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Inflation in the eurozone just hit a fresh record high of 9.1%—and economists say ‘the worst is yet to come’

Inflation isn’t just an issue in the U.S.—it’s wreaking havoc on consumers worldwide. And while there are signs domestic price increases may have peaked in June, an ongoing energy crisis is creating a nightmare situation for Europeans.

Inflation in the eurozone surged 9.1% from a year ago last month, the EU’s statistics agency, Eurostat, revealed on Wednesday. The rise marked the ninth straight month of record consumer price increases for the 19-nation currency bloc. And “the worst is yet to come,” Anna Titareva, a UBS economist, warned in a Wednesday research note. A 38.3% year-over-year jump in energy prices was the main driver of European inflation in August. Energy prices have soared in Europe this year as the Ukraine war and subsequent sanctions by the West have lifted natural gas prices four times as high as they were a year ago.

A 10.6% annual jump in food, alcohol, and tobacco prices also helped exacerbate inflation in the eurozone last month. But even core inflation, which excludes more volatile food and energy prices, hit an all-time high of 4.3% in August, more than double EU officials’ 2% target rate. Titareva noted that this was a “stronger than expected” rise in core prices. Three EU nations also saw inflation rates of over 20% last month, while nine saw double-digit price increases, according to Eurostat data. Italian government officials said on Thursday they are planning a new multibillion euro package to help families cope with surging energy and food prices. The move came after Carlo Bonomi, president of Italian employers’ association Confindustria, said the country is facing an “economic earthquake” as a result of inflation in a radio interview this week, Reuters first reported.

European nations have spent billions on energy subsidies and even direct payments to residents in order to help with surging consumer prices since the war in Ukraine began in late February. Even Germany, which typically has much lower inflation rates than the rest of Europe, is dealing with record levels of inflation amid surging energy costs. Consumer prices in the country rose at a 7.9% annual rate last month, according to the country’s national statistics office. And Jörg Krämer, chief economist at Germany’s Commerzbank, told Reuters he expects the situation to get worse from here as government fuel rebates and public transportation subsidies expire.

“The gas levy and the end of the fuel rebate and the €9 ticket are likely to push inflation to 10% by the end of the year,” he said. Krämer isn’t the only economist arguing inflation in Europe will increase through the end of the year either.

Where will eurozone inflation go from here?

Investment banks are worried that consumer prices will continue to rise across the EU over the coming months, forcing the European Central Bank (ECB) to raise interest rates more aggressively, thereby increasing the odds of a recession. The ECB only recently abandoned its negative interest rate policy, raising rates for the first time in 11 years in July. Some ECB officials have argued for an outsize 75 basis-point rate increase this month to combat inflation as well, but so far Europe’s central bank has been far more dovish than the Federal Reserve as the eurozone’s economy continues to struggle. A UBS team, led by economist Arend Kapteyn, said in a Thursday research note that eurozone inflation will continue to rise until it hits 9.6% in September, noting that it could “stay uncomfortably high for another few quarters” after that as well.

“We now forecast a recession in Europe,” Kapteyn added. “Central banks appear to have collectively decided a mild recession is acceptable to anchor inflation expectations.”

Goldman Sachs economists are even more pessimistic on the inflation front. In an Aug. 25 research note, a Goldman team, led by senior global economist Daan Struyven, said eurozone inflation won’t peak until the end of the year, when it hits a year-over-year growth rate of “above 10%.” Struyven warned that there is also “upside risk” to this forecast, and that he expects Europe could experience a “prolonged recession.”

September 2022, CICO writer  Staff Reporter Will Daniel

5 ways your website can create an emotional bond with your customer

Numerous studies have shown that emotions and instinct, rather than rational thought, are more often the driving forces behind consumer behavior and purchasing decisions. When customers feel a deep emotional bond with a brand, it is known as ‘brand intimacy’.

Brand Intimacy agency MBLM’s annual study of US consumers’ emotional connections with the brands that they use confirms that the brands that create the most brand intimacy are also the fastest growing brands. This means that all companies and brands can benefit from marketing that creates emotional bonds with their customers, in turn, ideally, to create a sense of brand intimacy. Here are five strategies companies can draw on to achieve this.

