According to Ed Farrell, director of the Consumer Reports Sentiment Index, consumers are shopping because they are tired of demonstrating restraint year after year. So even if their economic outlook remains unchanged, they are spending more in a stable but negative economy.
The mixed bag of data from the Consumer Reports Sentiment Index.
What's most interesting about the economic climate and consumer sentiment is how fractured the nation seems to be. Different income groups, different age groups, and different regions are experiencing different economic realities and expressing different consumer sentiment.
For example, people have reported more job losses than job gains in the first time in four months, with the Northeast hardest hit. People living in the West are experiencing the most economic stress, due to the economic uncertainty of jobs and the economy. Consumer confidence among people, ages 18-34 and 65+, has remained unchanged or lost ground (career starters and fixed incomes).
People with a current household income over $100,000 have slightly higher consumer confidence whereas people with a household income under $50,000 have slightly less consumer confidence. But it's middle income families that are under the most economic stress.
The report shows that people are most concerned with medical bills and medications, missing payments on major bills, and health care coverage reductions. Whereas the higher household incomes are seeing more stability, middle income families are barely making ends meet. For households under $50,000, 20 percent could not afford medical treatment or medications, 13.5 percent missed a major bill payment (but not a mortgage), and 12.5 percent lost or reduced their health care coverage in the last 30 days.
Irregular economic climates drag consumer confidence down.
One of the reasons national leaders are struggling in developing a solution is because the current economic climate is not allowing for a one-size fix all for the nation. Specifically, some areas of the country believe taxation is the only way out of the current crisis because they need relief while those in less depressed areas know increased tax burdens may erode their marginal economic foothold.
But avoiding the politicized nature of the economic climate, let's consider what this means for marketers. The three key areas where some companies are winning is by focusing on location, confidence, and relevance.
Location, because some regions of the country are outperforming others. Confidence, because some consumers, even in depressed areas, are making purchases. And relevance, because consumers will purchase meaningful products regardless of their financial situation.
While holiday spending has increased, personal electronics is the only segment of the economy that has successfully demonstrated it can deliver meaningful products. In fact, the increases in spending this year are largely tied to personal electronics, which is up 31.4 percent (up 21.2 percent from last month).
According to the Daily Finance, six of the top ten product purchases are related to electronics. Only Pillow Pets, Australian short boots (that cross a boot with a moccasin look), a Fisher Price dancing Mickey Mouse and indoor remote controlled helicopters can compete (you might notice the latter two rely on electronics).
In fact, even Toys "R" Us reported that the LeapPad Explorer is the most sought-after purchase for young children. It makes sense. The LeapPad Explorer is like a tablet for kids, with an education-entertainment bent.
The long and short of it in making marketing decisions into 2012.
Unless Farrell's one cautionary concern is right — that strong holiday sales could set the economy up for a weak first quarter — marketers have to do a better a job focusing on proximity (financially stable areas), demographics (select incomes), and psychographics (specific interests and positive outlooks). That means segmenting markets, targeting people who can actually buy the product (instead of blasting everyone), and making meaningful connections to the product or service offering.
Those are the questions to ask. Are you in the right markets? Are you reaching the right people? And are you demonstrating that your product can add tangible value beyond status? Because if anything has changed, status products just don't cut it anymore.