The Changing Psychology of Consumer Buying Behavior
It is always gratifying when a hunch is confirmed by a well-respected news source like The Economist.
Several weeks ago I was reading The New York Times, and I saw a retail ad for Saks Fifth Avenue dominated by the words “WANT IT!” This campaign was obviously an attempt to awaken consumers from their recession-induced stupor and move them up Maslow’s Hierarchy of Needs from needs to wants. Now, even though the campaign was running in a publication like the Times and was targeting an affluent audience, it still seemed to me to be incredibly out of touch with what most consumers are dealing with today, decimated retirement accounts, deflated real estate values an considerable uncertainty about the future.
I was pleased to see The Economist share my point of view in an article from this week’s edition on consumer buying psychology.
The article postulates that unlike past hits to the economy and spending, conspicuous consumption may not bounce back like it has consistently before. Three primary reasons were given for this:
1. Banks will be more careful when determining who gets credit
2. Many consumers will be focused on rebuilding savings first
3. Consumers will be much more circumspect when using credit to buy affluence, as millions have done in the past
The second primary point is that distrust of big business continues to increase as million dollar bonuses are paid to those that got us into this mess and industry after industry looks to taxpayers for bailouts.
The implications are that companies and brands will have to be more transparent with consumers than before and that consumers will severely punish companies that fail to keep their promises. Companies will also have to empathize with customers and move from “passion” to “compassion” in their marketing communications.
The article concludes with the point of view that these trends will accelerate the use of social media. Consumers will continually and increasingly look to social media to find ratings and recommendations on products and services from other users to balance the information they receive from marketers.
The recession has driven consumers to reappraise the value they receive from brands. Simply telling them to “WANT IT!” may not be enough. Savvy marketers should be using social media themselves to directly engage with customers, listen to their concerns and provide better and more insightful products and services as a result.
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