Job layoffs, frozen or reduced wages, and uncertainty about the future direction of the economy have led consumers to undertake a belt tightening of a magnitude rarely seen in the United States. Consumers have cut out many discretionary purchases and traded down to lower priced options for other purchases. This coping behavior may be the appropriate response to the current situation, but what happens when better times return? Will penny pinching be replaced by free spending ways many people had pre-recession?
According to an article in Advertising Age, marketers fear that the pull back on spending could last long past the end of the recession. Once we realize we can exist with spending less on certain products and eliminating other products altogether from our lives, little incentive exists to revert back to previous buying behavior.
If this prediction comes to fruition, marketers will be forced to make significant changes to their approach to customer relationships. Leveraging customer relationships by pursuing up selling and cross selling opportunities will not hold the potential that it once had. Instead, marketers should examine how customers connect with their brands. What attracts customers to the company or brand in the first place? What is it that you do that customers like or appreciate? It is not limited to your products or services. Community involvement, cause support, and social responsibility initiatives are relational connection points people have with your business. The aim of differentiation to achieve premium pricing might be replaced with differentiating to strengthen relationships and relevance with customers.
Link: Ad Age – “Marketers Fear Frugality May Just Be Here to Stay”
