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Are consumers spending or saving in uncertain times?

15 May 2009

The popular belief is that in a downturn, consumers are more likely to think carefully before spending, and that a dent in sentiment is shared by both those facing job losses or cut backs in working hours and pay, as well as the majority that will end up retaining their jobs.

However research conducted by Dr Paul Henry, Chair of the Discipline of Marketing, in the Faculty of Economics and Business at The University of Sydney has shown that not all consumers behave the same way when times are bad.

"Research suggests that consumer spending, budgeting and money management behaviour are not necessarily as uniform as is popularly believed," said Dr Henry. "For example, careful budgeting is a particularly ingrained practice among those in higher-educated professional occupations because they are naturally confident and empowered, where as lower-income earners often struggle with budgeting throughout their lives."

Further to this, Dr Henry's research has also shown that when facing economic stress, consumers look at the problem through the lens of their distinctive worldview. For example, people who are skilled planners will be best equipped to adapt to difficult economic conditions however people who struggle with budgeting are worst placed to cope with an economic downturn.

Dr Henry said: "Since marketing developed as a discipline some 50 years ago, a central tenant has been to break customers into like groups - and decide which group to focus on. This approach is even more important in the case of a downturn, when marketers need to look at the particular distinctive ways of thinking of their primary consumer group, and how they are likely to cope."

Dr Henry introduced the inaugural Faculty of Economics and Business, Powered By Research breakfast seminar on Friday 15 May. He was joined in a lively panel discussion by influential author, broadcaster and copywriter Jane Caro; as well as other marketing professionals Peter Drinkwater (Director, Added value), Angus Frazer (Head of Strategy, Mitchell & Partners) and Economics Editor of the Australian Newspaper, Michael Stutchbury.