1 – Humanize your brand

It’s much easier to feel an emotional connection with a person than with a concept, so it’s always worth humanizing your brand by showcasing the people behind the brand on your website. This is true for large businesses just as much as for startups (if not more so). The way Apple marketed Steve Jobs as the personality that encapsulated the brand ethos in the years when they first launched their revolutionary iPod, Iphone, and iPad products is a good example of this in a larger company. For smaller companies, showcasing the founder(s) on the website, and potentially the whole team (or the executive team, or those team members who interact with customers, depending on each company) is always going to be helpful in terms of cultivating an emotional bond. Equally important is the information that you provide about your team. Rather than their qualifications, it’s preferable to humanize them by including details about their lives or interests. For example, you can provide a ‘Meet the Team’ page.

2 – Build trust through authenticity

Trust is integral to all emotional relationships, including between consumers and brands. For a customer to trust a brand, it’s important that they feel that it is authentic and trustworthy. There are several ways to help achieve this. Providing real customer reviews (including videos)  is a great way to help new customers to trust a brand. It can also be helpful to provide a glimpse of ‘behind the scenes’, perhaps by creating a ‘meet the team’ video, or a video of a manufacturing process, or a tour of a workshop or company premises, including who does what and a bit about them. Engaging with customers is another way to build trust, such as by providing quick, accurate responses to customer queries. Lastly, making sure that you ‘walk the walk’, by consistently providing what you promise to, is crucial to building brand trust and so meaningful, lasting emotional bonds with your customers.

3 – Develop two-way empathy

Two-way empathy is an important aspect of every emotional relationship, and the onus is on the brand to develop it. Start by gaining a clear and detailed understanding of your customers’ characteristics, needs, and frustrations. With this understanding, you can communicate with them in a way that they can relate to, so using a language and communication style that they’re familiar and comfortable with, and by letting them feel that you understand them, and that you are like them. It can also be helpful to cultivate communities of like-minded people that your customers can join, whether in-person or online. Finally, build and nurture relationships with your customers. Keep records of their communication preferences and purchase history so you can communicate with them appropriately. Depending on your business type, this might include additional meaningful communications that address their needs and interests, or you might go the extra mile and keep records of and reference their family details when you speak to them, or send them a happy birthday message. You should personalize your customer relationships as much as possible, too. As an example, Netflix has created an algorithm that personalizes viewing recommendations rather than using demographic profiles or location.

4 – Employ emotional triggers

Utilizing emotional triggers in your website messaging can be a powerful way to develop an emotional bond and drive sales. Consumer psychologists have identified hundreds of emotional triggers that drive purchasing decisions, depending on the particular brand and product. Some of the most common, compelling emotional triggers are:

– Fear. A good example of this is when marketing insurance. Or, it might be fear of missing out on an offer or opportunity. Be careful before playing on negative emotions though when seeking to develop positive feelings about your brand.

– Guilt. Many people feel guilty about the impact our lifestyles have on the environment, or charities sometimes employ challenging images to invoke guilt to incentivize donations.

– Belonging. The feeling of wanting to belong to a particular movement or social group can be powerful. It might be Mac owners, or a particular car brand drivers, or young or healthy people, for example.

– Aspiration. This often relates to aspiring to a better or type of lifestyle, which buying a certain product or brand can allude to.

– Instant gratification. Chocolate, alcohol, and lottery tickets are among the many products and services that tempt consumer with the allure of instant gratification.

– Liberation, or well-being. These are some of the more positive emotions marketers can appeal to.

The key to employing emotional triggers is to let your understanding of your customers’ buying motivations inform which trigger you use, and then customize your messaging and images (or videos) accordingly and effectively.

