The aim of this study is to understanding consumer house-buying behavior from the consumers' perspective in the time of recession. In view of the existing literature exploring consumer decision making and purchasing behavior in electronic items, the purpose of this research was threefold hypothesis:
- To propose a conceptual model of consumer decision making within the frame of consumer behavior.
- Psychological impact of recession on consumers and consumers' recession behavior (their changing attitudes in buying and consumption patterns).
- Relationship between recession and the purchasing of households.
We have used this approach, based on our two decades of consumer trend forecasting and analysis, to advise electronic appliances across sectors on the recession's likely impacts on long-term consumer behavior.
Recession
"Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession. A recession generally lasts from six to 18 months, and interest rates usually fall in during these months to stimulate the economy by offering cheap rates at which to borrow money".
Recession in Pakistan
Keeping in view the global trends and how we in Pakistan tend to follow it like imbecile sheep, massive laying off of employees has been observed in manufacturing, industry, FMCG, banking and services sectors without ever understanding what recession is and whether our economy has been in recession already before it hit the US on the morning of January 21, 2008 when even the US markets were closed for a holiday! So, what is recession? It is a prolonged period of time when a nation's economy is slowing down, or contracting. Such a slowdown is characterized by a number of different trends, including: — People buying less stuff — Decrease in factory production — Growing unemployment — Slump in personal income — An unhealthy stock market By the conventional definition, this slowdown has to continue for at least six months to be considered a recession.
If we see the economic activity trend in Pakistan, due to massive load shedding, closure of factories and terrorism, Pakistan has been in a state of recession long before it hit the US. Inflation rate has been 15 per cent according to The Economist in the past one year and real GDP growth will slow sharply in fiscal year 2008/09 (July-
June), but will average five per cent per year between 2009/10 and 2012/13, driven by private consumption and investment.
The economy will remain dependent on textiles, other manufacturing and services that are facing a tough time due to incessant energy shortage. The rate of depreciation of the Pakistan rupee against the US dollar will increase in 2009 13, compared with the preceding five years. The value of the currency will fall from an average of PRs70.3: US$1 in 2008 to PRs90: US$1 in 2013.
The conclusion is that the economy of Pakistan has been in recession since 2003. In such a drastic situation, lying off will not solve the problems but only would add to them.
Consumer Behavior
"One definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society" (Hawkins, 2004). Another definition according to the American Marketing Association is that consumer behavior is "the dynamic interaction of affect and cognition, behavior, and environmental events by which human beings conduct the exchange aspects of their lives." More generally, consumer behavior is the psychology behind marketing and the behavior of consumers in the marketing environment (American Marketing Association, 2006)."
Key findings about consumer behavior
Consumers rarely weigh up all the costs and benefits of choices. Instead, purchasing decisions may be made automatically, habitually, or be heavily influenced by an individual's emotions or the behavior of others. This also means that consumers tend not to use all of the information available to them when shopping. Instead, people are more likely to read information when they perceive a benefit from doing so.
Consumers use mental short-cuts to help speed up decision-making. These short-cuts can distort consumers' decisions. Short-cuts can include relying on labels or brand names that are recognized, and being influenced by the way in which information is presented and the context in which a decision is made.
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