Recently it has been noticed that many consumers are sticking to the “paycheck cycle”, although the economy has been improving. The “paycheck cycle” consists of consumers buying products typically during the first week of the month in the U.S and then cutting back on spending as they run out of money. The cycle is typically driven by people who are living from “paycheck to paycheck.”
Consumer companies have been having a difficult time figuring out how to appeal to consumers and use this system to their. It’s been important to learn how to time promotions and when to increase the stock of demand for certain products. The more-affordable brands have been most affected by this system because shoppers with low incomes and those receiving government benefits are the ones who need to stock up on necessities at the beginning of the month when they first receive their paychecks.
It’s important for consumer product companies to understand this cycle and increase discounts during times when consumer spending increases. They need to work with consumers and their habits in order to succeed in this economy, especially when we are in a recession. It is likely that this cycle will become habit and it’s going to become necessary to work with it rather than against it.
http://online.wsj.com/article/SB10001424052748703618504575459563277106940.html?mod=WSJ_Consumerproducts_leftHeadlines
Are companies doing this or is it something that has to be noticed by companies still? If companies are doing this, it's a good thing for both the consumer and the producer because the consumer can purchase goods at lower prices and it is good for the producer because their overall profit will increase.
ReplyDeleteI also agree that this cycle seems beneficial for both consumers and producers. I would assume businesses would take this knowledge and use it effectively. They can easily see when they need more products (in the beginning of the month) and avoid a surplus of goods later, thus increasing profit down the road.
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