These days, consumers can simultaneously be stressed about their grocery bill but will happily find money for Taylor Swift and Beyonce concerts, management consultant Kearney Consumer Institute has found. The key to understanding—and thereby increasing—consumer spending in such an environment is to take what institute Lead Katie Thomas calls a “consumer-first perspective,” one that blends economics and emotions.
The approach “flips the traditional commercial script” by first evaluating the total consumer wallet based on how they view and categorize spend on their own terms. This understanding of how a consumer emotionally categorizes their spend can then be applied to our understanding of category-level transactions. For example, are M&Ms an indulgence, a reward, a guilty pleasure, or a necessity? Only the consumer knows for sure.
As a result of its survey and analytical work KCI introduces the concept of “consumer motives” as the starting point to understanding spend. While they vary by brand, motives generally fall into four buckets, each with its own unique perks and risks:
- Essentials (seen as necessary or functional);
- Value (investment in quality, product that works hard, potential future value);
- Pleasure (shopping as fun, “retail therapy,” reward/treat);
- Expression (communicating or projecting externally, including ego, style, and values).
Understanding how a consumer qualifies their spend and going a level deeper allows brands to assess the risks and opportunities that exist by motive.
KCI suggests brands follow three simple steps to reorient to a more “consumer-first” approach. In the short term, determine consumer motive attribution. In the medium term, map future demand by motive. And, finally, over the long term, shift the portfolio to match consumer-first priorities.
“The growing options consumers have combined with the constant news cycle bemoaning inflation concerns makes for an increasingly aware, savvy consumer who is spending thoughtfully across the whole wallet,” says Thomas.
Click here for more on the KCI study.