This article from the Economist suggests reasons why consumer behaviour is changing. Explain why using evidence from the article, highlighting the use of coincident indicators such as these figures in the graph. Evaluate the effects through the economy as savings become more of a priority, also how businesses will have to adjust to attact potential shoppers. Using the DRQ answering process to define red terms, diagram to show falling demand, then blue directions for the rest of the answer.
3 comments:
By understanding the consumer behaviour it attempts to find each consumers characteristics such as demographics and behavioural variables their wants. It is a study of when, why, how, where and what people do or do not buy products.
You have mentioned the figures are coincidental. However, they are not coincidental judging by an evidence in the article; housing and stockmarket bubbles have imploded and unemployment has soared.
I misunderstood the term 'coincident indicators' in previous comment. Apologies for that.
Coincident indicator analysizes 1. Number of employees on nonagricultural payrolls. 2. Personal income less transfer payments. 3. Industrial production. 4. Manufacturing and trade sales.
Looking at the chart,figures from mid-2007 is false-positive due to recession. From late 2007 until present, there has been many microeconomic indicators varying.During the recession production as measured by GDP, employment, investment spending, household incomes and business profits all fall suddenly. Due to this, 'savings become more of a priority.'
Consumer behavior is the study of when, why, how, where and what people do or do not buy products.
An indicator is anything that can be used to predict future financial or economic trends. Popular indicators include unemployment rates, housing starts, inflationary indexes and consumer confidence. Coincident indicators occur at approximately the same time as the conditions they signify. Rather than predicting future events, these types of indicators change at the same time as the economy or stock market e.g personal income. As the economy weakens people will have less personal income, and less security. As a result they will generally start conserving money. This is demonstrated by coinicident indicators i.e statistics and graph which show a marked decrease (7 percent in U.S, 2.3 percent in Europe.) in consumer spending and greater emphasis on saving (Inmar, an American firm that processes discount coupons, says that redemptions in America were 17% higher in the first quarter of 2009 than in the same period last year) as consumers hunted for bargains since the onset of the economic slowdown. Inevitably, sales will go down for producers and firms until the economy is returned to a healthy state. In the meantime businesses must concentrate on making sure they retain customers, which is difficult. The main way to do this is to behave in a consumer friendly way by reducing prices and offering other such incentives. As such, discounts and special offers will be on the increase as sales decrease.
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