Consumer Psychology to Get a Boost after Iraq Crisis Resulting in Emotional Spending as Reward, According to Unity Marketing.

Business Editors

STEVENS, Pa.--(BUSINESS WIRE)--April 14, 2003

Ever since Christmas, consumers have been in a state of increasing anxiety keeping them at home hunkered down. Consumer spending through March has been strictly back-to-basics, with consumers venturing out only for the necessities, filling up the gas tank, stocking the pantry and keeping medicine in the cabinet.

But now that the military has achieved near victory in Iraq, positive signs are on the horizon signaling consumers' return to shopping. Year-to-date retail sales are up 4.3% in 2003 over last year's levels, according to the Department of Commerce's latest estimates. The University of Michigan's consumer sentiment index, a measure of how consumers feel about the economy, rose to 83.2 from 77.6 in March, indicating a positive turn in consumer psychology.

"Corresponding with this year's late Passover and Easter celebrations, consumers will experience a feeling of renewal. They will emerge like butterflies from their cocoons with new enthusiasm to buy things they wanted but denied themselves over the last three months," predicts Pam Danziger, president of Unity Marketing and author of Why People Buy Things They Don't Need (Ithaca, NY: Paramount Market Publishing, 2002).

"The American consumers' native confidence and optimism, which has undergone a crisis ever since 9-11, will be bolstered by the turn of recent events. The effects of new consumer confidence will be measured in significant growth at the nation's cash registers through the rest of the year.

"As they emerge like butterflies from their cocoons, consumers will reconnect with the outside world by going out to eat and returning to the stores. Consumer spending will be focused on feel-good luxuries, either small indulgences like candles, bath and body lotions, or DVDs, or major luxury purchases, such as cars, jewelry, home entertainment systems, designer apparel, or landscaping.

"To give themselves permission to make sometimes extravagant, emotional-based purchases, consumers use justifiers that rationalize the purchase. In the spending spree to come, consumers will use the last three months they have been pent up as a justifier to reward themselves with a splurge. Their thinking goes, 'I've denied myself since Christmas, now I deserve this purchase.' As a result, consumer spending will be rewards driven and highly emotional," Danziger says.

About Unity Marketing

Founded in 1992, Unity Marketing is a marketing research and consulting firm that specializes in luxury and emotional marketing. Pam Danziger discovers 'why people buy' through market research and translates that insight into powerful marketing messages and brand positioning. Unity Marketing also publishes market research studies on the luxury market, art, jewelry, home furnishings, garden, gifts and collectibles, personal care and cosmetics, candle markets, as well as the Luxury Business newsletter. Pam is currently working on her next book, Let Them Eat Cake: Marketing Luxury to the Masses (as well as the Classes), to be published early in 2004.