Paradigm Shift in Consumer Buying Behavioral in Post-Recession

* Asst. Prof Shital Mody, M.Phil., M.B.A. N!"#$C%, M.Com,Asst. Prof in &.P.B.
'indu(a College, Course Co-ordinator, of Bachelor Management Studies )e*t.
Mum+ai,mail Add, relate-./gmail.com, Mo+ile, -01123 --456
** Asst. Prof Shradha 7ain, M.Phil. N!-S!"#$C%, M.Com., in &.P.B. 'indu(a College,
Mem+er of Bachelor Management Studies )e*t. Mum+ai, mail Add, s+(ain/gmail.com,
Mo+ile, -004-3 11665
A+stract,
8!he recession might +e over, +ut consumer s*ending has not returned to its heady 4--.
levels. 9t comes as little sur*rise. #nem*loyment levels remain stu++ornly high, hovering
around 6-:, and consumer confidence indices are starting to ;ea<en.=
Dana Telsey, CEO Telsey Advisory Group
Its a new world we are living in. The recession which hit the advanced economies is the worst
inancial and economic crisis in decades. The recession has reduced disposa!le income and
created an universal sense o an"iety and ear. Consumer conidence is at its lowest. The
consumers are shopping or cheaper !rands o consumer products and they are planning urther
cuts on discretionary spending in the coming months. As a response to lower disposa!le income
and rising unemployment, consumers have cut spending either !y buying less #ewer shopping
trips, less spending per trip, reducing the num!er o categories they are !uying into$ or !y paying
less #shiting retail channel, trading down, actively see%ing out promotions$. The new consumers,
however, are not &ust moving up and down the pricing ladder. The scholar ma%es an attempt to
study this shit in the !uying pattern o the consumer in the post'recession period.
9ntroduction,
The economic crisis has signiicantly changed not only what consumers are !uying, !ut also the
way the new consumers purchase and their motivations to !uy. The nature o shopping is
changing. Consumers are now shunning rec%less spending and ocus on how they shop. The
(shop'till'you'drop attitude o the nineties has !een replaced !y the emergence o new more
responsi!le and more sustaina!le orms o consumption. Out'o'town and supermar%et shopping
is increasingly replaced !y shopping online and at discount stores. I they visit a supermar%et,
consumers preer it to !e smaller, conveniently located and suiciently price competitive. As
consumers in Europe and ).*. are em!racing the new age o austerity, lagging sales and proit
margins is orcing traditional retailers such as Tesco and Carreour, to rethin% their !usiness
model. It is a widespread !elie that consumers intend to stic% to the new attitudes and
purchasing patterns adopted during the downturn.
>+(ectives of the study,
+. To understand the shit in the !uying !ehaviour o the consumer during the post'
recession.
,. To study the strategies adopted !y the consumer to save money in this period.
Research Methodology, To carry out the descriptive and e"ploratory research the secondary
data and secondary research datas was collected and used rom dierent !oo%s &ournals, newspapers,
company research papers and annual reports and
government pu!licat ions and government
we!sites.
Significance of the study, The study is important as it throws a light on the importance o
the economic environment and the changes in it on the !uying !ehavior o the consumer. The
policy ma%ers, the mar%et speculators, mar%eters should reali-e the importance o these changes
and develop strategies to attract the consumer.
!he Shift in the Buying Behaviour of the Consumer during the Post-
Recession.
)ecluttering,
There are a lot o reasons to oload unnecessary accoutrements. Downsi-ing to a smaller
home, getting laid o and doing some spring cleaning, or pic%ing up a ew !uc%s selling stu
you dont need.
nd >f !he Monthly Payer,
/any consumers used to !e comorta!le piling up de!t as long as their income could
cover the monthly payments. This doesnt happen anymore.
?ood ?rugality,
*pending on restaurants is down, !ut those who do eat out are ordering ewer side
dishes and appeti-ers or su!stituting an appeti-er or a main dish. Others are cutting !ac% on
home meals and ta%ing other steps to reduce ood costs.
