12. Happy Holidays?

12 Nov

Every brand’s main concern at this time of the year is the same: Will our shot economy halt holiday spending?

Well, the answer is no. However, the reason for this “no” can be credited to either of two theories. The spending trend of 2011 is due to denial or it’s due to hope.

DENIAL

The “Supercommittee” responsible for resolving our debt-ceiling problem hasn’t resolved much. Economy writers are naming our debt crisis the elephant in the room during these committee meetings. Although some resolution is supposed to be proposed in the near future, ideas are still floating around. A similar elephant in the room, as far as brands are concerned, is consumers’ artificial confidence. Some brands are using postponement concepts such as layaway and “brand-new” credit cards to encourage spending, with the expectations that profit will come later. Promotional budgets all in full-force during the holidays because companies are banking on the idea that consumer confidence is ignoring the impending crisis. Brands such as Big Lots, Walmart, and Toys-R-Us are utilizing this strategy.

HOPE

Other brands are assuming that people are aware of the potential problems that 2012 brings but want to revel in the holiday cheer, regardless. These brands are confident in their consumer markets because they are offering products geared toward higher income consumers, i.e. Cartier, Chanel, and Hennessy. During the holidays, companies split up holiday spenders by income, but also by attitude because those who are disillusioned by their job/company growth may spend more than a higher income household that made less this year than last.

Both of these outlooks are viable theories as to how consumers will behave during this holiday season. Much of the brands’ concern really depends on who they are trying to target. With lower income consumers, a brand is better off concentrating on denial methods. With higher income consumers, hope might bring more success.

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