Changing Consumer Spending Habits
An economist once told me that the factual “story” behind any economic report or event is almost entirely based on sociology, the study of how human society actually operates and reacts to outside actions. It is certainly apparent that when the economy is either “booming” or “busting,” the spending habits of the global consumer normally change dramatically.
Those who watch our national economic situation know that our nation’s economic foundation is based on whether the American consumer is in a spending mood; two-thirds of our national economy is based on whether the public is willing to spend their hard-earned dollars at the nation’s retail centers, car dealerships, or within the service industry sector. But when things start to go bad, as they have over the past 18 months, spending habits can change drastically, damaging the economic infrastructure until consumer confidence finally starts to mend.
There are some economists and business leaders today who believe that the current global recession has not only forced consumers to prioritize their spending habits but it may have changed the consumer consciousness to the point that American businesses will have to determine whether or not they are dealing with a customer base with an entirely new spending attitude. Some business leaders believe that is the case.
The CEO of the J.C. Penney Company recently gave an interview to voice his concerns about today’s shifting consumer behavior. Myron Ullman recently said that the U.S. consumer has a lot of anxiety and is very concerned about how upcoming changes in healthcare may affect their finances in the immediate future. He continued by saying that consumers are suddenly coming to the realization that “they may need to save more than they had originally planned. Their spending habits have changed to reflect this for the foreseeable future.”
He’s not alone; the corporate leadership of Best Buy, Drugstore.com as well as CEOs from the service industry (Hotels, Theme Parks, Restaurants, Rental Car Services) are all starting to realize that the U.S. consumer may never return to the spending habits of the past and that a change in their selling and advertising strategies might be necessary.
While people will continue to consume, they question now is what will they buy, when will they buy and where will they buy. Name brand products are taking a backseat to generic or store brand items. Malls are beginning to show signs of weakness – more and more stores are closing while consumers make their way to other, cheaper alternatives. Instead of going to one of the major mall’s “anchor stores,” they are now heading to places like Wal-Mart, Target or K-Mart to purchase the things their families “need” rather than the things their families “want.”
The economy is beginning to show signs of life for the first time in many months. Consumer spending was up in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost 30 years. The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated. By the way, incomes were also up at a 0.2% rate.
While all that may be true, the level of consumer confidence continues to be the key question. As I mentioned earlier, economics is all about sociology and until the American consumer starts to feel more positive about spending their money at the “corner store,” restarting the U.S. economy will just have to wait.
Marketing in a Recession? How Consumer Behavior Tips Can Bring in Bigger Profits Despite the Economy
Surviving the Recession
Savvy network marketer and other home based business owners know that just because consumer spending habits change doesn’t mean they still won’t spend that money. The trick to marketing in a recession is to understand how the consumer behaves in times like these. Keep reading and I’ll explain a little about the factors affecting consumer behavior that can help you get better leads and more profits.
Characteristics Influencing Consumer Behavior
It is always important to understand your targeted consumer but never more so than during tough financial times. Marketing in a recession carries with it a new level of complexity. Consumers are much more careful about where and how they spend their money.
If you are going to win over those leads, you’ll have to deepen your understanding of them and know what their concerns area. Use this information to tailor your USP (Unique Selling Proposition) to one that will provide solutions to their problems and concerns.
Four Main Elements of Consumer Behavior
Cultural factors play a very big role in consumer behavior. Social class, buyer behavior and subculture elements each go into determining the ultimate behavior of the consumer. During times of economic hardship, a good approach here is to first identify with the consumer on their individual social class perspective. For example, middle class families in this country are experiencing a credit crisis unlike anything they’ve ever seen.
Social factors are another element to a consumer’s purchasing habits. What their family status is, what roles they take on both in their family, job and community will affect how they spend. Try to determine the familial role of your leads, are they the decision makers? Market to them by showing them how your business, product or service can benefit the lives of everyone in their life.
Personal elements such as age, occupation, lifestyle and personality all play important roles. Try to group their personality into on of four types: care giver, money driven, social butterfly or analytical thinker and tailor your marketing approach to their specific personalities.
Finally, there are psychological factors at play here as well. Motivation, perception, beliefs and attitudes can all affect a buyer’s behavior. This is where it is most useful to take a preemptive approach in defining all the benefits of what you have to offer.
It Takes Practice
If you are new to the study of consumer behavior because you want to improve your results in marketing in a recession, this may take a little practice before you can master it. As you go through your day, think about these factors and observe those around you. With a little practice this process will become almost instinctual and can really improve your business’ results.
Consumer Finance News
The web is now stock full of millions of pages relating to finance. Compare the market type websites, real time ticker type, blogs, stock tipping sites, auto insurance and all the other subcategories relating to consumer finance and I have not even mentioned the four letter word Bank!
If you did not think that was enough television, newspapers, specialist journals crank out more every day. Sometimes, I feel people have become in one sense isolated, in another overwhelmed and others excluded. In middle income families I think is there is a myth that they do not earn sufficient money to visit a professional to gain insight into how to best manage and gain with their money. Blissfully unaware of what is available to them they can fall prey to unscrupulous people who have the latest investment fund, plan or how to get rich quick schemes. Or simply allow their money to remain in a Bank gaining secure yet poor returns in many cases, which are eventually eroded by inflation.
Now here is a thought, there are numerous financial calculators (some sponsored) mostly free that can actually assist middle income families. In short I am saying you do not have to be a millionaire to help yourself to free advice that is available from the web. Sound and useful information can be found, it is not now the preserve rich. Armed with these calculations, for example a debt management programme or for a family budget scheme, planning for your future is very real and possible.
Did you know that most people in the U.S. spend more time planning their annual vacation than they do planning for their finances. Considering that retirement is your longest holiday, many only contemplate the retirement fund until their late 30s. Whilst it may seem quite perverse to say start as early as you can it would stand you in good stead. Why? it could either allow you to retire early or simply retire in comfort. Many Americans now seek work after retirement to supplement their funds, not because they have elected to do so, no, it is out of necessity.
Having done your research, armed with information it is impossible to be over sold regulated investment plans, life insurance or high priced credit (should you need it) and instead of feeling, Well finance is for the super rich, no, the web has opened up opportunities for all to have financial stability.