Wednesday, January 20, 2010
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Recession is heading north as unemployment grows, energy prices soar and property prices nosedive. I had a strong feeling that during a recession, people tend to hold back assets than cash. However, the slump in property prices across Europe and its ripple effects in Asia have dented the confidence of investors in
Asia. Consequently, consumer spending also took a beating in retail, services, entertainment and others.
An economic downturn represents breakaway growth opportunities for those clever enough to help consumers feel good about migrating to “inferior goods” by enabling them to justify their decisions in terms other than affordability. A status-conscious car owner would not feel bad about trading his/her Accord or Teana or Camry for a more economical Toyota Prius, because he can boast of saving the environment.
So, how does a common man like me, (provided he is aware of the global crisis and weighs its implications on an individual level) would have a shift in spending behavior? Basically, as a consumer, the following factors would prompt me to buy a new product:
- Dissatisfaction with a current product
- The Need/Want for a new substitute
- Availability of the substitute
- Market price
- Utility factor of the new substitute
- Post-buying evaluation
Among these factors (in trying circumstances), I would give utmost importance to the utility factor and see if the product is living up to my constantly changing set of expectations.
This shift of my buying behavior for different kinds of products and services is technically termed as preference for “inferior” goods. Well, I am happy with it, what else do I need? Whether it is “inferior” or “cheap”, I look into the utility of the product in the near-term, enough to weather away the recession storm. What is noteworthy here is that companies with smartly cultivated “inferior goods” in their portfolio will ensure repurchase of its premium products.
In these situations, marketing holds the key, because in an age of pressure consumption, insights and understanding of marketers can make all the difference. Sooner or later the economy will bounce back. So, with my amateur marketing know-how I would suggest that companies should remain focused on consumer behavior dynamics rather than blunt selling, for a consumer is the best judge.
This post was written by: Franklin Manuel
Franklin Manuel is a professional blogger, web designer and front end web developer. Follow him on Twitter