5 – Storytelling

Storytelling has facilitated human bonding since time immemorial, and telling stories with an emotional aspect can allow firms or brands to draw consumers in and create an emotional bond. This might mean telling the brand story, or the founder story or team members’ stories, or customer success stories, or creating a video that tells a story that illustrates the lifestyle associated with your brand, for example. Incorporating emotional triggers into brand storytelling can create a particularly compelling purchase motivation and emotional bond.

August 2022, CICO writer  Staff Reporter Hugo Lesser

VistaJet Just Launched A Picasso-Themed Private Jet Experience

Traveling to see Picasso’s paintings in real life is a dream for fans of the artist. But imagine seeing his works and learning about his life in a way not accessible to the public? Yet, that’s precisely what VistaJet just launched with its Beyond Picasso offering through expanding the company’s Private World collection. The one-of-a-kind luxury experience takes place over three weeks across France and Spain. First, you will start learning about the artist’s life in the French capital in Paris before sailing on a yacht and visiting his beloved French Riviera. Then, you’ll venture to Barcelona to get insight into Picasso’s blue period before visiting Malaga and finishing in Madrid. Along the way, you will stay in five-star accommodations and eat at some of the world’s best restaurants. Plus, members get an in-depth private discovery of Picasso through several world-class museums, private collections, and places not accessible to the public. And you get to meet with people who actually knew Picasso, including his family. “VistaJet engaged with the most talented partners to create a magical experience designed around our Members’ individual passions,” Matteo Atti, EVP of Marketing and Innovation at VistaJet, told me. “The majority of our Members collect art – and which art lover would not want to meet with Picasso’s family to explore with them the life of the great master?”

And Beyond Picasso isn’t the only new offering. The private jet company also announced the addition of the Masterclass with the world’s best winemakers to its portfolio of curated travel itineraries. The personalized trip takes members to the heart of Italy, where they can meet with world leaders in the wine industry. Those include Vincent Chaperon, Chef De Cave of Dom Pérignon, Renaud Fillioux de Gironde, Cellar Master at Hennessy cognac, and Lewis Chester, founder of Golden Vines. There’s even an opportunity to get a personal cellar curated by Golden Vines founder Lewis Chester. That way, you can enjoy the wine experience for years to come.

“Liquid Icons had the most ambitious goal of creating the Oscars of wines while also funding diversity in wine education – it was an incredible chance to join the best wine experts and winemakers, and support the next generations of talents,” said Atti. “VistaJet is passionate about inspired travel.“

These latest offerings come after Private World was first launched in 2020. Since then, Vista Jet has secured 595 partners across 43 categories to create these rare (and highly luxurious) travel itineraries. For example, exploring the Altai in Mongolia, Adventures in the Namibian Desert, and Submarine adventures in the Caribbean are all currently available trips that include stays on yachts, private islands, and in exceptional estates. Plus, the company saw a 64% increase year-over-year in global flight hours, which is expected to grow as 17 Global 7500 aircraft will be available by the end of 2022. “VistaJet’s promise has always been to allow our clients to go anywhere, anytime,” said Atti. “Through Private World, we want to help our Members pursue their passions in the easiest, most direct ways, continuing to provide the ultimate service in aviation. It is not just about the places – it’s about the people, the opportunities, and the learning that only thoughtful travel can bring together.”

July 2022, CICO writer  Staff Reporter Jordi Lippe-McGraw

Do Robots Need A Story For Us To Trust Them?

Robots and other seemingly inanimate objects may seem just that, but of course, that doesn’t mean that we don’t wish to ascribe certain human characteristics to them, with many of these efforts done in a bid to try and make the technology seem more lifelike, and therefore more trustworthy. “Making technology more human is a common approach to make the technology more familiar to us and thus make people more comfortable using it,” Sridhar Iyengar, Head of Europe, Zoho Corporation, told me. “For instance, with chatbots you don’t want answers to be too scripted as you want it to appear natural to help people bond with it.” One of the more interesting developments in this area is to make robots either male or female. For instance, research from Washington State University suggests that the supposed sex of a robot affects how, or even whether, we want to engage with it. The study argues that people may actually be happier conversing with a robot in hospitality settings if the robot appears to be female rather than male. This was especially so when the robot was humanoid in appearance. “People have a tendency to feel more comfort in being cared for by females because of existing gender stereotyping about service roles,” the authors explain. That gender stereotype appears to transfer to robot interactions, and it is more amplified when the robots are more human-like.”

