Consumers embrace change, reduce out-of-home entertainment amidst global shift in purchase decisions
By Zion Rufus
With consumer priorities evolving, the focus on affordability, sustainability, mental health support, influencer marketing, and responsible data usage now becomes paramount for brands aiming to remain competitive in the ever-evolving market.
As the global market experiences profound shifts in consumer behavior, marketers find themselves at the forefront of understanding and navigating this rapidly changing landscape.
Hence the demand to align strategies with evolving priorities.
Addressing this pressing need, WARC, the eminent authority on marketing effectiveness, has unveiled the “Evolution of Marketing” content program, aimed at examining emerging trends and technologies that will shape marketing strategies in the years to come. WARC’s recently released 2023 Consumer Trends Report also shed light on the factors influencing consumers’ purchase decisions across brands and categories worldwide.
Consumer Spending Takes a Hit Amidst Inflationary Pressures
The report revealed a significant shift in consumer spending patterns, driven by inflationary pressures, which have led to changes in purchase behavior across various categories.
Approximately two in five consumers (40%) have curtailed their expenses, spending less now compared to the previous year. Notably, the study found that out-of-home entertainment has been the hardest hit, with over a third (34%) of consumers reducing their spend on leisure activities outside their homes.
In contrast, in-home entertainment, buoyed by a staggering three billion gamers worldwide, has experienced less impact, with only 17% of consumers opting to cut back on such expenses.
Dr. Grace Kite, Founder and Economist at Magic Numbers, cautions marketers to reassess their strategies to appeal to cost-conscious consumers during this period of economic uncertainty. She emphasizes that convincing consumers of the value of products and services will be essential for survival in this dynamic landscape.
Sustainability Battles Price in Consumer Decision-Making
With sustainability emerging as a global concern, brands’ commitments to environmental responsibility have become a consideration in consumer purchase decisions. However, the report highlights that price remains the predominant factor influencing buying choices for consumers. A substantial 74% of consumers across the globe perceive price as a critical influence on their purchases, while 47% consider a brand’s commitment to sustainability.
Bill Alberti, Managing Partner at Interbrand, emphasizes that while environmentally friendly practices are laudable, consumers facing rising living costs are forced to balance their concerns for sustainability against budget constraints. As a result, many are opting for more affordable options.
Gen Z’s Mental Health Crisis Impacts Spending Decisions
The report delves into the growing mental health crisis among Gen Z, which has given rise to changing priorities and spending habits. Gen Z’s top concerns include personal finances, prices of products or services, and climate change. This generation’s struggles with anxiety are more prevalent compared to other age groups, with nearly three in ten (29%) Gen Z individuals stating that they are prone to anxiety.
Despite these challenges, Gen Z has demonstrated proactive measures to manage their mental wellbeing. GWI data suggests that this generation engages in activities they enjoy (55%) and reduces social media usage (37%) to alleviate stress.
Social Commerce Surges to New Heights
The rise of social commerce has been an undeniable trend, fueled by increased social media usage and influencer marketing. The report predicts that by 2025, the social commerce market is expected to reach a staggering USD $2 trillion, constituting a quarter of all online retail sales globally. In April 2023, the number of social media users worldwide was estimated at 4.8 billion, accounting for nearly 60% of the global population, spending an average of over two hours daily on these platforms.
Gen Z and millennials play a vital role in the success of social commerce, with approximately 44% following influencers who frequently promote products or brands, and 45% indicating their likelihood to purchase products recommended by influencers. Influencer recommendations are perceived as more engaging than regular advertisements by approximately half of these cohorts.
Balancing Privacy and Convenience in Marketing
The report spotlights the delicate balance that marketers must strike between personalized marketing and respecting consumers’ privacy concerns. While 62% of consumers find personalized product recommendations helpful, 53% perceive targeted ads as intrusive. Interestingly, more than a third (34%) agree with both statements, showcasing the paradoxical nature of consumer attitudes.
Consumers’ concerns about data privacy have led to the popularity of ad-blockers, with reasons including “too many ads” (61%) and “ads getting in the way” (54%). Nonetheless, the data suggests that most customers are willing to share their information for personalized experiences, provided brands use their data respectfully and responsibly.
Navigating a Dynamic Consumer Landscape
Stephanie Siew, Research Executive at WARC, asserts that the changing behaviors of consumers stem from living with long-term uncertainties. From economic uncertainties to technological advancements, marketers need to respond to macro trends that will shape consumers’ spending choices in the coming months.
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