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Analysis Post Recession Consumer   An Analysis
 

Analysis Post Recession Consumer An Analysis

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    Analysis Post Recession Consumer   An Analysis Analysis Post Recession Consumer An Analysis Document Transcript

    • POST RECESSION CONSUMER AN ANALYSIS Submitted to Mr. Ashish Khandelwal Consumer Behavior Faculty Submitted By Nikita Jain MBA- FT (3rd Sem) 41074 IMS, DAVV
    • 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 disposable income. 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. DOMINANT TRENDS A demand for simplicity A focus on the boardroom ADVANCING TRENDS Discretionary thrift Mercurial Consumption SLOWED TRENDS Green Consumerism The decline of deference ARRESTED TRENDS Ethical Consumerism 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. Discretionary Thrift 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 values. Mercurial Consumption 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. Green Consumerism 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 save homes. Ethical Consumerism 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.
    • THE ANALYSIS 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 tickets online. 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 committing frauds.
    • Discretionary Thrift: 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. Mercurial Consumption 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 purchasing decisions. Green Consumerism 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.
    • Ethical Consumerism 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/ excursions. 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. Nikita Jain MBA- FT Marketing 41074 IMS, DAVV