Economic disequilibrium happens when external forces cause a disruption in the market's supply and demand equilibrium. When this happens, the market enters a period when supply and demand are mismatched.1 Whether you needed a sofa, a desk chair, an automobile or PVC pipe in 2021, there is a good chance you heard this statement over and over again―IT’S BACK ORDERED!
“Delays, product shortages and rising costs continue to bedevil businesses large and small. And consumers are confronted with an experience once rare in modern times: no stock available, and no idea when it will come in.”2―The New York Times
“Factories around the world are limiting operations — despite powerful demand for their wares — because they cannot buy metal parts, plastics and raw materials. Construction companies are paying more for paint, lumber and hardware, while waiting weeks and sometimes months to receive what they need."3 ―The New York Times
Unfortunately, PVC product manufacturers, including those producing PVC electrical pipe and fittings like CANTEX, got hit even harder with supply issues. In addition to COVID’s impact on production and logistics, PVC manufacturers are also dealing with the aftermath of the historically severe storms that hit resin manufacturers in 2021.
Some companies will continue to do well while facing product shortages and others will not. Several factors will determine a company’s success during this historically unprecedented disequilibrium in the economy. Marketing strategies are one of these factors. The marketing choices a company makes can affect how they manage during and after the supply shortages. Remember, your competitors are still there during a supply shortage, so you still need to distinguish yourself from the competition, because they just may try to swoop in and steal your customers. Unfortunately, once your customers leave, you may never get them back after supply and demand equalize.
Here are some marketing tactics experts recommend to help you through this supply and demand imbalance:
1. Don’t stop marketing! Maintaining customer loyalty at a time like this is crucial. Your competitors will not stop marketing, and they may be out collecting new customers including yours! Be sure to let your customers know that your available products go to loyal business partners first. Show them that loyalty behooves them no matter what the market looks like.
You also need to keep distinguishing your business from the competition despite supply shortages. Make sure your products are the first to come to mind when customers are in the decision-making process.4 Remember, all your competitors also have supply issues. You will want to remind your customers about everything that sets you apart from the competition? Are you more loyal to good customers? Are you working harder to meet product needs during the shortage? Do you have better products? Let your customers know!
2. Communicate―Let your customers know about your situation, but explain it in the context of what’s happening in the world not just at your place of business. This way their frustration is not directed towards you. Your customers may already know that supply issues are a global problem from COVID. However, disappointed customers may still want to lash out at you. They may need constant reminders that you’re doing everything possible to work with a situation you didn’t create! You will also need to show them what you’re doing better than your competitors to handle the same issues.
3. Remember that perception is everything! Know that demand creates value, and promote your products from that perspective. Just like diamonds or rare scotch, your high-demand, low-supply products need to be presented as rare commodities not as products you can’t produce quickly enough.5
Additionally, product scarcity can be used as a marketing advantage by promoting the need to act now and also the need to stay loyal to receive products. You can turn around how your customers perceive a supply issue for your good with an effective persuasion strategy.6
4. Adapt a new post-COVID strategy that no longer focuses on pre-COVID factors. Develop a strategy that immediately sets your product apart from the competition during the post-COVID era. Remember that your competitors know how demand shocks create openings for attracting new business. This makes it essential to adapt your marketing strategy to fit the change in supply and demand.7 Get ready for your competitor’s customers to come to you instead of letting your customers slip away to them. Don’t forget that when the industry becomes saturated with supply again, consumers are more likely to stick with products they know and trust.8
One of your post-COVID marketing strategies should definitely involve increasing your on-line presence. With more time spent at home and less time spent at live meetings and events, it's no surprise that online activity is increasing significantly. Since this time last year, internet users have increased by more than a quarter of a billion people (a 6% increase). 9 If you aren’t already investing marketing dollars into your company website, search engine optimization (SEO) and on-line advertising, now is the time! If you are investing in digital marketing, invest more! Similarly, it’s no surprise that social media user numbers have jumped more than 13% with an increase of more than half a billion users in 2021. With 4.48 billion social media users around the world, which is almost 57% of the world’s total population, businesses need to start taking social media very seriously! Did you know that return on Investment for digital advertising has actually almost doubled post-COVID? 10
5. Pick your market! Pick and choose who you market to, and do not be afraid to say no! According to Forbes Magazine, the worst business strategy is anything that results in client dissatisfaction. In a recent article in Forbes about how to preserve a business’s reputation during supply shortages, Forbes recommends turning down business if it might possibly lead to a negative review in the future. It’s better to turn down business from a prospective customer than to make promises you can’t keep.11
This is a good time to focus your resources on refining relationships with your high-profit and loyal customers. It is also a great time to use the shortage of products as a tool for re-negotiating your relationships with profit-draining customers. 12
“... However a company ranks its customers, providing better service to some customers, and declining business from others, may be better than offering poor service to all.”13
Listen to the experts! Taking a few steps to improve your post-COVID marketing strategies will not only help your company now, but it can also help set your business up for greater success in the future.”
1. Investopedia, Disequilibrium
2. The New York Times, The World Is Still Short of Everything. Get Used to It
3. The New York Times, The World Is Still Short of Everything. Get Used to It
4. Federated Media, How Supply & Demand Can Alter Your Marketing Strategy
5. Federated Media, How Supply & Demand Can Alter Your Marketing Strategy
6. HubSpot, The Scarcity Principle: How 7 Brands Created High Demand [Research]
7. Federated Media, How Supply & Demand Can Alter Your Marketing Strategy
8. Federated Media, How Supply & Demand Can Alter Your Marketing Strategy
9. Wordstream.com, 6 Post-Pandemic Marketing Strategies with Long-Term Benefits
10. Hootsuite.com, Half a Billion Users Joined Social in the Last Year (And Other Facts)
11. Forbes, Preserving Business Reputation with Supply Shortages
12. Marketingprofs.com, Five Rules for Growing Customer Loyalty Even as COVID Disrupts Supply Chains
13. Forbes, Preserving Business Reputation with Supply Shortages