We all know that most consumers are concerned about spending in the current recessionary atmosphere.  But how does that concern affect their shopping habits?  In some cases, consumers are buying cheaper items, but more of them, spending the same amount of money as before.  For example, the Herald Tribune reported that at wine.com, the average price of a bottle of wine purchased in December was 17% below the average of the year before, but the number of bottles sold was 15% higher than a year ago.  Similarly, at 9 Mile Schoolhouse Christmas Market in Montana, customers tended toward the smaller and less expensive Christmas decorations, but total revenue per customer was 18% higher than the previous year.

We’re not ignoring the fact that revenue and profits are indeed down for many retailers in this recession.  But is there anything marketers can learn from the sales of wine and Christmas ornaments?  We think those examples may represent a trend toward small indulgences.  That is, consumers are forgoing some luxuries and trading down, but then compensating themselves with a small reward. 

Marketers can benefit by repackaging products and services to fit this trend.  This can work at different ends of the economic spectrum.  For example, companies that offer high-end Baltic cruises might want to also offer a weekend getaway in the United States.  Note that high-end customers don’t want ostentatious displays of wealth right now: consider offering less flashy destinations.  Perhaps a quiet pampered getaway including gourmet food and wine. 

And companies appealing to more mainstream customers may want to consider offering less expensive options.  For example, a company offering activities for kids may have a full-day option that costs $75, which might scare away many parents at the moment.  But a three-hour workshop for $40 could seem very appealing, especially when that alternative is presented alongside the $75 option.

What are the best options to offer your prospects?  We are able to find the answer to this question by conducting market research that asks about trade-offs.  “Which would you prefer: option A for X dollars or option B for Y dollars?”  We then discuss the options further with respondents, and sometimes it turns out they actually prefer some other combination that hadn’t initially been considered!  To discuss how to uncover the most appealing offers for your prospects, give us a call at (818) 752-7210.

Sources: “Buying less expensive wine, and more of it,” International Herald Tribune, January 1, 2009; 9 Mile Schoolhouse, www.9mileschoolhouse.com