$reater Sus*icion,
The past ew years have !een a great letdown, among other things, with polls showing
that Americans conidence in !an%s, !ig !usiness, and other pillars o the esta!lishment is at
record lows.
@ess Brand @oyalty,
/illions o consumers traded down to store !rands over the past couple o years and
many plan to stic% with them. The 0uality o o'price products has turned out to !e !etter than
e"pected, so there may !e little reason to pay more or !rand'name goods with essentially the
same 0uality.
@ess Credit, More Cash,
Consumer !orrowing has allen !y record amounts as Americans pay down de!t
and ad&ust to !an%s lowering their credit card limits.
@ess 'ealthcare,
Theres no upside here. 1ith unemployment s%yroc%eting, millions have lost health
insurance coverage or cut !ac% on care to save money. *ome people go without drugs theyve
!een prescri!ed or cut the dosages in hal, so the pills last longer.
@ess Aaste,
1hen you have less money, you waste less, or o!vious reasons.
@ess Aindo; Sho**ing,
1hen people !rowse, they !uy 2 so more people seem to !e eliminating window
shopping as a casual pastime.
More Closet Sho**ing,
Consumers have piled up a lot o goods in recent years, and many people are surprised at
how much good clothing or other stu theyve s0uirreled away.
More $ardening ,
3eggies rom the !ac%yard are usually cheaper, and more healthul, than those rom
the store. Thats one reason sales o canning e0uipment have !oomed over the past two years.
More Negotiating,
Its no longer cool to pay the list price or everything, and consumers are less
em!arrassed as%ing or discounts. 4etail merchants wont always haggle, !ut e5ay sellers will,
and state'your'price we!sites li%e 6riceline have !een !ooming.
More Resourcefulness,
I you cant count on any!ody else, then youre li%ely to rely more on yoursel.
Americans are ta%ing more responsi!ility or their own inances and careers, underta%ing more
do'it'yoursel pro&ects, and learning how to coo% at home instead o eating out.
More Bolunteering,
Americans with more time on their hands ind it rewarding to spend some o it helping
others.
Redefining Success,
1e used to measure it !y how much money and stu we had. 1ith &o!s scarce and
money tight, Americans are see%ing more satisying wor% 2 and giving up material goods to get
it.
Rental Re+ound,
The 7ownership society8 is over. Ater pea%ing a ew years ago, home ownership rates,
not surprisingly, have started a long &ourney downward, as oreclosures sha%e out people who
couldnt aord their homes in the irst place and tough !orrowing standards limit new !uyers.
Smaller 9s Bigger,
It goes without saying that many things are getting smaller rather than !igger, including
household !udgets and peoples am!itions. *maller portions, smaller houses, smaller cars, and
local.
!he strategies ado*ted +y the consumer to save money in this
*eriod.
More frugal lifestyles. : 9rom putting o car repairs to growing your own veg, cash'
strapped consumers have shited towards a more rugal liestyle and a more conscious
attitude toward spending. 6ressure on cash lows cause amilies to stay at home more
oten. :;< o )* consumers cut !ac% spending on entertainment, recreation and eating
out #Gallop poll$. Trends towards simplicity, do'it'yoursel, responsi!le consumption and
sharing have accelerated during the downturn. The rise o the sharing economy is getting
a lot o attention and you can now rent your own car through services such as =ipcar and
1hipcar, your lat on Air!n!, the par%ing slot in ront o your house through
6ar%atmyhouse.com or your neigh!ours lawnmower through >ona!les.com.
More conscious attitude to;ard s*ending: 6lanned purchases, modiied shopping trips
and shorter shopping lists have !ecome the standard o today?s value'conscious
consumer. Consumers are actively see%ing out promotions and paying more attention to
prices #@A< o American consumers use coupons more oten, 5oo-BCo, ,CCD$. They are
also ar more li%ely to research a product !eore ma%ing a purchase, large or small, and
will choose the !rand with !etter inormation and a more personal message. Eew
customers chec% la!els and study the content o products, compare prices, review !rands
promises, weighing options. FThe Eew Consumer *tudyF, conducted in ,CCD !y the Euro
4*CG 1orldwide, shows that the new consumers clearly have increasingly higher
conidence in the opinions o others and in online content generated !y their peers while
consumers conidence in !rands is decreasing.
