Consumers are demanding greater value from every product and service they buy. This personal value is now being defined as personal return on investment (ROI), stemming from the desire to make the most of everything we have—including the investment of time, emotional reward, experience and money. This reality of finite resources and time creates the desire to demand even greater value. These value requirements transcend product cost and function to include a value differential prompting consumers to look longer and harder at the products they buy in order to evaluate the real value of the products as opposed to just the perceived value. This is the differential that is now driving new consumer demand. Increased food functionality, Fair Trade ingredients and a sustainable supply chain are all examples of value differentials that are beginning to play bigger roles in consumers’ decision to acquire good or services.
Consumer Consumption Readjustment
During the past few years as the economy has dipped into recessionary levels and major markets have come close to the brink of collapse, consumers have made major readjustments in their consumption habits. In fact, two out of five American consumers now indicate they have actually become more of a saver than a spender during the past year. Furthermore, more than half feel they live a more satisfying life by having fewer material possessions.
With pervasive uncertainty and lowered discretionary income, consumers have been forced to reevaluate not only their spending, but the overall value of what they are buying. The value of store brands continues to see gains in the consumer’s eyes, with almost seven in ten of the population agreeing that they are often as good as or better than national brands, an 11 percent increase since 2007. In fact, consumers, overall, are becoming more experimental across brands and less brand loyal (Figure 1).
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This new value-conscious consumer behavior is also reflected in how consumers view advertising and the shopping experience. They are skeptical of companies telling them “what they need,” and instead desire more control over their decisions. In fact, more than half of Americans indicate they would rather find out about new products and services on their own compared to traditional advertising. In addition, the shopping experience becomes another level of personal ROI with seven out of 10 consumers agreeing that when they go shopping, the overall experience with the store is just as important as what they are purchasing.
