How are increasing prices affecting consumers?
Published April 8, 2011 at 5:32 pm
Are price increases changing consumer spending habits? According to a recent study conducted on FGI Research’s SmartPanel™ when it comes to consumer products, many shoppers say yes. Thirty percent of respondents plan to stay with the same brand when purchasing groceries, 43% for the purchase of clothes, 36% when purchasing cleaning products, 38% for toys and 53% of respondents will not change their spending habits when purchasing electronics. This means that the majority of people are planning to switch to a different brand when shopping for these goods.
Additionally, half of consumers would rather pay more for their current volume of groceries while nearly as many respondents (46%) would rather reduce the volume of household products while still paying the same price for the goods they purchase. Very few respondents (4%) would prefer to reduce quality instead of the two previously mentioned options.
When it comes to groceries, if you had to select one option, which would you prefer companies to do?
… Electronics?
Consumers, however, seem to be cutting back on electronics. A Smartphone is the electronic with the highest intent to purchase within the next six months, but that only comes in at 12%. The electronics least likely to be purchased are the iPad and PS3, with 83% and 80% of respondents stating that they do not currently own them nor do they plan on purchasing them within the next 6 months.
… Car purchases?
With the improving economy, it’s not surprising that more consumers are looking to make big-ticket purchases. Nearly one-third of respondents (28%) are planning to purchase a new or used car within the next six months. As a response to rising gas prices, 77% of those planning to purchase a car will get one with better gas mileage than the car they currently own.
…Vacations?
Although we are recovering from the Great Recession and consumers are willing to make big-ticket purchases, some expenses are still considered luxuries and not necessities. Less than half of respondents (45%) plan to take a vacation within the next six months. This is especially surprising because we are hitting peak vacation months with the warm weather and kids out of school. Of those planning a vacation, 29% will be visiting a friend or relative in the US, presumably to save money. This group makes up 46% of respondents that plan to keep their costs below $200 per person. A much smaller proportion (5%) of respondents is planning to leave the country. This group accounts for 40% of the respondents planning to spend over $1,500 per person on their vacation.
…Restaurants?
In response to dining out habits, 59% of total respondents dine out less than once a week. Sixty-two percent of respondents who dine out once a month or more spend less than $15 per person when they dine out.
Men and women have different spending habits when it comes to dining out. One-third of male respondents dine out more than once per week, compared to only 17% of women. In addition to eating out more frequently, 45% of men spend $15 or more on average per person as compared to only 33% of women.
How often do you dine out for a meal?
Actionable Insights
This data can be used by many industries to help forecast demand in light of recently increasing prices. For example, grocery stores can afford to charge more for groceries, but should expect to decrease the volume of the household products they sell in order to maintain sales levels. Car dealerships should focus on emphasizing the fuel mileage of a car in comparison to a competing brand. Restaurants should offer some lower-priced menu items to encourage those that eat out more often to return to that restaurant.
This research could be expanded to help your business determine the price to charge for a new product with a concept test, or define the segment that your product is best suited for and determine their willingness to purchase that item using market segmentation.
Next Steps You Can Take
- Contact FGI Research: click here or call us at (919) 929-7759
- Explore FGI Research’s market research solutions, including custom panels, full service research, and our online sample (SmartPanel™).
- Join FGI Research’s online panel to participate in future studies.
Survey Methods
Respondents: 400
Date of Survey: March 22-29, 2011
Sample Source: FGI SmartPanel™
This nationally-representative sample consists of adults aged 18 and up and is balanced to the US population using recent census data. One can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
This reflects my personal situation fairly accurately. Te grocery portion is especially troublesome,because I am a senior citizen on a fixed income.
Rising gas prices will stall the small gains. we are about to see the other shoe drop and things are going to get bad.
i would gladly pay more for my groceries if quality and downsizing on the supply of what you get in packages was in jepordy.
I am not suprised to see what electronics people do and don’t plan on buying. With money getting tight a lot of people (myself included) seem to be leery of spending money on an electronic device if they currently have a device that has the same functions.
A lot of the responses were not too surprising
The biggest surprise to me was that females eat out more than males. Most of my males friends eat out practically every day
interesting things going on — it appears on on hand that the ecomony apperars to be recovering – yet on the other hand it appears that we are still in a recession
People are still uncertain about the economy so they will tend to use much more discretion in all of their purchasing habits. Fuel prices have also helped lend to the lack of expendable income that they will spend on many items.
Interesting results, especially those items that are consumed.
I would like to see future reports include two other areas of interest.
1. Items consumed that are easily replaced, vs. similar items that are essentially non-replaceable.
2. A complete examination of transportation. With less and less organic power items being available, and most not replaceable, we must move quickly and seamlessly to other sources of power – and especially those that impact travel. I own a very cost effective car, but still am spending nearly 15% of my monthly outgo on fuel – and I have not travelled for anything other than necessities in months. I think we need to move quickly with wind, sun, tides, and other replaceable power options, and also find ways to effeciently use coal and wood to generate heat and steam.
I have 8 University degrees in Chemistry and Chemical Engineering, and can assure you that these paths are viable, but poorly trod – and almost neglected. If we wait to act until the current non-replaceable organics are consumed, future generations will be again living in squalor, working from home, and the ability to travel and see the world will be reserved to the precious few who are wealthy. Wm. N. Yeager, PhD, CIA
Very interesting article. It reflects what is going on in our economy.
I think the rising prices are affecting families in an adverse way. With the rise of gas and thus groceries, my family can no longer take that one night every week or two and go out to eat like Steveie Tomatoes. We don’t get steaks and seafood, usually just wings and a couple of sides. Then let the kids play a few games. The night usually cost $50 – $75 but now that’s entirely too much if we want to pay other bills and keep gas in the vehicles.
Gasoline prices are about to go through the roof! But Detroit and all the other car manufacturers are still producing high-priced autos which no one can afford. Didn’t they get the message when they asked for the bailout? It doesn’t cost them anywhere near that to produce the vehicles. What are they trying to do? Also, the BP fiasco and its effects on the U.S. Economy haven’t been fully realized yet, either. Because of it, more than just food prices will go up. The politicians aren’t telling the truth, things are worse than they are letting the public know.