In every economy, consumer spending is vital for its growth. It facilitates the circulation of capital and contributes towards the state revenues. With its benefits, increasing the spending levels would be more advantageous to economic growth. It becomes essential to establish means of growing the spending rate. Corporations have the task to determine the aspects that facilitate consumer spending growth. Products’ utility influence customers to increase their consumption. If the marginal utility of the product is high, customers will purchase it more. With the merits associated with consumer spending, it is critical to evaluate consumer satisfaction as a determinant of consumer spending growth.
Research Problem
It is important to have a standard means of analyzing consumer spending in an economy. In the USA, consumer spending represents over 70% of the GDP (Fornell & Dekimpe, 2010). With its effect on the economy, it is one of the areas that draw the attention of public policymakers and marketing companies. they put in efforts that facilitate heightened sales. The unstable USA economy had a bearing on the consumers; thus, making them spend only on essential goods. However, when sales increases, companies expand their enterprises and provide more employment opportunities (Fornell & Dekimpe, 2010). The fluctuating nature of consumer spending makes it hard for corporations to develop strategies that increase their sales. With the fluctuating nature of consumer spending, it is essential to examine its co-relation with consumer satisfaction. Theoretically, when consumers are satisfied with a product, they are more likely to increase its purchases. They will spread information on the product’s viability; thus, influencing more buyers to purchase it (Fornell & Dekimpe, 2010). However, there are other aspects such as the debt service ratio (DSR) that strains the consumers’ budget. It becomes vital to analyze if DSR has effects on the consumer gratification and spending relationship.
Research Theory
The research is based on the analogy that consumer satisfaction affects consumer spending. Satisfied consumers are more likely to increase their intake of particular products. They will influence their counterparts to purchase the items. As a result, they escalate consumer spending growth.
Methodology
The study utilizes quantitative research. It makes use of data from the American Customer Satisfaction Index (ACSI) (Fornell & Dekimpe, 2010). It is an economic indicator that encompasses figures on customer experience and quality of goods and services in the USA market. The products and services are fully produced in the USA or partially by foreign corporations that have a market base in the USA. The ACSI data was chosen because it represents the USA economy, its reputation for providing a basis for analyzing other economic metrics, and the extensiveness of its figures (Fornell & Dekimpe, 2010). The credibility of the data was ensured by using information from trustworthy sources such as the National Quality Research Center at the University of Michigan (Fornell & Dekimpe, 2010). The figures provided from these sources were evaluated based on the hypotheses of the study.
Hypotheses
Hypotheses provide direction for the study. The main proposition of the study is to examine the relationship between consumer spending and consumer satisfaction. The other supporting hypotheses are; to evaluate whether improvements in collective satisfaction have a positive impact on future modifications in cumulative consumer spending; to determine whether the increases in DSR diminishes discretionary consumer spending despite changes in customer satisfaction (Fornell & Dekimpe, 2010). These propositions guide the research findings.
Instruments
The research utilizes observation in its study. It conducted quarterly reviews on ACSI data, CPI from the National Bureau of Standards, and real personal disposable income from the Bureau of Economic Analysis (Fornell & Dekimpe, 2010). The data in the ACSI was obtained from conducting interviews with over 200 employees in an estimate of 250 firms (Fornell & Dekimpe, 2010). It makes the study more comprehensive.
Sample
The sample used in the study is the national customer satisfaction score in the ACSI. The other options present were the findings from over 200 companies, 43 industry scores, and ten economic sector scores (Fornell & Dekimpe, 2010). These alternatives were not used since they do not represent the CPI of the USA. The data set used were from quarterly 2006 to 2008. It helped ascertain the relationship between customer satisfaction and spending variables during a financial crisis.
Findings
The findings of the study indicate that consumer gratification affects consumer spending. The analysis of ACSI data indicates that the consumption of high-quality goods and services are relatively high. Gratification from the discretionary goods prompt higher spending rates. Combined consumer satisfaction and household DSR is set to affect the future cumulative consumer spending growth (Fornell & Dekimpe, 2010). DSR and consumer satisfaction are interdependent variables as they reflect the products preferred and elucidates the reasons for the preference. With knowledge of what goods sell the best or worst, consumer spending is predictable.
The findings indicate that the debt servicing ratio affects consumer spending. DSR weakens the consumers’ ability to spend. They might be satiated by services or products. DSR robs them of their ability to purchase even if they are willing to as it constraints the budget (Fornell & Dekimpe, 2010). However, in cases where the budget constraints are hardly felt, the consumer will purchase the products they are satiated with.
Implications
It was important to conduct the study as it provided a basis for escalating sales among enterprises. The research provides a basis for analyzing aggregate consumer spending. Economic forecasters benefit from the research since the analysis of consumer spending behaviour affects the economy of a state. It adds to the business literature that aims at improving marketing. Given the correlation between consumer satisfaction and spending, marketing should aim at the gratification of the buyers. They should not only invest in their brands but also the provision of top-notch quality goods and services. As a result, they would boost their sales volume.
Future Research
Future research on the topic should focus on a wider market sample. It should analyze the effects of consumer satisfaction on the cumulative consumer spending across the globe. It should put into consideration the impact of the relationship between the two variables on aspects such as marketing.
Conclusion
In conclusion, the research is aimed at analyzing the effects of consumer gratification on customers’ purchases. It uses quantitative analysis where it manipulates data from ACSI. The sample of data used is from national customer score and is observed quarterly. The findings of the research indicate that gratification is the main basis for increased consumer spending. However, the debt servicing ratio may affect the stability of the two variables. From the study, firms should improve their marketing and focus on customer satisfaction.
Reference
Fornell, C., Rust, R. T., & Dekimpe, M. G. (2010). The Effect of Customer Satisfaction on Consumer Spending Growth. Journal of Marketing Research (JMR), 47(1), 28–35. https://doi.org/10.1509/jmkr.47.1.28
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