Consumer Frugality Issues - Essay Example

? Consumer Frugality Consumer Frugality and Its Impact on Marketing Frugality refers to the lifestyle of a consumer that is characterized by the ability to restrain from acquiring and using goods and services for the sake of achieving long-term goals. The recent and persistent economic downturn has led to most of consumers becoming very frugal because of the uncertainty surrounding economic conditions. Basically, frugal consumers have a number of common traits which include low buying behavior, less appetite for material things, and prefer repairing and reusing items (Craig-Lees & Hill, 2002). According to a survey study conducted by Booz & Company on 2,000 consumers in the U.S., there is an emergence of frugal consumers. This is mainly because of the recent recession that has shaped their consumption behavior. It is expected that such consumption behavior will persist in the future even as there are reports that the U.S. is recovering from the recession (Zavestoski, 2002). Therefore, marketers have identified a market segment consisting of frugal consumers and are making efforts to attract such customers. The frugal consumer has very unique characteristics including a strong consciousness on value which determines the level of trade -off in price and convenience (Zavestoski, 2002). Research studies on consumption patterns among U.S. consumers indicate that almost 67 percent of customers are purchasing low priced products in order to reduce on spending while improving on saving (Craig-Lees & Hill, 2002). This is evident from the decrease in the Per capita consumption expenditure across almost all demographic groups. Additionally, customers have maintained a weak sentiment which has influenced their low expenditure on consumption. The target market segment of frugal consumers can be described using a number of demographic factors that define their unique features. The demographic factors include household income, and age. First, the target market segment consisting of frugal consumers is made up of middle-income households. They have an annual income between $20,000 and $50,000 and are very mindful when it comes to spending their income. They are very selective and often plan in advance before going for shopping at discount stores rather than high-end stores. Second, the target market consists of individuals aged between 35 and 40 years. This is the age gap within which people have families, are in employment, and are working hard to save for their retirement. They are very keen with their spending habits and they always ensure that they are buying goods at low prices so that they can save a significant part of their income (Zavestoski, 2002). Third, the target market consists of home owners who have a high demand for household products to use in their homes. However, they are also very frugal and have a habit of shopping from discount stores. The multiple demographics of frugal consumers make it very difficult to market products. Discount retail shops including target, Costco, and Sam's Club have developed a number of marketing mixes in attracting frugal consumers. Let us recall that frugal consumers buy less and price conscious. Therefore it is evident that any marketing mix targeting frugal consumers should heavily rely on price. However, the other 3 P’s are equally important because they complement price. It is an obvious fact that consumers are becoming very frugal these days and that businesses need to differentiate their products in order to remain competitive (Craig-Lees & Hill, 2002). The frugal consumer is looking for products that will deliver the best value for their dollar. This implies that businesses need to provide the best value to its client in order to attract a significant number of frugal consumers. The most common marketing mix among companies targeting frugal customers is that there is always a price discount. This is mainly because such consumers are very sensitive to changes in prices. A significant decrease in price levels has an enormous potential of making them purchase an item from a discount store. Frugal customers consider price discounts as helpful in their decision to save money because there is the perception that they pay less for more (Craig-Lees & Hill, 2002). The marketer has to make available products that mainly satisfy basic needs. This is because they cannot do without such products including food and clothes. In most cases, frugal customers mainly focus on satisfying their basic needs and consider luxury products a waste of money. Basically, they are less materialistic and would prefer reusing items. The most common types of promotions used in targeting frugal customers include advertising, free publicity, special prices, coupons, and free samples. Marketers advertise their products through posters and billboards. This has proven to be very effective in attracting frugal customers because it gives them product information prior to their decision of making a purchase. Free samples are very common when introducing new products and this endears a frugal customer into trying something new. Coupons are included in product packaging and entice customers to make an additional purchase at a lower price. A Price reduction is often used in promoting products in the short-term period (Craig-Lees & Hill, 2002). Marketers also get free publicity when local newspapers and radio stations highlight a story on their products. The success of most of discount stores such as Costco, Target, and Sam's Club has been dependent on a number of factors. We can asses these success factors using a SWOT analysis and even make recommendations on how such companies can address threats and weaknesses. The SWOT analysis includes: Strength Discount stores are offering a wide range of products as well as services. The available products are of high quality. The discount stores offer their products at a lower price. Most of the products have a very strong brand. Weakness Lowly-priced products are associated with poor quality. Inability to retain customer during conditions of economic downturn. Opportunity The invention of social media offers an alternative medium for promotions. Changes in consumer tastes and preferences towards discount products. Increasing demand for household products among families. Threat Poor economic conditions that reduce consumer purchasing power. Free entry of discount stores has increased competition. I would recommend that marketers adopt flexible marketing strategies that change with changes in the needs and preferences of consumers. This will ensure that discount stores retain customers even when there is economic recession. For instance, marketers can reduce prices during recess so as to make their products affordable even when consumers have a lower purchasing power. The other recommendation is that marketers should invest more in promotion activities so as to improve product differentiation. This is the most appropriate strategy to creating a competitive advantage in a competitive market. This is because most of the new discount stores will be copying from each other. Customers will be unable to associate a particular product with a certain store leading to loss of customers to rival stores (Zavestoski, 2002). References Craig-Lees, M & Hill, C. (2002). Understanding Voluntary Simplifiers. Psychology & Marketing, 19(2), 187-210. Zavestoski, S. (2002). The Social-Psychological Bases of Anticonsumption Attitudes. Psychology & Marketing, 19(2), 149-165. Read More