Inflation isn’t causing consumers to avoid big purchases in 2023. While shoppers aim to save overall, 80 percent already know where they’ll be spending more. For the third consecutive year, consumers are most likely to splurge on Electronics & Technology; they see value in investing in product longevity, quality, and performance.
Since consumers are prioritizing saving but simultaneously making selective high-priced purchases, marketers need to look at what drives spending and garner insights on how brands can become more “splurge-worthy.”
Even in this digital age, nearly a third of consumers consider word-of-mouth a major factor influencing them to splurge, as well as paid social ads and influencer posts—which was not the case last year—leaving several key takeaways to consider.
Offer an Experience Worth “Talking” About
With three in 10 consumers reporting word-of-mouth as the top channel influencing purchases, brand awareness is at peak importance. If customers feel that a brand delivered the experience they were looking for, they’ll recommend it. Whether it’s BNPL (Buy Now Pay Later), exclusive offers, or simply a seamless checkout, brands should identify and execute the journey their customer is expecting. Then, let the happy shoppers do the sharing—in person or on social media.
Be Smart & Strategic with Social Messaging
The data shows us that paid social and influencer marketing hold significant power when it comes to persuading consumers—if the audience segmentation and messaging is strategic and crystal clear.
It’s critical to target each ad segment with specific copy designed to speak to that generation. Health & Wellness didn’t make the top three splurge categories for 35- to 44-year-olds; at an age where health problems are starting to creep up, it’s unlikely that these consumers are indifferent. Brands should cater to this audience with specific messaging that encourages them to invest more in a healthy future.
One-off experiences are low on consumers’ splurge lists; Dining Out only made the top three among 24- to 35-year-olds. This presents both a primed market for restaurants to tap into, and a challenge to create incentives, personalized marketing and hyper-targeted messaging to draw in other ages.
For Clothing & Fashion, the forecast is sunny among 16- to 24- and 34- to 45-year-olds who anticipate splurging and spending most of their disposable dollars there. If these consumers are leaning towards investing in high-quality, long-lasting pieces, it’s critical for brands to get in front of them with this angle.
Let Influencers Do the Work
Younger generations are exercising purchasing power in a socially-driven world, blurring the lines between social media and word-of-mouth. Gen Z and millennials turn to TikTok and IG influencers for advice on everything from beauty and fashion to parenting and home renovations. Because influencers engage heavily with their community, there’s a real chance that top followers consider their recommendations and reviews to be “word-of-mouth”— putting even more power behind the influencer.
At the end of the day, consumers are trusting influencers, shopping on social, and spreading the word digitally and IRL. To succeed and encourage splurging, brands need to identify the right social platform, influencer, and messaging that will hook each consumer group. Deliver the experience the customer expects, then let them share away.
Dara Busch is Co-CEO of 5WPR, a leading PR agency. View 5WPR’s fourth annual Consumer Culture Report.
The research was conducted by Censuswide, an independent market research consultancy, with a nationally representative sample of 2,000 US consumers between the 21st and 24th of November 2022. Censuswide is a member of the British Polling Council, and abides by and employs members of the Market Research Society. All survey panelists are double opted-in, in line with MRS code of conduct and ESOMAR standards.
5W's in-house research & analytics practice leveraged an AI-based natural language processing tool in order to visualize, aggregate and analyze the most salient media conversations surrounding inflation, consumer spending habits and supply chain impacts over the past calendar year (November 2021 - November 2022). Insights gleaned from this analysis were paired with Censuswide's consumer survey data to ensure synergies in 5W's reporting.
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