Analysis Post Recession Consumer An AnalysisDocument Transcript
POST RECESSION CONSUMER
Mr. Ashish Khandelwal
MBA- FT (3rd Sem)
U NDERSTANDING the P OST R ECESSION C ONSUMER
The research paper by Paul Flatters and Michael Willmott talks about the
anticipated trends in the Post Recession Consumer. It mentions how consumer
behavior gradually changes in different times from Pre Recession to Post Recession
Period. Pre recession consumer behavior was; according to the paper; an outcome
more than 15 years of prosperity. And even during that period, the decade from
1995 to 2005 has been like never before in terms of increase and availability of
Then the impact according to the type of Recession; the paper divides recession in
two broad categories:
Relatively brief and shallow that provoke short term changes in consumer behavior
depending on that causes of the recession and who is the principal victims are.
Like a recent International Monetary Fund analysis of 122 recessions and 21
developed countries since 1960 found that the typical recession lasted about a year
and resulted in a dip in GDP of roughly 2%.
Sometimes recessions are catastrophic deep and enduring, as well the Great
Depression of 1930s and Japan’s lost decade. Such downturned set the mindset of
whole cohorts of consumer and have a long term impact on buying behavior.
The current recession may have features of both types of downturns but surely not
as deep as great depression or as prolonged as the Lost Decade. But the recession
has its over impact and the paper charts out 8 such trends in Consumer Behavior.
A demand for simplicity
A focus on the boardroom
The decline of deference
Extreme Experience Seeking
A demand for simplicity
In this complex world this trends would be seen when consumers would be seeking
value for their price. They would want simple offering with greatest value. Simple
user friendly phones, i pods, networking sites, simple procedures.
Focus on Board room
There would be more attention given to the Corporate Government. The current
global fiasco has been compelled consumers to go deep into the things, be more
aware and for the companies to be more honest and transparent to gain
consumer’s trust. Excessive executive pay, use of public money has already been
irritating the public, now they have started voicing their thoughts.
Being a spendthrift is no more in. Frugality is the fashion statement. People are
recycling more, buying used goods, and imbuing their children with traditional
Consumers are becoming agile & fickle: Ready to change their purchase, fickle
shoppers. They could instantly find something than abandon it even more quickly.
There shopping decisions are liable to sudden and unpredictable change for reason
at all. It would get difficult for marketers to retain their customer base.
This would reduce as per the study; it talks about consumer going green, because
it’s expensive. They would do things that are possible individually like talking
smaller steps, switching off lights and all but not going for green, eco friendly cloths
etc. that expensive affair.
The decline of deference
This estimation talks about Regeneration/ Reestablishment of trust and faith in
government authorities, infrastructure and policies, public holding companies. As In
this recession, we anticipate a similar short-term recovery of trust in authority as
governments intercede to regulate business, stabilize markets, create jobs, and
Ethical consumerism would take a back seat; people want goods in economical
rates, whichever way they have it. When people are concerned about feeding their
kids they would not think about welfare, poor countries’ children etc.
Extreme Experience Seeking
The exotic experience seeking adventures would obviously reduce in this post
recession time owing to people sense of seriousness and responsibility.
To what extent would you agree with the given projections about
the consumer behavior?
Let’s take all the trends one by one.
A demand for Simplicity, it’s already started. The trend can be seen
everywhere from gadgets – gizmos, to instant food to simpler interfaces to
procedures etc. Rather than saying a demand for simplicity I would say
everything is CONVERGING – merging everything together. The simple
procedures in banks etc to form accounts, open- close. Booking railways
Google wave is the most recent example. Its makes everything simpler,
collaborates all your internet needs into one – Everything coming into one
window; Chat, search, social networking, web hosting, professional links.
Mobile phones- solving all the purpose- on the touch of a button.
NG - tay – A software that simplifies all your billing needs
Tata Sky plus – recording, tv, radio, cable all solved.
Make my trip – making choice simpler. Giving the ability to search, chose,
decide amongst 10 different airlines.
A focus on boardroom:
Here we talk about consumer at two levels, Consumers who are actually
consuming the product and Investors who care about the profits made by
any company. Take for eg. HUL a consumer like us would not think twice
about the ethics followed in HUL before buying a LUX or any other product
but an investor would surely want to know.
