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Has recession caused a shift in consumer behavior

PART ONE
The Class discussion is on the following questions:

Psycho/socio/cultural/Economic environment

To what degree do you think that the recession has caused an enduring shift in consumer behavior? Defend your position.
In terms of defending your position, think of a product or service targeted to a specific market segment. Has the price of that product been lowered? Explain why the price was lowered and then whether the marketing/product manager should or should not raise that price? What will be the impact on the original target market? Please elaborate on your responses.

Or, in terms of defending your position, how long did it take for lessons learned during the great depression to be forgotten?

http://www.mmsend4.com/ls.cfm?r=148777216&sid=9162598&m=977143&u=NRF_&s=http://www.stores.org/%E2%80%9Cpractical-consumerism%E2%80%9D?adid=ST_Trends

Bohan, David (2010, June 28). Shoppers coming out of recession won't necessarily return to old habits. The Tennessean. Available on 4 July 2010 at
http://www.tennessean.com/article/20100628/COLUMNIST0301/6280313/-1/BUSINESS02

Consumers are feeling more comfortable shopping again, but they're not falling back on pre-recession patterns, writes columnist and marketer David Bohan. More shoppers are using the Web for advance research and online buying, and a significant number of consumers told Deloitte in a recent survey that they had changed stores to save money during the downturn and had no plans to switch back.

Hamm, Steve; Young, Lauren, & Helm, Burt (20 October 2010). The Age of Frugality. Business Week. New York. P54. Abstract available via ProQuest on 4 July 2010 at
http://proquest.umi.com/pqdweb?did=1575522541&Fmt=2&clientId=29440&RQT=309&VName=PQD

Horowitz, Bruce (2010, March 21). Retailers, restaurants offer deals as more of us pinch pennies. USA Today. Available on 4 July 2010 at
http://www.usatoday.com/money/economy/2010-04-21-1Apennypinchers21_CV_N.htm

In terms of defending your position, think of a product or service targeted to a specific market segment. Has the price of that product been lowered? Explain why the price was lowered and then whether the marketing/product manager should or should not raise that price? What will be the impact on the original target market? Please elaborate on your responses.

Or, in terms of defending your position, how long did it take for lessons learned during the great depression to be forgotten?

OK ! Now, after you have read the above question and information please provide only a couple of paragraph responding to each person #1, #2 and #3 below. Agree or disagree and critique or support their positions. The response must have all of these three parts to it: personal experience, the teaching materials above and some comments from the posts made by one of the other two person comments.

Comments from person #1
For the most part, consumer consumption behavior will return to normal when economic growth and job stability regain their strength For now, " most consumer segments remain in "recession mode,"" but they should bounce back. Consumers buy stuff and when they have money do so, they will continue to buy stuff. If this were not the case, the country would still be in the "great Depression Mode".

The recession has, however, introduced lasting consumer perceptions when it comes to the housing market. "Recent strength in the US apartment sector reflects a rent not own mindset, despite near record housing affordability" (Ricciardi 2010). The recession caused frighteningly high numbers of Americans to default on their home mortgages. This accelerated a chain reaction where there has been a fundamental shift from people buying homes, to renting instead. Despite record low housing prices, people don't like to be in debt. Renting provides a thrifty alternative. People realized their houses, unless paid for, are a liability, not an asset and their pocket books have proven it. Additionally, while housing prices are low, it can be extremely difficult to get financing which further encourages the rental market. My husband and I tried to get a loan for an investment piece of property. We both have excellent credit scores and while we could get a loan, the rates made it impractical. I'm sure others trying to buy a home find themselves in similar positions and will stick to renting as a result. In order for the housing market to truly rebound, lower rates and better financing options must accompany the lower housing prices. However, with so much uncertainty in the market right now, it is unlikely this is in the foreseeable future.
http://www.nuwireinvestor.com/articles/consumer-demand-shifting-from-owning-a-home-to-renting-55808.aspx
http://www.stores.org/"practical-consumerism"?adid=ST_Trends

Comments from person #2
In this economic down-turn a very high percentage of shoppers have changed how they approach spending their hard earned money. For one, the internet has made available options for purchasing any type of product from the comfort of one's own home. Before the recession the majority of shoppers would have flocked to Auto Dealerships, or brand name stores to purchase the latest, and most expensive products; such as, clothing, jewelry or any other commodity, and now on-line shopping "for some" is easier and convenient and almost sales-rep free and as quoted by Reda, (April 2010) Dugal "insists that shoppers will increasingly seek out online and mobile coupons, comparison shopping sites and loyalty and rewards programs" (Lines 12-14). Recently I have purchased several items via the web that I would have never considered purchasing outside of a retail store and I was able to save a few dollars not only on the purchase price of the items but also on time and gasoline and when I actually go to the grocery store or clothing store I look for sales, or coupons that I can download just to save a few dollars. But, I believe that with time, and as Lanie mentioned in her discussion with economic growth and job stability a good number of "consumers consumption behavior will return to normal". I may continue the use of the internet but I know that I will enjoy the thrill of bargaining with a dealer or sales rep.

