Insights from the Home-Owning Consumer
A home means different things to different people. For marketers seeking insights into homeowners’ purchasing decisions, it’s a telling tale of consumer habits.
The home represents a big part of a consumer’s life, from initial acquisition to the many significant purchases made to create a home. These important consumer decisions offer a magnifying glass through which we can examine some more general consumer behaviours. The following three insights demonstrate what a microcosm a homeowner’s purchase habits can be as a reflection of the consumer economy.
Honey, I Shrunk the House
The size of new homes has decreased by 11 per cent in the last half of 2008, from 2,629 sq ft. to 2,343 sq ft. This trend started before the economic crisis hit North American households. Builders quickly learned to adapt the size of houses to meet consumers’ current financial possibilities and immediate day-to-day needs. In this context, it’s no surprise that consumers aren’t biting to purchase 10 cans of Campbell’s Soup for $10. Consumers are managing day-to-day decisions about purchases in the same way they handle major purchases, like homes.
Birds of a Feather Don’t Always Flock Together
Despite what one may think, not all products within a category behave the same way. An April 2009 survey released by Pew Research Center looked at the difference in consumer habits between purchasing luxuries and necessities. Take appliances, for example. A dishwasher, contrary to the opinion of many busy parents, is considered a luxury, versus a clothes dryer, which is considered a necessity (21 per cent versus 63 per cent, respectively, called each a necessity). The forecast for the industry shows that laundry washers and dryers will not decline in sales as much as dishwashers and even ranges. Likewise, consumer goods companies should expect line extensions to suffer more than their core products, because these extensions are considered a luxury by consumers. Special K, for example, will sell better than Special K with the addition of strawberries and vanilla, because the latter is more expensive and therefore considered unnecessary. Consumer packaged goods companies need to invest in the core of their brands, to ensure they do not lose consumers for their franchise.
To Buy, or Not to Buy? Or to Scale Down?
A recent survey asked 400 consumers about their purchase intent for televisions, appliances and furniture. The results were striking. They highlighted that a significant decline in purchase intent was expected over the next six to 12 months. Meanwhile for those who do intend to purchase, research showed they will not scale down significantly. Consumers are looking around more and doing more of their own research to find deals. However, they will not buy a product that does not fulfill their needs. For example, if they want a stainless steel fridge, they will not buy a white one, even if it is priced lower. What does this mean? Marketers should not advertise only the opening price point or low-cost products just because the economy is weak. Value still resonates with consumers.
Authored by Philippe Meyersohn, GM - Brand, GE Appliances / Mabe Canada.
