In the fall of 2007, the United States economy entered into a “Great Recession”, that was more severe than any of the recessions since the Great Depression (Katona). Current studies have shown that the Great Recession may have left a “deep and lasting trauma” on consumer behavior and spending habits (Lavin). Now as the economy has begun to slowly recover, market researchers have yet to discover if consumers will snap back to their former buying behaviors. For our research project, we examined and evaluated the change in the buying behavior of sixty people who live in Sonoma County. We conducted our research by creating a questionnaire, analyzing other found data, and by reviewing previous research articles regarding this topic. While researching, we discovered that current studies have not yet discovered the real impact of the Great Recession on consumer psychology. However, some research has shown that buying behaviors can be segmented into four groups, which explain consumer psychology during a recession (Quelch). Our research paper will focus on how the recession has shifted consumer psychology and altered buying behaviors since 2007, by analyzing how consumers in Sonoma County have cut back and which segments they each fit into. RESEARCH:
After reviewing articles written about “post-consumer behavior” after a recession, many scholars believe that consumers will not go back to their free spending ways as they have in the past (Ives). Consumers affected by the Great Recession now find importance in saving money and buying fewer goods and services on credit (Katona). Scholars believe that consumers who have experienced loss and cut backs during the Great Recession will lack consumer confidence and “continue to live with residual uncertainty” in the future (Arussy). Due to the recession, consumers have learned how to find the best deals and greatest value for their buck (Arussy). Consumers have also made small adjustments to their daily purchases by switching from name brand items to private brand items (Arussy). Most consumers who have switched to private or store labels have seen no difference in the cheaper brands and have now become accustomed to these minor changes (Arussy). Many of the respondents who answered our questionnaire mentioned that the recession had certainly changed their spending habits. Researchers believe that permanent changes in spending will occur for products that require financing, since consumers are now trying to stay away from anything that gets them into debt (Wheaton). This leaves many market researchers wondering if consumers’ buying behavior for frequently purchased items will revert back to former behaviors, or if the new consumer behavior that was developed in this area of spending during the recession will become the new norm (Lavin). Not all buying behaviors are believed to revert back to the way they used to be before the recession. In some areas of spending, consumers will continue to cut back on certain items such as groceries. In other areas which they find important, such as gym fees and phone bills, consumers will make no cut backs or changes (Quelch). Research has shown that the United States is a nation of people who love new technological advancements that make lives a little easier and more convenient (Wheaton). This being said, it has also shown that the Great Recession has affected the buying behaviors for each consumer segment differently in terms of the areas in which they have cut back in spending. (Quelch). In John Quelch’s Harvard Business Review article “How to Market in a Downturn,” he analyzes how consumers’ spending habits have evolved since the recession began. Quelch explains the four segments that consumer’s fit into psychologically during a recession and gives examples of how each consumer fits into a segment. We will use these four segments that Quelch explains in his article to analyze our results from our questionnaire....
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