...| | | | | | | | Consumer behavior: Consumer behavior is the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Behavioral changes in consumers changes more often in the recession. * Recession is break down of market, increase in unemployment, reducing in house market. * When recession hits the market, first and fore mostly consumers will get affected by it. * Consumer behaviors have been changing over the years. In today’s world, they are choosing the healthy and appropriate products because now we can get the new and more information about the product unless like before. * Every individual is educated in present world. They know the exact information; they know what to buy and what not to in every product. * At the time of recession when everything goes up in terms of prices, consumers will think more before they are spending the money. * Each country got their own unique culture, economic conditions and personal factors. * If we take Asian countries like India, china and Pakistan etc. Family will be the main criteria in expenditure. Before they are spending, they take everyone of the family members opinion * If we take U.S ad U.K, family factor will not be the factor in one’s expenditure. In that case, they may take their own decision in their own way and some people may take family’s consent. So, it depends on one’s personal...
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...Neglect from banks and others also led to the Great Recession. The subprime mortgage crisis could have been avoided if accountants were more aware because large banks were violating regulations and concealing the investments that were unstable. Moreover, accountants did not recognize these violations, allowing banks to continue lending subprime mortgages. (Rosenberg 2). Greater awareness from the part of accountants would have prevented many bank failures. On the other hand, the negligence of the Federal Reserve in maintaining low-interest rates could have had been prevented by corporations themselves. Due to the bankruptcy of Enron in December 2001 due to bad management and greed, the Federal Reserve needed to add money to the economy by lowering interest...
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...During the recession, many retail and consumer businesses had to deal with a hit in profit and financial gains. Typically, mass retail giants cut down locations as well as employees, making it difficult for workers to get bonuses or raises, and possibly take losses in corporate offices as well. However, some big retail companies, like Home Depot, Best Buy, and Bain & Company were able to turn some of these downturns into positives and give more to their employees and continue to grow their companies. The behavior and attitude of management can drastically affect a company’s outcome during a recession, so being proactive and seeking out the positive is always the most effective during times of need. According to Shalom Schwartz, who created the theory of personal values in the workplace, there are values managers hold that can influence behavior unknowingly at work (Kreitner and Kinicki, 152). Amongst the ten values, Bain & Company, Home Depot, and Best Buy all hold on to universalism. Universalism, the “understanding, appreciation, tolerance and protection of the welfare of all people and of nature” in the workplace creates a positive work environment for everyone involved (153). Bain & Company’s CEO Steve Ellis took the proactive approach during the recession and added even more employees to his team. “This is an opportunity to grab very talented people,” Ellis stated, when talking about how many former consultants became stranded during the recession (176). He is giving...
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...the street. This trying state of the economy is changing society like never before. The fashion industry is not what it used to be with big developments in consumer behavior. People handle their money differently which asks for new business approaches. The fashion industry needs to react in the right way to conquer this current economic crisis in order to keep their valued customers. In the February issue of ADMAP magazine, Richard Storey describes his survey on how customers react and behave in times of recession. Studying consumer behavior is very important in order to create new marketing strategies or which strategy should be used in times like this. Through quantitative and qualitative segmentation methods, he was able to divide several consumer types with their own strategy to handle this crisis. The majority makes a division between the things that are too important to leave behind and the goods that can be saved on and buy less of it or the cheaper equivalent. Some save on big expenses while others cut out weekly small costs. You have people who try to change their spending behavior but fail. Others start making up rational or irrational motives to fully maintain their lifestyles. And a small group gains from the crisis by buying expensive things on huge discounts. However the different reactions of the consumer, no one is happy about the situation. Their buying power has shrunk and there is a common anger in the world. The same amount of joy after Barak Obama’s...
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...temptation for each girl. In economics, luxury goods are good for which demand increases more than proportionally as income rises. It present a striking contrast to "necessity goods". As the demand of "necessity goods" are not related to income increasing or decreasing. On the other hand, Begin with 2007, global economy has been stumbling under recession. As known to all, financial crisis brought to United States economy slowing down and it has spread globally effecting all countries. Economic recession directly influenced on income level and employment. In addition, consumption levels have fall off drastically. Such two characteristic factors make me interested in the relationship between luxury brand and Economic recession. So I researched the ideas and found a few books which talked about the luxury brands in Asia under economic recession. The literature review will pay attention to a book on the cult of Luxury Brand, Impact of Personal Orientation on Luxury Brand Purchase Value, Shopper Behaviour in Recession and impulsive buying behaviour in recession. Radha Chadha is one of the most famous expert in marketing and consumer research in Asia. In the book of the cult of the Luxury Brand which presented the "lux- plosion" or the explosion of luxury brands in Asia. This book shows up the paradox of the luxury brands management in Asia market and tries to redefine the new age luxury brand...