Robot origins

Research from Stanford Graduate School of Business suggests that this might extend to the “origins” of a robot. The study found that when we think about the people who create robots (and other technologies), we seem to regard the work performed by the robot as more authentic. Traditionally we tend to view AI as less authentic than humans, but the researchers wanted to understand if assigning a form of a human origin story to technology could help to reduce that authenticity gap. “If you look at what drives purchases of consumers in advanced economies, it’s often not objective characteristics of products or services,” the authors explain. “It’s our interpretation of them, the meaning we derive. It matters a lot if we think something is authentic.” This can be hugely powerful for companies, as it is believed that authenticity is so powerful that we’re willing to pay more for goods and services that we believe are authentic.

Artificial authenticity

The researchers tested the authenticity of AI technology in a range of scenarios, from recruitment to therapy. The work in each scenario was performed by a hypothetical AI agent, called Cyrill. In each scenario, Cyrill was given a backstory related to the work “he” did. Gaining trust between robots and humans has been an ongoing source of research for some time now. For instance, research from the U.S. Army Combat Capabilities Development Command’s Army Research Laboratory suggests that human facial expressions could be crucial in establishing that trust, at least on the battlefield. “We wanted to characterize and quantify factors that impact the emotional experience that humans have with trust in automated driving,” the researchers explain. “With this information, we want to develop a robust way to predict decision errors in automation use to eventually enable active, online mitigation strategies and effective calibration techniques when humans and agents are teaming in real-time.” Suffice to say, however, giving robots a human origin story is perhaps rather more straightforward than giving them human facial characteristics. It also appeared to have a stronger impact on the authenticity of the robot. Indeed, this boost was even found when the origin story was deliberately tailored to be less humanlike.

Forming bonds

The issue of developing trust with robots is becoming more pressing as our interactions with them become more frequent. For instance, research from the Nara Institute of Science and Technology explored how robots can build trust both by touching humans but also by engaging in a degree of small talk while they do so. The researchers tested the impact of robotic touch and also robotic touch when combined with speech on a pool of Japanese volunteers. For instance, sometimes the volunteers received a gentle stroke on their back from the robot’s arm, whereas in others they also received remarks such as “Hello, how are you doing?” alongside the stroke. The volunteers reported better mood in the conditions where the robot both touched them and talked to them. What’s more, they also said that their mood was most positively affected when the speech and touch happened simultaneously. The results also found that there was considerably more facial activity in muscles associated with smiling when the robot touched and spoke to participants. People in this condition were also more inclined to think of their robot companion as human-like.

Building trust

While we may assume that the way in which we build such trusting relationships will inevitably differ from the approach taken with fellow humans, that may not be the case. Research from the University of Montreal suggests that the way we build trust with robots is very similar to the way we do so with humans. The researchers conducted a trust game experiment, whereby human volunteers were asked to bestow a $10 endowment to a partner, who was either a human, a robot, or a robot acting on behalf of a human. It was in many ways a classic game theory setup, with the human volunteer knowing that gains were to be made, but the trust would be key. The robots in the experiment were programmed to mimic reciprocation behaviors from previous human players. It’s common in these kinds of games for decisions to quickly converge around outcomes that are mutually beneficial to both parties. In this experiment, a key factor was the emotional reaction of people following their interactions with robots versus humans. The results suggest that people develop trust similarly in both humans and robots. Traditionally, people would trust humans for both monetary gains and also gain information about the other party, and a similar pattern emerged in the relations with the robots. This is positive, especially as interactions between man and machine are becoming both more frequent and are taking place in more sensitive domains. Nonetheless, if we want to encourage trusting relationships to form, giving technology both a face and a back story might not do any harm.

June 2022, CICO writer  Staff Reporter Adi Gaskell