!rading do;n: Consumers act 0uic%ly to price changes and trade down to lower'priced
goods within their category #inest to !randedG !randed to private la!el$. 5rand loyalties
may !e 0uestioned and sacriiced to lower price oerings. 4esearch conducted !y
/cHinsey in ,CCD ound that, in any given category, an average o +I< o consumer'
pac%aged'goods consumers !ought lower'priced !rands in the past two years. O the
consumers who switched to cheaper products, J@< said they perormed !etter or much
!etter than e"pected. As a result, ;J< o the switchers said they no longer preerred
higher'priced products, and an additional J+< said that while they preerred the premium
!rand, it 7was not worth the money.8 In a more recent survey conducted !y /cHinsey in
,C++, more than A, percent o the respondents said they were see%ing out and !uying
lower'cost household products. It is noticea!le, however, that spending !ehavior varies
among categories. Consumers, or e"ample, are less li%ely to trade down coee, !eer and
dog ood compared to laundry detergents and cough medicines.
Cutting +ac< on discretionary s*ending: 1hile holidays and lu"ury categories are
particularly hit, even little everyday treats li%e maga-ine su!scriptions, dining out or
purchasing coee in the morning are aected. Ostentatious wealth !ecomes less
ashiona!le. >arge purchases are delayed and replacements are postponed, with a
negative impact on dura!le goods such as cars, home urnishing and household
appliances.
Sho**ing for value: Conscious and mindul consumption does not always mean !uying
less. Consumers continue to !uy the products at dierent prices, !ut they need more
reasons to &ustiy the purchase, regardless o price segment o which the product !elong.
Consumers reuse to !uy at higher price unless they clearly perceive 0uality advantage
and they tend to ocus even more on su!tle dierences that distinguish an authentic,
innovative and distinctive product rom goods produced and sold or mass consumption.
I they are loyal to some !rands, they preer to wait or a price drop, !y promotions or
discount coupons #>elia 3oinea and Alina 9ilip, ,CCD$. In a research ound that, the
advertising agency Ogilvy B /other conirmed that the commitment to premium
products remains !ut consumers are loo%ing or trusted !rands with 7proo o value8.
The consumers would preer to have ewer, high'0uality things. The success stories o
*tar!uc%s and o Apple during the economic downturn conirms that recession isnt only
a!out trading down !ut products positioned at high price points should !e perceived as
7worth it8.
Conclusions,
The recession that hit the economies o various countries all around the world, has !een an eye
opener not only or the mar%eting community !ut also or the consumer community !ecause it
led the ormer understand that &ust hyping o the products !y good eatures, pac%aging, !randing,
adding e"tra services to the product or rather window dressing its shops, outlets is the
undamental i selling product or services, the latter understood that what is important is the
consistency in the income that would lead to this heavy !uying as they say 7 *hop'till'you'drop8.
4ather, an old saying goes say or a rainy day, which is more important, and has heavily !een
realised !y the consumers. There is need or the reali-ation to !e made stronger among people
that 7A rupee saved is a rupee earned8.
References,
Hnoop Todd Alan, 74ecessions and Depressions. )nderstanding 5usiness
Cycles8, 6raeger ,CCI.
Hrugman 6aul, 7The 4eturn o Depression Economics and the Crisis o ,CCI8, 1. 1.
Eorton B Company, +DDD.
*or%in Andrew 4oss, 7Too 5ig to 9ail. The Inside *tory o Kow 1all *treet and
1ashington 9ought to *ave the 9inancial *ystem rom Crisis L and Themselves8,
3i%ing Adult ,CCD.
Rou+ini Nouriel and Mihm Ste*hen, 8Crisis Economics. A Crash Course in the
9uture o 9inance8, 6enguin 9ree 6ress, ,C+C

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