Abstract
The purpose of this essay is to examine the possible effect of the global recession on customer behaviour. Many industries have been hit hard by the recession, but this paper attempts to take a different stance by focusing on how certain products are flourishing because of changes in consumption culture, and the essay attempts to justify this through analysis of buyer behaviour theory. The potential for these changes in consumption behaviour to persist in the long term is also considered.
1. Introduction
The global financial crisis is continuing to worsen, and the equity markets have shown that they are not yet set to recover, as they continue to plummet . Businesses continue to struggle, and as consumer spending contracts, it becomes even more important for marketers to understand how the recession affects buyer behaviour. One such issue is whether these changes to consumer behaviour will last, or whether a recovery of the economy would shift buyer behaviour back to its pre-recession pattern.
This essay will be structured as follows: Section 2 will link the recession to buyer behaviour theory. Section 3 will look at how businesses have been affected by the recession, and justify this using the theory discussed in Section 2. Section 4 discusses the longevity of the changes to buyer behaviour, while finally Section 5 concludes the paper.
[...] Explaining this succinctly, Chrystal and Lipsey assert that: “Fluctuations in her current income will have little effect on her current expenditure, unless such fluctuations also cause her to change her expectations of life-time income”[5] This demonstrates the importance of confidence; if consumer confidence falls to a point where they do not believe the economy will recover over a long period of time, this will cause consumers to scale down their expectations of life-time income, reducing their consumption. A model of consumer behaviour taking the opposite end of the spectrum is that of Keynes, whose theories were the foundations upon which Modigliani built upon[6]. [...]
[...] p994 http://www.economist.com/business/displaystory.cfm?story_id=12815694 http://www.economist.com/business/displaystory.cfm?story_id=12815694 Blackwell, R. D., Miniard, P. W., Engel, J. F. (2001). Consumer behaviour. p80 Lewis, L. (2008). How Japan learnt how to stop worrying and love the recession. Ibid. Ibid. Hosea, M. (2008). RECESSION RETAILING: The Six Secret Strategies of Shopkeepers. p26 Bussey, R. (2008). CONSUMER CONFIDENCE: The confidence crunch. Bussey, R. (2008). CONSUMER CONFIDENCE: The confidence crunch. Hosea, M. (2008). RECESSION RETAILING: The Six Secret Strategies of Shopkeepers. Duke, R. C. (1992). European [...]
[...] Instead, he claims that the most important influence on consumer confidence is the media, stating that “confidence will not return until the good news does as well”[23] After seeing that the Japanese slump of the 1990s had a profound effect on Japanese consumer culture, consider the UK slump in the early 1990s. Did this have a long-lasting effect on British consumer behaviour? Maeve Hosea would say ‘yes', asserting that the Tesco Value line was launched in 1993 as a direct result of the recession of the early 1990s[24]. [...]
[...] A., Lipsey, R. G. (1997). Economics for business and management. Oxford : Oxford University Press De Mooij, M. (2004). Consumer behavior and culture. Calif.: Sage Publications Duke, R. C. (1992). European new entry into UK grocery retailing. International Journal of Retail & Distribution Management. Vol 21. Issue 1. Drakopoulos, S. A. (1992). Keynes' economic thought and the theory of consumer behaviour. Scottish Journal of Political Economy, Vol 39, No 3 Hosea, M. (2008). RECESSION RETAILING: The Six Secret Strategies of Shopkeepers. [...]
[...] Keynes' economic thought and the theory of consumer behaviour. p320 Chrystal, K. A., Lipsey, R. G. (1997). Economics for business and management. p457 Drakopoulos, S. A. (1992). Keynes' economic thought and the theory of consumer behaviour. p318 Hosea, M. (2008). RECESSION RETAILING: The Six Secret Strategies of Shopkeepers. pg Ibid Ibid Chrystal, K. A., Lipsey, R. G. (1997). Economics for business and management. p105 Baltas, G., Doyle, P., Dyson, P. (1997). A model of consumer choice for national vs private label brands. [...]
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