Yes, people cut back and reduce their spending significantly, but spending on escapist pursuits holds or even increases. People spend more on things like going to the movies, buying popular upbeat music, low-cost indulgences (like delivered pizza) and products that deliver enjoyment (rather than utility).
So what's going on in consumer's minds that drives this behaviour? What's the psychology of a consumer mind in a recession?
Firstly, temperament is largely pre-set psychologically, rather than environmentally triggered. Some people will always gravitate towards the positive.
In combination with this it's important to recognise that we have a sort of emotional homeostasis (or equilibrium). Whilst we tend to tell ourselves (consciously) that winning the lottery would make us eternally happy or that the death of a partner would trigger never-ending misery, in fact people usually settle back into their own emotional position within a relatively short space of time.
Next is the issue of mirror neurons. It's well established that we apes are psychologically geared up to copy one another. What's less well known is that brain imaging research has shown that seeing someone do something causes our brains to create the same patterns as if we were doing that action.
The classic example is if we see someone yawn (or sometimes just reading the word yawn) we yawn too, even if we aren't tired or bored at the time.
Engaging with something very positive (like an upbeat song), watching sporting success or buying something that's positioned as being very pleasurable all trigger a psychological feeling of happiness (dopamine) in the short term.
So putting these elements together, many people are unconsciously looking for a way to restore their emotional balance and buying into a positive (escapist) product proposition is a way of achieving this - at least in the short term. Businesses who can meet this consumer need or adapt to do so can flourish during these difficult times.
Philip Graves [Consumer Behaviour Expert]
