UNDERSTANDING CONSUMER CONFIDENCE EVOLUTION IN RESPONSE TO ADVERSE SHOCKS AND HOW MARKETING CONTRIBUTES TO BUSINESS SUCCESS IN ECONOMIC DOWNTURNS
UNDERSTANDING CONSUMER CONFIDENCE EVOLUTION IN RESPONSE TO ADVERSE SHOCKS AND HOW MARKETING CONTRIBUTES TO BUSINESS SUCCESS IN ECONOMIC DOWNTURNS
Purpose- Firstly, this paper examines how current measurements of consumer confidence might be used to forecast future household spending by using economic variable (i.e. unemployment rate, national adjusted income per capita) data in China, with the help of statistic tools (i.e. Python and Pandas) for the job of data cleaning and analyzing. Secondly, I will focus on the ways in which businesses alter their marketing mix in the face of economic hardship to survive by understanding the importance of utilizing effective marketing strategies during economic downturns. Methodology- This paper examines the predictive performance of consumer confidence index on change in consumption growth by constructing three different OLS regression models and by integrating several existing proposals for effective marketing strategies for businesses in times of low consumer confidence to help business managers to make wise and effective response to economic downturns. Findings- It is shown both 1 year lagged consumer confidence and 3 years lagged consumer confidence are good predictors for current change in consumption patterns, whereas 2 years lagged consumer confidence shows negative correlation with consumption change, and consumer confidence have their own predictive power regardless of the macroeconomic variables. Conclusion- Therefore, this paper contributes to the existing literature by providing empirical findings that consumer confidence cannot always fulfill the role of anticipating consumption change and by further providing concrete policy recommendations for consumer confidence’ revival during recessions in an effort to fill the gap.
Keywords:
Consumer confidence, marketing, consumption, consumer behavior forecasting,
___
- 5 Factors that impact business and consumer confidence. (2016, May 25). Www.macquarie.com.au. https://www.macquarie.com.au/advisers/business-consumer-confidence-australia.html
- Ang, S. H., Leong, S. M., & Kotler, P. (2000). The Asian apocalypse: crisis marketing for consumers and businesses. Long Range Planning, 33(1), 97–119.
- CEIC Data. (2018, June). China Private Consumption: % of GDP. Ceicdata.com; CEICdata.com. https://www.ceicdata.com/en/indicator/china/private-consumption--of-nominal-gdp
- Civi, E. (2013). Marketing strategies to survive in a recession. International Journal of Business and Emerging Markets, 5(3), 254-261.
- Croushore, D. (2005). Do consumer-confidence indexes help forecast consumer spending in real time? The North American Journal of Economics and Finance, 16(3), 435–450.
- Danciu, V. (2013). The future of marketing: an appropriate response to the environment changes. Theoretical and Applied Economics, 20(5), 33–52.
- Demirel, S., & Artan, S. (2017). The causality relationships between economic confidence and fundamental macroeconomic indicators: empirical evidence from selected European Union Countries. International Journal of Economics and Financial Issues, 7(5), 417–424.
- Duralia, O. (2018). Integrated marketing communication and its impact on consumer behavior. Studies in Business and Economics, 13(2), 92–102.
- Flavin, M. A. (1981). The adjustment of consumption to changing expectations about future income. Journal of Political Economy, 89(5), 974–1009.
- Ghosh, S. (2020). Consumer confidence and consumer spending in Brazil: A nonlinear autoregressive distributed lag model analysis. Journal of Economic Theory and Practice, 20(1), 53–85.
- Ginn, J., Stone, M., & Ekinci, Y. (2010). Customer retention management in the recession. Journal of Direct, Data and Digital Marketing Practice, 12(2), 115–127.
- Grossberg, K. A. (2009). Marketing in the Great Recession: an executive guide. Strategy & Leadership, 37(3), 4–8.
- Hall, R. E. (1978). Stochastic implications of the life cycle-permanent income hypothesis: theory and evidence. Journal of Political Economy, 86(6), 971–987.
- Karasoy Can, H. G., & Yüncüler, Ç. (2018). The explanatory power and the forecast performance of consumer confidence indices for private consumption growth in Turkey. Emerging Markets Finance and Trade, 54(9), 2136–2152.
- Khumalo, J. (2014). Consumer spending and consumer confidence in South Africa: cointegration analysis. Journal of Economics and Behavioral Studies, 6(2), 95–104.
- Kirtiş, A. K., & Karahan, F. (2011). To be or not to be in social media arena as the most cost-efficient marketing strategy after the global recession. Procedia - Social and Behavioral Sciences, 24, 260–268.
- Kłopocka, A. M. (2016). Does consumer confidence forecast household saving and borrowing behavior? evidence for Poland. Social Indicators Research, 133(2), 693–717.
- Ludvigson, S. C. (2004). Consumer confidence and consumer spending. Journal of Economic Perspectives, 18(2), 29–50.
- O’Malley, L., Story, V., & O’Sullivan, V. (2011). Marketing in a recession: retrench or invest? Journal of Strategic Marketing, 19(3), 285–310.
- OECD. (2015). Business tendency and consumer opinion surveys. OECD ILibrary. https://www.oecd-ilibrary.org/economics/data/main-economic-indicators/business-tendency-and-consumer-opinion-surveys_data-00041-en
- Srinivasan, R., Rangaswamy, A., & Lilien, G. L. (2005). Turning adversity into advantage: Does proactive marketing during a recession pay off? International Journal of Research in Marketing, 22(2), 109–125.
- Suharto, S., Junaedi, I. W. R., Muhdar, H. M., Firmansyah, A., & Sarana, S. (2022). Consumer loyalty of Indonesia e-commerce SMEs: The role of social media marketing and customer satisfaction. International Journal of Data and Network Science, 6(2), 383–390.
- Yayın Aralığı: Yılda 4 Sayı
- Başlangıç: 2014
- Yayıncı: PressAcademia
Sayıdaki Diğer Makaleler
THE EVALUATION OF AI INTEGRATION IN INNOVATIVE DIGITAL MARKETING STRATEGIES