Reference no: EM132211604

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Factors and Trends Discussion

Consumer spending habits represent a vast array of opinions, backgrounds, locations and even time of year, and companies need to be aware of them to most effectively target their market and remain competitive. After the recession in recent years, however, spending patterns have been altered from what they were before, and there are several key indicators that have influenced consumer spending habits. These key economic indicators include consumer confidence, employment and wage changes, and the level of discretionary income available to consumers (Maverick, 2018).

Companies that are trying to establish product differentiation, the key factors they must consider, as it relates to consumer spending habits that are affected by these economic indicators, is first, recognizing that quality plays an important role when consumers have more discretionary income and higher wage and employment opportunities. This becomes vitally important for companies to understand, because as discretionary income rises, consumers transition from previous spending patterns, to ones that focus on quality, creativity and community (Gerzema & D’Antonio, 2011). Positive relationships with companies, which puts a heavy emphasis on customer service, is another key factor that companies need to pay attention to in order to achieve product differentiation, a trend which started before the recession but is now seen as a must for a lot of consumers (Gerzema & D’Antonio, 2011).

Luxury goods are highly desired non-essential goods that represent a high-class, quality, and typically expensive line of products that are marketed as rare, valuable, classy, or extremely high quality to consumers that want products that represent a perceived high-status through craftsmanship (Yourdictionary.com, 2018). These types of products typically are purchased by consumers that have a high degree of discretionary income, meaning they have a lot of extra money to spend on non-essential products, which also means they are likely a lot more demanding of getting exactly what they want and are willing to pay for it (Yourdictionary.com, 2018). As such quality and craftsmanship of the products and the degree of exclusivity is an essential part of attracting and keeping these customers happy and having them sell for a premium price actually adds value to the attraction of the item and is something that marketers need to pay attention to closely in order to keep the exclusivity high.

Societal attitudes towards companies and products greatly affect the way marketers think about the value chain because as consumer spending habits change as their attitudes change, marketers need to amend how they market their items or they may face a backlash from the consumers. A bad marketing campaign that follows what the company perceives as a popular topic can backfire if consumers don’t agree with it, so marketers need to pay special attention to the majority of their target market, and conduct surveys or direct marketing solicitation for feedback on what direction the marketing should go. Apple is a great example of a company that was failing at establishing a good hold on the electronics market back in the mid-1990’s, but after Steve Jobs came back as the CEO, he changed the direction of the company from following the norm, to focusing on beautiful electronics products beginning with the 1998 iMac, and followed closely by the iPod in 2001, which sold over 100 million units (Walley, 2010). Their marketing shifted to a focus on their quality and design during a time when consumers were shifting their spending patterns due to economic changes, to more quality and appeal based items, something which Apple has continued to focus on ever since, and has proven to be very effective over the last decade (Walley, 2010).