Post-BREXIT UK financial services industry

💱 In this post-BREXIT marketing environment, the financial services industry in the UK is investigating new paths to global competitiveness. 

According to Reuters, a report expected later this year will point the way toward appropriate regulation and guidelines for reinforcing the nation's position as a major financial centre. 

What laws and reforms will be needed? How will these affect the marketing of financial services to commercial and consumer groups? What will be the long-term effects of BREXIT on this and other industries?

Brexit: adjusting marketing plans for uncertainty

Now that Brexit has taken place, businesses large and small are going to have to adjust their marketing plans.

Much uncertainty remains, however, as this Guardian article indicates and this podcast interview with a small business owner indicates.

Brexit and business

Brexit

With Brexit in the works for 2020, UK businesses that rely on exporting for revenue are hoping to hear more about plans for trade deals with the European Union. UK businesses that import parts or merchandise are also keenly interested in how these negotiated trade deals will affect their operations.

Pricing and shrinkflation

From foods to paper goods, more than 2,500 products have 'shrunk' whilst their retail prices have not decreased during the past five years. This shrinkflation reflects increased costs facing manufacturers, changes in foreign exchange rates after the Brexit vote and consumer resistance to paying higher prices. As a result of these environmental and internal forces, brands are reducing the size of some products without changing the prices.

Yet, according to the UK Office of National Statistics, more than 600 items have actually increased in size during the past five years. This reflects the trend towards focusing consumers on value. 'More for the same price' sends a message to price-conscious shoppers that a product will deliver higher value than some competing items.

More shrinkflation is on the way as marketers cope with continued cost increases and ongoing currency swings that can affect what manufacturers pay for ingredients and what they receive in payment from wholesale buyers.

Shrinkflation is usually not publicised by the manufacturers...but government offices and media reporters take notice. Then consumers become aware, and have to decide whether to continue buying a favourite brand or product, or change behaviour and buy something else.

Ryanair adds share, profits and partners

Not every marketer can achieve both higher market share and higher profits, but Ryanair's marketing plan has accomplished these two key objectives through price cuts.

By adding more jets and cutting fares to attract passengers, the no-frills airline has successfully boosted market share while forcing competitors to respond.

Even as Brexit proceeds, Ryanair is preparing for the future through partnerships with European airlines. The plan is to allow passengers to book longer-haul travel through Ryanair and connections with its partners, including Air Europa, Aer Lingus and Norwegian Air.

Ryanair's long-term goal is to be flying 200 million passengers yearly by 2024. Currently, the airline projects it will fly 130 million passengers in the next 12 months--with lower prices and higher profits.

This post updates the Ryanair case in Chapter 3 of my Essential Guide to Marketing Planning, 4th edn.

Poundland's pricing strategy

Poundland sells everything for £1. Or at least that was its traditional pricing strategy. In recent months, the retailer known for its one-price strategy has expanded the number of products sold at a higher price. 

From time to time, Poundland offered special deals over the one-pound price (see "Replay DVD" here). But recently, Poundland posted store signs announcing more value deals, meaning the sale of merchandise priced over the one-pound price.

Was the change in pricing strategy due to Brexit's impact on the pound? Poundland says Brexit is not to blame. The retailer is actually expanding its merchandise offerings: 'The rationale was to bring customers more value products than is possible at the £1 price point'.

In fact, Poundland is opening stores under the brand 'Poundland & More' to test the strategy of mixing £1 with a range of higher-priced value deals.

This post updates the Poundland example in the targeting and positioning section of Chapter 7 within my Essential Guide to Marketing Planning.

Product pricing and Brexit

Unilever and Tesco skirmished briefly about pricing this week.

As a result of Brexit, the value of the pound sterling has slumped, and Unilever is trying to increase the price of some products by an average of about 10% to compensate for the slump.

Inventory on Tesco's store shelves dwindled as the grocery giant fought Unilever over pricing. Media coverage of the battle raised the possibility that Tesco's shoppers might be unable to find beloved brands like Marmite and Ben & Jerry's.

Tesco resisted Unilever's price increase by emphasising its role as championing low prices on behalf of consumers. Unilever explained that its supply costs are increasing, profits are going to be affected and therefore product pricing must be adjusted.

After a 24-hour standoff, Tesco and Unilever announced that the dispute had been resolved and shelves would be full of the brands shoppers want.

Expect more announcements about wholesale pricing as other producers seek to counteract the slump of sterling by increasing prices, if possible.