Reda S., (April 2010). "Practical Consumerism". Retrieved August 15, 2011, from TUI, MKT 501, TD1, web-page: http://www.stores.org/%E2%80%9Cpractical-consumerism%E2%80%9D?adid=ST_Trends

Comments from person #3
The answer to the first question depends on the economic class that you're referring to. For the extremely wealthy, their spending habits didn't change a bit with the onset of the economic downturn. They continued to live their lavish lifestyle and spend their money where they saw fit. For the extremely poor who spent their life living off the government and others hard work, their lives didn't change much either. Uncle Sam continued to support them and they continued to spend what money they were given. The economic class that was hurt the most was the working middle class Americans. The ones that built this country and the ones that still keep it running. The average 40-50 year old working class citizen lost nearly 40% of their economic wealth when the stock market plummeted. Many of the ones that were close to retirement had to continue working to support their families. Did the economic downturn cause a shift in their consumer behavior? You bet it did. Families that were once financially able to go on vacations now had to spend that "family time" at work. They were no longer financially able to afford niceties because that money now had to be spent on just "getting by". We've just been talking about the ones that were able to keep their jobs. The downturn didn't just effect the working class, it affected businesses also. Many were layed off because companies weren't making the profits they needed to so costs had to be cut somewhere. This meant a large portion of the US had to also cut spending wherever they could. This trend of cutting "niceties" has extended to this day for many families. A majority of the US's population is still trying to recoup from the economic downturn and this has paved the way for a slow recovery.

One thing that business are trying to do to help is to lower prices. For example the auto market. Many auto manufacturers have drastically lowered the prices of their vehicles trying to entice the public to buy. They lowered the price since they knew the public was tight on money but also because the manufacturers themselves needed to sell more. Now that we are starting to slowly trend upward on the economic front should they start to their prices, probably not yet. The market is so volatile right now, many consumers still don't have the excess cash to spend on "niceties". If they were to raise the prices I think their sales would start to drop again.

Again only looking for a response by you with all three of the required parts from the comments by:
person #1
person #2
person #3

Part TWO
Questions: One Can AT&T Tame the Ihogs? Provide an answer with a few paragraphs and in a separate couple of paragraphs responding to each of my classmates response to the same question that are below, answer by agreeing or disagreeing and critique or support their positions. The response must have all of these three parts to it: your own experience, the materials in the below article and some comments from the posts made by one of the other two person comments.

In regards to pricing strategies!

Burrows, Peter & Kherif, Oga (2009, 28 December). CAN AT&T TAME THE IHOGS? Business Week. New York: p21. Available on 4 July 2010 at
http://proquest.umi.com/pqdweb?did=1927612251&sid=2&Fmt=3&clientId=29440&RQT=309&VName=PQD

Support your answer to the question agree or disagree and critique or support your positions. The response must have all of these three parts to it: your own experience, the teaching materials above and some comments from the posts made by one of the other two person comments.

Below are two of my fellow classmates replies to help

Classmate #1
In a competitive environment, changing the habits of consumers can only happen if competitors are unable to profitably meet consumer demands. Under those conditions, a company can force changes - up to the point that consumers begin moving in large numbers to alternatives. Part of the reason that customers will stay with a company is that the cost of switching is too high to be worth the effort to them. In the case of AT&T, it would seem that iPhone customers are locked in for the duration of their contract, because there is a substantial cost for switching to Verizon - AT&T's iPhone cannot be used on Verizon's network, so not only must an AT&T customer "buy out" the contract, a new Verizon iPhone would have to be purchased. Therefore, on the face of it, AT&T can, within reason, do what it wants with its iPhone customers, provided that it does not care about attracting new customers. On the other hand, if AT&T believes that there will be many new iPhone customers then it must make its data plans competitive with Verizon's.

That said, alternatives always exist for those willing to pay the price. For example, Android phones, adding together all the various models and manufacturers, make up about half of the smartphone market. These phones are not compatible with iPhones and run Android apps instead of iPhone apps, but it is reportedly easier to "unlock" them so that they can be used with different carriers, therefore reducing a smartphone user's switching costs. What this means is that if data bandwidth were of supreme importance to a smartphone user, with the cost of limited concern, then a customer could change service providers to get the fastest speed available.

Classmate #2
A company can never tame the consumer. They can only provide a good or service the customer wants/needs and hope the consumer chooses them. There are, however, things a company can do to incentives the consumer to choose them and this is where there is hope for AT&T. Iphone consumers will continue to use more and more bandwidth. Growing technology and new applications will only encourage greater use of smart phones and the associated bandwidth. It is clear, AT&T consumers are in general dissatisfied with the service they have been receiving. To remedy this, AT&T needs to enhance their service to include both better coverage and more/faster bandwidth. Both endeavors will obviously be costly and these increased costs will be passed onto the consumer. While one may assume these higher costs will force customers to switch, high switching costs and costs charged by competitors will likely encourage many consumers to remain with AT&T. If AT&T fails to improve their service, however, they will not stand a chance. The customer wants better service and more bandwidth and if AT&T won't provide this, they will have no reservations about switching services. They will flock to the company that will provide their wants and needs. AT&T must adapt to their consumer. Hopefully, they can do this affectively without raising their costs too much.

Solution Preview

Psycho/Socio/Cultural/Economic Environment:

To what degree do you think that the recession has caused an enduring shift in consumer behavior?
Recession has resulted in certain changes in the consumer's behavior such as changes in the behavior of loyal customers to seek out lower prices and better value products. Many businesses may lose long time customers. Shoppers or marketers on the other hand have an increased intelligence when it comes to what they are purchasing since they are purchasing less of it (Horowitz 2010). The Retail Forward Shopperscape has made a report that 72 percent of all individuals who shop have admitted that their behaviors change as a result of changes experienced in the economic environment with only 7% having no changes made to their shopping behavior at all.

From the comment from the first person, I disagree with the comment since the consumer's consumption behavior will not change meaning that it will not return to normal even when the job stability gains back its strength. The reason behind this lack of change is the fact people will always have fear inflicted inside them such ...

Solution Summary

Whether recession caused a shift in consumer behaviors are examined.

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