Life during COVID-19 leaves consumers feeling conflicted between saving for uncertainty or spending for reward.
It is no surprise that consumer purchasing activity would be impacted by the economic uncertainty created during a global pandemic. Concerns about financial security versus “compensatory consumption” during times of crisis are expected and often impact spending as a result.
But what happens when you add fake news into the equation?
A new study by Leeds Associate Professor Lawrence Williams, in collaboration with Justin Pomerance, assistant professor of marketing at the University of New Hampshire’s Peter T. Paul College of Business and Economics (UNH) and Leeds’ Doctoral Candidate Nicholas Light, sheds light on how an individual’s exposure to fake news impacts their consumer buying behavior during this year’s coronavirus outbreak.
Their research found that fake news makes COVID-caused uncertainty worse in consumers. Of note, their findings indicate the uncertainty increases “two opposing spending intentions in consumers: the desire to save money and the desire to spend it on things in order to feel better.”
When it comes to dealing with fake news, companies are not powerless. Instead, they should reach out to their audiences while being realistic about what consumers can, want and will spend.
Spend responsibly and do good
Consumers should also be aware of how these conflicting desires to save more and spend more result from feeling uncertain. Doing so could help them be more responsible spenders, saving when they can but indulging in a little retail therapy when they must.
Some might feel the desire to save would leave luxury bands in the lurch, but Williams believes there is hope for even the most indulgent brands.
“You can frame the same experience as a small treat, and satisfy the desire for luxury while also being fiscally responsible,” says Williams.
The research shows there is an opportunity for premium brands to be viewed as acceptable indulgences or even as a partner in resource conservation. For example, if marketers can connect purchasing to a broader impact by supporting local businesses and satisfying a desire, they may persuade consumers the benefits will outweigh the need.
So even if they are trying to save money, consumers can feel good about helping organizations survive right now by allowing themselves to purchase some type of “indulgence.”
Policymakers can use these findings to help protect consumers inclined to spend more than they can afford. Companies can leverage this phenomenon either by emphasizing how they can help consumers save money, or by showing how their brand might provide some stress relief.
The key takeaway for companies is knowing what concerns their consumers have, and then use that knowledge to strengthen their partnership with consumers during these challenging times.
This research was funded by a grant from the Marketing Science Institute.