Understanding the economy and purchasing behavior of consumers
It is measured by the total output produced by the economy or the GDP over time which is usually measured in years. The cycle tells us where we started and how it's going. If the GDP increased, it means the economy is getting stable and it is when expansion happens, on the other hand, if the GDP decreases, it is then called contraction wherein the economy recession happens, but what really causes this effects? In this Meta Analysis, I will delve more on this topics and how it will affect the society.
In a microeconomic conditions, it impacts the ability of the consumers to purchase, while Macroeconomics impact on the willingness of consumers to purchase. With these, either the market reduces their spending to what they only need or only buy their want to a minimum or change their purchasing behavior. These are of course needed to be considered by brands for them to still get a share of their market.
Stages of Business Cycle
- Expansion
There's an increase of everything – income, employment, demand and supply, money supply and investments. This is when the economy is on the way to its best scenario. - Peak
Economy is at its maximum level and can't go any further. By this time, consumers tend to restructure their spending because most probably they have already bought or tried most of the products offered in the market. - Recession
Demand and Supply of goods start to decline. With this, we proceed to have excess in supply. - Depression
We see increase in unemployment, and the economy declines. - Recovery
Economy begins to recover. This is when supply starts reacting and new investments are made.
Understanding this cycle helps both brands and customers make lifestyle decisions, change financial decisions which affects their spending on goods.
Understanding Income Distribution in the Philippines
In order to eradicate poverty, development efforts frequently center on measuring and evaluating poverty.
The nonpoor are likewise susceptible to poverty, while the poor face the threat of being stuck in it forever. The impact of the novel coronavirus (COVID-19), which is anticipated to result in losses in revenue due to decreased economic activity, has brought vulnerability to light in particular.
The COVID-19 made impact with the economies worldwide, including the Philippines which has affected the economic activities of Filipinos.
During the depletion of the economy, on average, consumers preferred to shop looking for items on sale or with great deals. We've seen increase in promos such as Buy 1 Get 1, Product partnerships, Prices slashed off, and increase in purchase of generic brands.
According to a study made by Arlene Wong and Aviv Nevo in their paper entitled The Elasticity of Substitution Between Time and Market Goods: Evidence from the Great Recession, they estimate that households could have reduced the average price paid for food by 2 to 4% by buying on sale, 31 to 33% by using coupons, and 5 to 11% by shopping at discount stores. Purchasing generic goods would have reduced costs by 13 to 25%, and purchasing large sizes would have reduced costs by 20 to 47%.
Households responded to the recession by paying closer attention to their budgets and increasing spending in each of the money-saving categories by 1.5 to 2.0 percent of total household expenditures. However, the return on time spent on these activities, as measured by a decrease in the average marginal price paid, fell by about 2%.
During the pandemic, e-commerce platforms emerged and gained popularity. We've seen the increase in trends of online shopping and even now in the new normal. Although we have been going back to brick and mortar stores, most people realized the convenience of it, and personally, I too have been doing online purchases now instead of going physical stores especially on grocery runs. It saves me time and energy, prevents me from buying things that aren't on my list, etc.
As stated previously, purchasing behavior of consumers change depending on the state of the economy, but what had the most minimum impact are FMCG and some of the consumer goods as they are in constant demand of customers.
We now delve into consumer packaged goods which have a short lifespan and considered as the largest business sector. This sector has also benefitted with the fame of e-commerce.
Digital technology empowered the CPG enterprise to develop and prosper. Lately, the world has gone through a few main changes. Now human beings are intently familiar with on line orders, cope with delivery, or even customized products introducing the following trends:
- Omnichannel Marketing - Brands ought to analyze customers' interface and inclinations in items and communication channels. Other than, it's fitting to optimize your company's movement over diverse showcasing stages to lead your clients through all the stages of their shopper travel. Omnichannel promoting infers inbound promoting strategies and channels that offer assistance obtain modern buyers.
- Private Labels - Numerous brands consider making their private names. This handle can happen in any industry: makeup, nourishment, dress, extras, etc. Private name items are merchandise that clients can discover as it were in a particular store. This way, brands increment their benefits and draw in modern clients.
- Acquiring other companies (competitors or expansion) - One more slant that has been watched of late is procuring or contributing in a match brand. Unilever could be a incredible illustration. Beginning from 2015, this multinational monster has bought a critical number of brands.
- Self care products - Self-care is the number one need for numerous individuals. Skincare items deals move forward radically and proceed developing.
- Sustainable goods - Numerous individuals go green and care approximately items that influence our environment. As a result, there's a rising request for merchandise that can't hurt our planet. Companies attempt to address this request. By getting to be cognizant, brands offer assistance spare vitality and protect the open wellbeing and virtue of our environment.
- Personalized products – Personalized items are things you'll be able alter concurring to your taste. Since around 80% of clients would purchase something from companies that offer custom items, numerous brands actualize the methodology. Nissan lets their clients design cars, and Lenovo permits buyers to make custom tablets. Customization empowers commerce proprietors to produce more deals, move forward client dependability, and have more client knowledge.
Conclusion
We've seen online purchases rise, marketing strategies are now digital compared to the traditional papers and billboards, but we don't see it going away soon, in fact we predict more platforms and innovative concepts to emerge. E-commerce deals and utilization are expanding year-on-year, but the widespread has quickened that prepare. As the economy still takes its time to go recover, purchasing behaviour of consumers will continue to change and brands will still have to cope with the changes along it.
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