How Can Marketers Respond to Changes in Consumer Confidence?
Every business has felt the impact of the COVID-19 pandemic in some way – and the impact on the economy has been massive. Consumer and business confidence have wavered, stabilized, plummeted, and soared. This volatility is likely due to uncertainty around the virus itself since no one has a clear sense yet of when people and the economy will come out on the other side. Some economic forecasters and major investment firms project up to 30% unemployment on the horizon – and while all of this possible gloom and doom can have many brands at a loss for words or strategic plans, there are several reasons for marketers to be hopeful.
A recent article highlights swings in the Economic Sentiment Index, a tool that tracks consumers’ feelings across five major economic areas: jobs, future economic outlook, willingness to make big buys, personal finances, and the intent to buy a new home. In March, we saw these indicators take a sharp decline as most of America headed into lockdown. More recently, four of the five of these indicators started to increase – notably, perceptions about the United States’ economic outlook improved.
Why does consumer sentiment matter? As I have written about in the past, psychology is critical to how consumers engage with marketing and with brands. Consumer spending powers about 70% of the U.S. GDP – so when customers are feeling confident and willing to make purchases, the entire economy tick’s up. Perhaps some of this confidence is rooted in the (mostly) effective distribution of the first wave of government stimulus checks in recent weeks.
Where there is consumer confidence, brands take note and crank up the volume. CMOs are increasing marketing and ad spending. The desire for more proactive ways to seek fresh opportunities during this period makes sense, as companies use this time to position themselves for growth beyond the crisis.
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