Hamdi Putra

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How Economic Factors Affect Consumer Behavior

Are you losing customers and blame online sales?
When I visit businesses with slow sales 1I hear many excuses for why they have so few
customers this month. It seems 2 they are willing to blame online sales, the local government
policies, or even the local council. Their comments only serve to highlight the fact they do not
understand that the current economic factors have more to do with the customers behaviour than
any of those other factors. 3Money is not spent if 4 the customer is worried about their future.
The single biggest factor for consumer behaviour spending patterns is how secure they feel their
short-term future is regarding savings, employment and home payments. The more insecure they
feel about the economy, the more 5they will pay down debt or keep money for the rainy days.
This happiness factor is measured by the consumer confidence index which is reported daily
showing how secure the consumer believes the future is. When the CCI goes over 100 points,
customers will spend. If 6the CCI goes under 100 the customers stop spending.
How the economy affects the consumer behaviour?
7

The consumer is bombarded with messages of doom & gloom from the newspaper and other
news media telling them all about the problems in the world. Currently 8we have concerns with
;
- Eurozone debt and several countries in recession
- Declining natural resources and climate warning
- Instability in several governments causing public unrest & armed violence
- Over a 20% drop in Australian super and shares
- Loss of primary industries with large scale unemployment happening almost weekly since start
of 2012
9

Business owners need to pay attention to these economical factors. Mortgage payments are
often the largest expense a customer has and will not risk losing their home just to take a chance

and buy your products. When there is uncertainty in the mortgage rates, 10sales will decline in
most sectors. The instability of employment in manufacturing, 11financial services and
construction sectors will cause customers to focus on what would happen if 12they lost their
employment. So they start saving money for their possible unemployment and spend it on career
change prospects like training in new skills. Due to the high costs of aged care and related
retirement expenses many consumers are looking ahead to their future by investing in
superannuation and/or shares to be financially secure. With 13the global recession and collapse
of some international organisations thought to be secure from the economy
wobbles, 14super funds have lost millions of consumers financial net.
What the current economy means to your customers?
15

They are unsure if 16they will be able to keep the family home, pay for their retirement and
even if18they will have a job in the next six months. So 17the consumer goes into survival mode
by saving money and stopping all unnecessary spending. 19As a business owner or manager
you need to pay attention to the local economic factors as 20they will mean the difference
between meeting your sales targets or not.

1. I hear many excuses : S + V1 + O = Present Tense

2. They are willing to blame online sales : S + Tobe + V ing + O = Simple Present Continous
3. Money is not spent : S + Tobe + O = Present Tense
4. The customer is worried : S + Tobe + V2 = Past Tense
5. They will pay down debt or keep money for the rainy days : S + Will + O = Present Future
6. The CCI goes over 100 points : S + V1 + O = Present Tense
7. The consumer is bombarded with messages of doom & gloom from the newspaper :
S + Tobe + V2 + O = Simple Past Tense
8. We have concerns with : S + V1 + O = Present Tense
9. Business owners need to pay attention to these economical factors :
S + V1 + O = Simple Present Tense
10. Sales will decline in most sectors : S + Will +V1 + O = Simple Future

11. Financial services and construction sectors will cause customers to focus on what would
happen : S + Will + V1 + O = Simple Future
12. They lost their employment : S + V2 + O = Simple Present
13. The global recession and collapse of some international organisations thought to be secure
from
the economy wobbles : S + V2 + O/ Complement = Simple Past Tense
14. Super funds have lost millions of consumers financial net :
S + Tobe + V3 + O = Past Perfect
15. They are unsure : S + Tobe + O = Simple Present
16. They will be able to keep the family home : S + Will + V1 + O = Future Tense
17. The consumer goes into survival mode by saving money : S + V1 + O = Present Tense
18. They will have a job in the next six months : S + Will + V1 + O = Simple Pesent Future
19. As a business owner or manager you need to pay attention to the local economic factors :
S + V1 + O = Simple Present Tense
20. They will mean the difference between meeting your sales targets or not :
S + Will + V1 + O = Simple Future.