But the point we cannot avoid Frauds. It’s not about the current recession it
has always been the case, every recession has been preceded by a big
corporate fraud. And even in India after the Satyam fiasco people may like
to know or would be talking more about the corporate governance but the
truth is still a lot many investors are totally unaware of the investing
nuances. They just do it without much knowledge. So maybe there will be
more talks for a while but as soon as things get back to normal, consumers
will be there casual best. This would be only for there for a shorter period of
time. People will not stop being casual, and companies will not stop
Yes for a while consumers will be frugal. Yes they would think twice before
spending a lot. But unless they spend, the money flows in the market; the
recession would remain. So as soon as consumers feel things are going their
way, they would be back to spending. They would start buying, eating out,
traveling etc. So again this would be there but not to a great extent
otherwise we would never come over the recession. Inflation is the way to
growth. Unless people spend how we would ever come out of recession.
That’s why there are so many packages, offers, discounts etc. to compel
people to spend money and bring money flow in the market and come over
the recession.For example the cheaper tour packages, when people travel it
gives boom to a lot of industries – they buy tickets, rent a hotel, rent local
transport, eat out, shopping etc. so its like the money starts flowing in the
economy and that’s how we come over recession.
This would be definitely a positive trend. With the plethora of options
available to consumers these days, loyalty to one brand is a thing of past.
Consumers are becoming experimental, ready to try to new things, new
brands etc. Then there are social networking sites, sites like ebay, amazon,
where consumers opine there experiences and views related to different
products and services, that effects a lot many people to make there
Yes that’s true. Consumers in these times when they are trying to cut down
expenses in every possible way, would not pay extra for green products to
show there environment concern. Definitely they would do things in their
own way like reducing e- waste, switching off lights, reduce consumption of
fuels etc. But as off now they wouldn’t go for eco friendly products by paying
more. Like hybrid – battery cars etc.
The Decline of Deference
For a while there is surely a regain of faith in government agencies,
organizations; that could be seen in the revival of interest in the public
sector job in the youth once again. Even the pass outs from elite colleges
are going for banking jobs and other public sector jobs. But again it is going
to be very short lived.
This would be stalled as per the research suggests and I also agree. When
people are concerned about making ends meet, they wouldn’t mind taking
the wrong way for lesser price. They already feel cheated from the big
companies and business houses and they wouldn’t mind themselves
deferring from their ethics for the time being and getting goods and services
in more economical way.
Extreme Experience Seeking
The research suggests this would be arrested that is would stop. I don’t find
myself completely agreeing to it, because it solely depends on how the
marketers would react to this inclination of consumers. If they market some
extra ordinary offers for consumers to splurge upon, which they always
wanted to do but couldn’t out of money constraints they can go ahead with
the experience. So it’s a dual sided thing. How bad the situation of the
consumers is and marketers take on that.
Considering what's given in the article, will play out as described by
the author, what will be the impact on the following industries:
a) Music and Entertainment
b) Tours and Travels
c) Hotels and Restaurants
Music and Entertainment
Music and entertainment can have two affects if people are actually going
with stalling there extreme experience seeking adventure, music and
entertainment come in handier. People cant do away with entertainment,
after a week long hard work they seek weekends to go and watch a film etc.
The fm radio culture makes them listen to all the new songs and go ahead
buying or downloading them in there personal ipods if they feel like.
On the other hand consumers may be won’t be spendthrift in attending over
expensive musical nights and live shows. They would be saving money in
that regard but going for smaller and less expensive entertainment options.
Tours and Travels
It has reduced to a great extent but unless the marketers response back.
They are coming up with newer offers and packages, so far the more
economical and cheaper options, so a lot of consumers/ families are taking
advantage of this recession time and fulfilling there long awaited outings/
With airlines also giving more cheaper and reasonable travel options, there
are people using them for the first time despite the recession because now
they are able to afford it.
Hotels and Restaurants
They have surely seen a downturn and may be it would continue for a while.
Spending in food and hotels is still a luxury. But again it depends a lot on
the marketer’s action. Because it’s only now the hotel chain like GINGER, no
frill hotels are gaining popularity.
Actually in my opinion Consumer Behavior cannot be taken in isolation.
They have to always linked with the reaction or the efforts from marketers
side to woo the consumers. Because they would surely take extreme
measures to get their customers back in action. To compel people to spend
money so that the economy goes on, and the recession sinks in past. So
consumer behavior is a dual way processes depending upon marketers take.
The study misses on the trends related to internet and consumer ever
increasing interference with the medium. Because that has a lot of potential
to change Consumer Behavior.