Given the current turmoil in international relations, tariffs are a major point of discussion among those who do business internationally.
Even those who don’t do major business overseas could be affected by trade wars and rising tariffs. Because of the wide-reaching effects that tariff increases can have, direct-to-consumer (DTC) marketers need to consider just what effects these trade wars might have on the DTC brands they represent.
Increased International Costs
The most obvious effect on DTC marketers comes if the products being marketed are sold internationally and popular in areas affected by the tariffs.
Obviously, a brand that is popular in China or other regions where new tariffs are in effect will have those tariffs applied and will likely see that reflected in its price. Marketing efforts will need to take this new price point into account and possibly adjust marketing tactics to ensure that the brand’s popularity remains high in affected regions.
Of course, consideration should also be paid to how marketing is approached in regions that aren’t directly affected by new tariffs. Different marketing approaches may be required in these regions beyond the basic language issues and regional differences that already appear in the various ads.
Given that the other changes to ads are occurring to help soften tariff-related price increases, there may end up being significant differences between marketing strategies in different parts of the world.
Decreased International Sales
Another issue that goes along with the increased costs of international sales due to tariffs is a likelihood that those sales figures will start to slip.
This very real potential could necessitate further changes to marketing tactics in the affected regions, both to preserve existing customer relationships and to entice new consumers to embrace the brand despite the tariff-inflated cost. The goal would be to show that even with tariff costs added, the brand’s direct-to-consumer products are still a better option than what is available from other retailers.
Increased Promotional Costs
Even if the products themselves aren’t marketed internationally, tariffs can affect the cost of some materials used in the marketing of DTC brands.
This scenario isn’t much of an issue if primarily digital marketing techniques are used, but if you market products using physical goods up to and including shirts and paper goods then you could possibly feel the pinch of increased tariffs moving forward. Depending on the severity of the cost increases, it could even force a larger shift to digital advertising to avoid some of the tariff-inflated costs.
Material Sourcing Issues
If trade wars and rising tariffs continue, price increases could affect the availability of some materials used in the manufacture of the products, and of the U.S. prices of the marketed products themselves.
Depending on the severity of the issue this could result in production slowdowns, inventory shortages and possibly even inventory outages while new suppliers are sought. This can be a major issue for marketers as inventory and resupply problems can significantly affect how you approach that product’s marketing.
If the shortages are expected to be a long-term issue, the company may choose to cut back on its marketing budget or make other adjustments as well.
Possible Economic Shifts
Though it may not seem obvious at first, perhaps the biggest possible effect of tariffs on DTC marketers is the possibility of an economic shift.
This possibility could be mild or severe depending on the sectors affected by the tariffs, and it could get much worse when combined with other economic factors. With multiple economic stressors in play, it isn’t out of the question for this to kick off a major economic event such as a shrinking economy or recession. Reduced sales and other issues could result, and the focus of marketing may need to shift to showcase the value or perceived necessity of the brand and its products.