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...Recession In economics, a recession is a business cycle contraction. It is a general slowdown in economic activity.[1][2] Macroeconomic indicators such as GDP (gross domestic product), investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation. Definition In a 1975 New York Times article, economic statistician Julius Shiskin suggested several rules of thumb for defining a recession, one of which was two down consecutive quarters of GDP.[3] In time, the other rules of thumb were forgotten. Some economists prefer a definition of a 1.5% rise in unemployment within 12 months.[4] In the United States, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is generally seen as the authority for dating US recessions. The NBER defines an economic recession as: "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment...
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...organization, provides retirement services, life insurance, and consumer loans. The company offers retail financial programs through fifteen thousand merchants. American General Corp. operates in 41 states. Puerto Rico, and the United States Virgin Islands. Well, first we find out that American General Corporation is a blue chip, multibillion dollar company. This tells us right from the beginning that this financial giant is really worth looking at as a potential candidates to be added in our stock portfolio. Considering that this is a financial company dealing with investments, pension funds and life insurance we have to be very careful because these industries are most sensible to overall economy changes, and we know that at this point US economy is going through the period when recession is most expected. To get a better understanding of how this might affect companies risk we have to know how diversified companies investments are. For that we have to evaluate companies performance compare to market performance. ( for this purpose we use chart on returns for American General Corporation to S&P 500 ). As we can see from the chart behavior of the company is almost identical to the behavior of the market, this observation becomes more obvious when we take a look at company's beta which is .95. Well this is not such a great sign because as I already mentioned recession is expected., and as we know with recession overall market returns go down this is knowing the relationship...
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...In retail, both company behavior and consumer’s behaviors affect product prices. Consumers have shown different behaviors and impacts on market prices. In this paper, I will examine these issues. This will show how consumer behavior interacts with market behavior. I will also demonstrate how the use of price is a cue to quality, or can destroy the price-quality relationship. The first thing that I found out, by working at Home Depot is how responsive our market is to a change in price. This responsiveness is known as elasticity. I first learned this term in macroeconomics class. Products like tools, fixtures and lumber are highly inelastic. That is, regardless of whether the prices are raised or lowered, customers continue to purchase them in approximately the same quantities. Customers demand for elastic products do fluctuate with the price. A small change in prices either up or down will result in an increase or decrease in the number of units sold. Good examples of these are electronics, brand name shoes and clothing etc. The more elastic your product then the easier it is to raise your prices without hurting your sales. To increase your profits on highly elastic products rather than raising your prices you might try lowering them. Because although this reduces your profit on each unit sold the resulted increase in sales volume will probably increase your overall profits. I learned this lesson in business finance this semester. When a business sets s a price for their...
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...Every organization will face environmental constraints no matter how successful the business is. One of the most common organizations that we can refer to in our daily lives is the restaurant industry. Restaurant is basically a place that prepares and serves food for customers outside from home. The main purpose of a restaurant is serving food to customers, but some may also provide entertainment or other services. With all the various types of food that we consumers demand for, the restaurant industries have different kind of restaurants, for example, Thai cuisine restaurant, Chinese food restaurant, Sushi restaurants, fast food restaurant, in order to satisfy customers’ desire. The restaurant industry is the largest employer in the private sector, and it continues to get larger every year (Vault.com, 2014). According to the National Restaurant Association’s analysis, the restaurant employment stands 441,000 jobs above its high point before the recession, while the overall economy in 2012 is still down 3.2 million jobs from the prerecession peak (Qsrmagazine.com, 2013). It might seem like an easy business to set up as food is under the physiological needs according to the Maslow’s hierarchy of needs, which means there will be no problem of running the business as an individual moves up the needs hierarchy from one level to the next (McLeod, 2007). Human needs food to survive, thus, the restaurant industry may easily gain a desirable profit. However, there are a few external...
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...Fundamentals of Macroeconomics Part One • Gross domestic product (GDP) The gross domestic product (GDP) is a measure of a country’s production that gives an analysis of how the economy is doing and how it relates to employment. In the United States, for example the gross domestic product is determines the market value of final goods and services produced within its borders. Prior to using the GDP, the United States used the gross national product (GNP) measure that accounted for goods and services produced by U. S. residents, including those working outside the United States borders. However, this did not give an accurate description of economic conditions within the country’s borders. Therefore, in 1991 the GDP became the official measure of the United States economy. • Real GDP Real GDP is a measure of the value of goods and services produced using prices from a base year. This means it is adjusted for inflation to offer a more realistic analysis of how the economy is doing in comparison. Economists and government use Real GDP to compare the GDP in one year to past years to study trends in economic growth. • Nominal GDP The nominal GDP measures the value of all the goods and services produced using current market prices. Nominal GDP leaves inflation in the calculations therefore giving a higher estimate than Real GDP. Nominal GDP determines the total value of goods and services produced in a country for a particular year. • Unemployment rate The unemployment...
