Recession Has Changed Us Consumer Behavior Harvard Case Solution & Analysis


Recession has caused quite a bit of trouble to various industries. The effects of recession have long term long term impact for the industries, and hence the recession has given some serious damages precisely to the packaged-goods-industries.

Positioning of the product is the key element for any company. It takes quite a bit of tim to position the brand in the mind of the consumers. Statistics show that an average of 18 percent of consumer-packaged-goods, consumer sbought lower priced brands in the past two years. And out of that 18 percent, 42 percent customers were satisfied with the products. Customers thought that they performed better than expected, and 34 percent of the switchers said they no longer preferred higher priced products and remaining customers believed that higher priced products are no longer worth the money.

It all depends upon the company and the industry in which they are competing necessary to be analyzed and approached in a positive manner. Experience and likings would be different in terms of category. For instance, only 12 percent of beer buyers have moved on to cheaper brands. Of those, 31 percent show positivity in terms of quality, it means a small number of groups of consumers play as far as this category is concerned. Numbers have proved that customers are also not ready to move towards cheaper products in the pharmaceutical industry but more or less it has better statistics as compared to the beer industry.

These numbers are alarming for the brand leaders. Companies have to alter their market dynamics in order to remain in the competitive market. P&G did the same when they launched Tide Basic, a cheaper version of its leading brand, tide laundry detergent. Market leaders need to respond as quickly as they can, just like P&G did because now cheaper brands are also considered as its competitors.

Tories has now confirmed that, willing to pay and, the perception after consuming the product, both are dissimilar from each other. High quality products were the first choice for the customers before the recession. But now in the current era consumer behavior and buying patterns have started to change.

            But the ultimate question upsurges, again the numbers has shown that if the economy fixes, the situation may not yield to its previous condition. Consumer behavior has already transformed and the customer has observed changes. Cognation has altered the consumer behavior in terms of buying patterns. This is the alarming state for different companies whose who have to compromise on their brands. Organizations must give them a firm reason to stick with their existing premium brands. Else they will not consider these customers as people or group who buy quality over quanityt and the profit margin will grind down.

            Consumer-packaged-goods industries need to understand the category dynamics at a larger level of detail than can be achieved through strong research methodologies. Analyzing the purchasing behavior and motivations can also play a dynamic role to understand the changing consumer behavior. Managers need to understand the fact that now the behavior of consumers have transformed, as companies accept this fact, they will be able to react quickly in this competitive environment.

            Moreover, this is essential for the organizations to decide about their existing brand positionings. The positioning must trade-off easily between prices and benefits. In bottled water industry reducing the price may be helpful as customers don’t prefer premium priced bottled water. Broader category strategy can also be very crucial....................

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