The global financial crisis has brought wide-ranging changes to consumer spending behaviour and consumption patterns throughout the world with the economic downturn impacting on the spending and purchasing power of people.
The findings of a study conducted by Booz and Company in 2008 on consumer spending behaviour revealed that, firstly, the unprecedented confluence of the dramatic rise in oil prices, the substantial deterioration of housing values and the credit crisis, affected the overall economy and significantly changed consumer behaviour. Secondly, many consumers had already made significant cuts in their expenses and were projecting to make deeper trade-offs given the pessimistic and depressing economic forecast. Thirdly, although the low-income earners had made deeper trade-offs, yet people of all age groups and income levels have made similar adjustments and compromises across main spending areas. Fourthly, these analogies are understandable given that the majority of the local populations are exposed to similar drivers of change and spending allocations such as rising mortgage rates, declining saving funds, increasing prices of basic goods and services and many other spending considerations.
However, to understand the motivators that determine consumers’ behaviour and consumption patterns, people should not conceive consumers in abstract terms. Building on Maslow’s theory of motivation, a consumer is a human being that uses goods and services available to satisfy needs and wants. People’s needs and wants will depend on which level of motivation they have reached. Besides, people do not spend their money aimlessly, they spend money on goods and services that appeal to them and according to their financial means. For example, people will buy a refrigerator and a cooker because they need these equipments. However, which type and brand they will buy will depend on their financial means.
Besides motivation, financial means, needs and wants, other factors that influence consumer spending behaviour and consumption patterns are: quality of products and services, availability of credit facilities, gender, supply of products and services and other economic, social, cultural and financial aspects.
With the invention of plastic money and the advent of credit facilities that led to the widespread social phenomenon of ‘Buy Now and Pay Later’, credit purchase has skyrocketed. Loans and credits have drastically changed the people spending behaviour and consumption patterns with people adopting risky behaviours. For example, automobile companies now accept the purchase of motor vehicles on credit conditions. Since then, banks and other financial institutions such as insurance companies have been offering car loans to encourage people to purchase motor vehicles.
All people know the axioms ‘do not spend more than you earn’ and ‘save for rainy days’. It is well-known that consumers encouraged by the consumption markets and financial institutions have...