a business trainer and author of The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market

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