Consumers are ready to spend but they’re finding higher prices and product shortages

SKIMMERS POINTS:

  • Supply chain restraints are leading to shortages to of a lot of products including gadgets, cars and bikes.
  • Some automobile dealers are asking full sticker price on new cars frustrating loyal bran customers.
  • The laws of supply and demand may lead to higher prices but could also lead a loss of brand equity for many brand.
  • Marketers continue to ignore seniors as well at a time when they have a LOT of money to spend.

I’ve been a loyal Subaru customer for a lot of years so when it was time to look at a new care we looked at the new Subaru Wilderness. When we checked with a couple of dealers they wanted the full sticker price saying “this model is in short supply”. As we left the dealership my wife said “I won’t ever buy a Subaru again”.

Welcome to the new economy. Consumers have money to spend, but high prices and product shortages are frustrating many. Basic economics tells us that the lower the supply, the higher the price, but this rule leads to a loss of brand equity for many products.

Even though Apple just introduced their new M1 iMac’s customers can wait up to a month to receive a customized order. Costco has marketed a lot of their big-screen TVs as being sold out, and customers are crowding into U.S. bike shops and often walking out empty-handed — or, if they’re lucky, with a bike whose price has repeatedly gone up since last year.  

Companies pass along higher costs driven by rising raw-material prices, strained factories, and overloaded delivery chains. They’ve been able to do that without damping customer demand for the most part, but consumers are starting to notice and now, and they don’t like it. Executives foresee more price increases, with supply expected to remain tight and demand elevated through at least next year.

Prices for all kinds of products, from lumber to diapers, have been climbing this year. The headline measure of consumer prices rose 4.2% in the 12 months through April, the most since 2008, and in some markets, new houses are going for way above listing price.

Brand-marketers continue to ignore seniors

According to Nielsen, people over 50 are the most valuable generation in the history of marketing. n the U.S. people over 50 are responsible for over half of all consumer spending. They outspend the average consumer in nearly every category–food, household furnishings, entertainment, personal care, automotive… They account for 55% of all consumer packaged goods sales and dominate 94% of CPG categories They outspend other adults online 2: 1 on a per-capita basis They have a net worth about three times that of other generations. Yet marketers ignore them?

If you took your entire view of the human race from primetime advertising alone, you’d see a society without old people. They don’t work, they don’t drink beer, they don’t drive cars. They don’t exist. According to Havas Group, only about 5% of U.S. advertising is even aimed at people over 50.

Consumers over 50 buy about fifty-seven percent of all new cars. They control about seventy percent of the wealth in the US If they were their own country, Americans over fifty would be the third-largest economy in the world—bigger than the entire economies of Germany, Japan, or India. And the future? Between now and 2030 the population of adults over fifty will grow at about three times the rate of adults under fifty.

Bob Hoffan, The Advertising Skeptic

People over 50 comprise 47% of adults in the US, they comprise 6% of agency employees. It seems that people over 50 are creative enough to dominate in Nobels, Pulitzers, Oscars, and Emmys but are not creative enough to write a fucking banner ad. Instead, the demographic is shunned and caricatured in marketing images, perpetuating unrealistic stereotypes and contributing to age discrimination.  Recent ads have described being 50 years old as “basically dead” and characterized older people as selfish and out of touch.

Less than 5 percent of ads showed older generations handling technology, even though the Pew Research Center has found that 69 percent of people between 55 and 73 own a smartphone. More than a third of the images analyzed by AARP portrayed younger people with technology.

Older consumers have money and they will spend but..

1ne: Older consumers are less subject to peer influence than younger consumers.

2wo: Adult consumers become less responsive to sweeping claims in marketing messages as they age. They develop an increased demand for facts.

3hree: Older consumers tend to be quicker than younger consumers to reflect emotionally a lack of interest or negative reaction to an offered product. 

4our:  Older consumers tend to be more responsive to companies with a conscience than younger consumers. As a result, they see more differences between competing companies and brands.

5ive: When making discretionary-purchase decisions, older consumers tend to have a decreased sensitivity to price, increased sensitivity to affordability, and sharply increased sensitivity to value.

Some brand are finally catching on but for the most part it’s all about Millennials and Gen X.

Consumers are ready to spend but they’re finding higher prices and product shortages

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

View all posts by richmeyer →

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.