The Motivation Behind Discretionary Spending
People like to spend. Consumers, and their spending on the things they want but do not need, make a tremendous contribution to the U.S. economy. Of the $10 trillion gross national product, 30 percent, or $3 trillion, is made up of consumer discretionary spending. Pamela Danziger, president of Unity Marketing, explores the motivations behind consumer discretionary spending to find out why people are spending their money on things other than necessities, such as food, homes, medical care and gasoline.
After performing extensive research into her subject and conducting numerous focus groups, Danziger concludes that understanding why consumers behave the way they do will help marketers understand and predict future consumer spending behavior. While revealing the information she has uncovered, she develops insight into how predictable changes in consumer demographics will shape their behavior. She then aims to help marketers develop strategies that are grounded in consumer intelligence rather than impersonal data. Taking a new look at the consumer, she offers a better perspective on the future habits of these fickle, emotional, yet predictable consumers.
Types of Discretionary Spending
Danziger writes that consumers are looking for emotional satisfaction when they buy the things they do not need. This discretionary spending can be broken down into four types. These are:
- Pragmatic. This type of spending is made up of the things that people buy not because they need them, but because they perceive them as making their lives better in meaningful, measurable ways.
- Indulgences. These are theluxuries that people buy without guilt. They bring emotional satisfaction by being frivolous, a little extravagant, but not so expensive that they lead to remorse.
- Lifestyle Luxuries. These purchases fill a practical need, but are well beyond the basic items needed to effectively serve essential purposes.
- Aspirational Luxuries. These purchases are bought purely for the joy that owning them brings. They include original art, antiques, yachts and fine jewelry.
In her research, Danziger writes, she has found that in order for consumers to buy these things they do not need, they use justifiers as excuses and reasons that provide them with permission to buy. Some consumers need better justifiers than others, and some need no excuse to buy something that they do not need. The author has identified 14 distinct justifiers that consumers manipulate to give them permission to buy of which marketers must be aware. Some of these are: to improve quality of life, to derive pleasure, to beautify the home, to learn something new, for emotional satisfaction, and to achieve a state of relaxation.
Play to the Justifiers
The need to make discretionary purchases influences consumers' decisions about where they make their purchases, how they research the purchases they plan, and how they find the things that will satisfy their unfulfilled emotional needs. Danziger writes that marketers must learn better ways to apply their insights to strategically position their products and play to the justifiers consumers use to make their discretionary purchases. To help marketers do this, she examines both the conceptual side of the purchase decision, and the practical side by profiling best marketing practices, and those who use them.
Her advice to marketers who want to establish long-term, emotion-based strategies for success include: make customers feel like winners every time, help customers fulfill their fantasies, and entertain them. Marketers can do these things, she writes, by asking the simple question, "Why do people buy?" and being open to the implications of customers' answers.
Why Soundview Likes This Book
Danziger provides a plethora of data and revealing stories from national marketers who have tapped into the emotional decisions made by today's consumers. By focusing on specific products and the ways companies can market them better to fulfill the emotional needs of their customers, Danziger creates a fact-based blueprint for marketers to use when facing big decisions. Her abundance of trends, figures, charts and timely industry data makes this book a fact-filled journey into the emotional buying patterns of the American consumer that modern marketers should not ignore. Copyright (c) 2002 Soundview Executive Book Summaries