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...of the slowest recoveries from a recession since the Great Depression. Never before since World War II has either inflation adjusted GDP or unemployment rate been below where it was four years after a recession began. Our economy in this recovery could have grown and created jobs at the average rate like the 10 previous postwar recessions. GDP per person could be $4,528 higher and 14 million more Americans would be working today (Gramm and Solon). Economists claim that the lack of strength in the recovery was due to the depth of the recession and underestimating the severity of the economic disaster. Another speculation is that the financial crisis, by the very nature is a much slower and more difficult recovery. A recession is generally defined as a decline in GDP growth in a six-month period. So what can keep the GDP, or the value of all consumed goods, from returning to a healthy economic state? Oil is a primary source of energy we use everyday. The more oil we use, the faster the economy grows. Over the last forty years, a 1 percent hit to the world oil consumption has led to a 2 percent increase in GDP. That means if GDP increased 4 percent a year, like before 2008, oil consumption was increasing by 2 percent a year (Anandan, Ramaswamy, and Sridhar). Statistically, in 2006 figures display that the average oil price was $67.65 per barrel. In 2008 when the recession hit, the average oil price was $99.08 per barrel. And 2013, post-recession era, figures show that the average...
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...lead to inflation. This is because, all people will have disposable income as they are employed which gives way to the need for luxuries. When the supply is less, the prices increase. b. Cost pull: This kind of inflation is because of the rising costs. Companies have to necessarily meet these increase in costs. The best way to do it is to pass the costs to the consumers. This results in price inflation. (Economics help, 2014) Sometimes, an inflationary economy is a sign of growth. However, it may not be desired at all times (i.e.) when it grows consistently. Inflation can be controlled by increasing indirect tax rates or increasing the savings and lending rates. Increasing tax rates will make the consumers pay more tax and hence discourage them from spending. The increasing savings rate will urge them to save more. Increase lending rates will discourage them from borrowing. 2. What is the Consumer Price Index (CPI)? How has the CPI behaved since the year 2000? What have been the causes of these changes? In your response, include a graph of the CPI for this period and cite your source. Consumer Price Index (CPI) measures the changes in the...
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...connect with their customers. Adopting a holistic marketing orientation means understanding consumers – gaining a 360-degrees view of both their daily lives and the changes that occur during their lifetimes so that the right products are marketed to the right customers in the right way. Connecting With Customers Creating Customer Value, Satisfaction, & Loyalty Analyzing Consumer Markets Analyzing Business Markets Identifying Market Segments and Targets Consumer Behavior • The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. According to the book entitled Consumer Behavior: A Primer by Gail Tom – Selective reality is understanding the world from a consumers perspective. By understanding the consumer’s perspective, marketers can give consumers the right product, at the right price at the right time at the right place. But in so doing, are marketers merely reflecting the consumers subjective reality or are they unintentionally or maybe intentionally, also exaggerating, distorting, altering, the consumers needs and wants? And is this for the better or is this for the worst? Cultural Factors - Culture, subculture, and social class are particularly important influences on consumer buying behavior. Culture is the fundamental determinant of a person’s wants and behavior. Through family and other key institutions, a child growing up is exposed to values such as:...
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...Assignment 4: Analysis of the Business Cycle April Hammer Strayer University Online Assignment 4: Analysis of the Business Cycle Introduction 1. The Current Economic Conditions Microeconomics is a social science that deals with the behaviors of individual consumers, firms and industries. It is an analysis of certain firms, individuals and households’ decision making processes as well as behaviors that affect how resources are allocated (EconGuru Economics Guide, 2006). Where macroeconomics deals with the economy as a whole, microeconomics deals with individual firms and how consumers make decisions as well as how companies decide what to sell and at what price to sell it at. The economy today has been in a big uproar with major downfalls and setbacks that have come about. We are in a current recession. One would hope that the economy will be able to repair after this downfall. Today’s economy in the United States is becoming a major disaster in more areas then one. One major issue is that the United States does not make enough products that we need to sustain ourselves. We import far more then we export. This has put the United States in debt to other countries. This debt continues to grow and become unreachable. Some of our major companies are being bought out by other countries. There are many data tools that can be evaluated to determine how well a current economy is doing. GDP growth is a measurement of the total value of goods produced is an...
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...Page 1 Analysis of the Recent Economic Downturn In 2007, strong growth in the third quarter lead most to believe that a recession had been avoided, however, this proved not to be the case. A decline in GDP growth is the cause of recessions. Typically, there will be a “goldilocks” economy or an irrational exuberance prior to a recession, followed by a market crash. Prior to the 2007 – 2009 recession, the housing market was going up. Everyone “knew” house values could only go up and behaved accordingly; banks lent too much money to consumers bought too much house. Once the market crashed, the stage was set for a recession. Many factors affecting the aggregate demand curve had declines. As mentioned, home equity declined, as well as the stock market. This decrease in wealth decreased consumption and consumer confidence leading to lower spending. As consumers cut back on spending, business confidence also fell with additional decreases in consumption and also investments. Additionally, foreign GDPs were also declining leading to a decrease in exports. The changes in these variables all caused a shift back in the aggregate demand curve, lowering the GDP. Attempting to counteract the recession, the Federal Reserve pumped money into the economy, increasing the nominal money supply. As the value of the dollar decreased, interest rates were kept low, allowing the exchange rate to remain favorable for exports. Additionally the government increased spending by way of stimulus packages...
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