Psychological Effects On Consumer Behavior

966 Words Oct 20th, 2015 4 Pages
Businesses who aren’t invested in the financial markets can sometimes think they’re safe from fluctuations and economic uncertainty – some even think they’re safe from a market crash, portraying a ‘chin up and tough it out’ mentality. They know their industry, they know their customers, and they know their competitors. They’re confident with their current strategies and don’t think they’ll need to make too many amendments in the event of an uncertain economy.

However, every business, in one way or another, is affected by these movements – but it’s not all bad news! Marketing professionals can utilise the chaos and mayhem caused by these markets to help maintain their company’s sales, profits, and even overcome their competition.

How can they do this? First, let’s examine the psychological impact financial markets have on consumers.

Psychological effects on consumer behaviour

We, as consumers, like to spend. We spend using cash and we spend using credit. However, during uncertain economic times, with banks’ interest rates being pushed down, unemployment rates rising and Wall Street gurus speculating on market crashes, there’s a lot of negative information being released to the public via local news sources. This information being circulated causes doubt and uncertainty, ultimately ruining consumer confidence.

As every marketing professional knows, there are three stages of consumer spending: they first spend on what they need, then on what they think they need but really…
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