Vision - January/February 2009 - (Page 8) Consumer Strategies in Times of Economic Strain Use coupons Spend more time looking for bargains Spend less on nonessential purchases Shop at discount retailers Buy with cash instead of credit card Buy store brands instead of name brands Review Sunday circulars Buy less expensive version of a product Establish (or reestablish) a household budget Buy in bulk Shop on auctions sites 22% 45% 53% 53% 51% 51% 47% 60% 59% 66% 66% 2) Stress the Value Proposition of the Goods and Services Being Offered Consumers are cutting spending across the board. They attempt to make spending cuts that lower their overall spending without hampering their quality of life. Can your product or service help consumers lower their total spending while still providing them the features and services they’ve come to enjoy and depend upon? In a difficult economic environment, consumers need the reassurance that they are gaining true value with each purchase. Helping cut costs elsewhere is a clear example. For example, a recent CEA consumer study found greater energy efficiency to be the highest desired feature for the average consumers’ next television purchase. Source: CEA Market Research, 2008 Year-over-year Change in Discretionary Spending 20% 3) Present a Bargain 15% 10% 5% 0% -5% 1992 1980 1982 1998 2002 1988 1996 1990 2000 2006 1994 1984 1986 2004 2008 Recession Discretionary Spending Source: CEA Market Research, 2008 tions suggesting spending will be down for the year—even given anticipated federal stimulus. Much of this weakness will show up in the first half of the year as the events of 2008 spill over into 2009, but the entire year will be well below the long-run trend. Despite the risk of another tough year, here are three things your company can do today in response: 1) Stress the Longevity of the Company-Customer Relationship As fear enveloped the financial markets, uncertainty also spilled over into consumer sentiment. Consumer sentiment indicators like the University of Michigan’s index dropped more in October than it had ever dropped in any prior month going back to when the data first became available in the 1970s. In CEA’s 15th Annual Holiday Outlook, nearly three in four consumers indicated they were cutting back expenditures due to concerns about the economy. This figure is up significantly from 2007 and highlights individuals’ great concern with today’s increasingly uncertain world. This strong negative sentiment is influencing the purchasing behavior of consumers. Knowing the firms from which they buy have sustainable business models, that they will service future needs, and that the relationship between customer and company is enduring has the potential to mitigate the uncertainty consumers are currently facing. In a difficult economic environment, consumers take a more holistic look at each and every purchase. How does the purchase fit within their broader goals of being cost aware as well as looking for value? Our research finds consumers are spending more time shopping for bargains and looking for opportunities to trade-down to less expensive products without drastically impacting the experience—behaviors you would expect during an economic slump. By presenting the bargain aspect of products and services, companies can respond to the increasing number of individuals looking for deals. These are not perfect solutions for our imperfect world. They are subtle suggestions for dealing with our new found struggles. Consumers have not abandoned technology like they have many other sectors of the economy. There is increasing evidence that technology products are becoming less of a luxury good and more of a necessity. An increasing number of consumers rely on products like their laptop computers and their mobile phones on a daily basis. By stressing the value proposition, positioning the deal and highlighting the lasting nature of the customer-company relationship, companies can take advantage of consumers’ continued interest in technology in the face of a tough economic environment. • www.ce.org 8 January/February 2009 http://www.ce.org
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