After two years of paying down debt and skipping family vacations, many Americans plan to cautiously start spending their tax refunds once again.  According to NRF’s 2010 Tax Returns Consumer Intentions and Actions Survey, conducted by BIGresearch, 43.9% of Americans expecting a refund will pay down debt, fewer than the 48.0% in 2009. However, only 65.5% of tax payers are expecting a refund, down from 68.4% in 2009.

According to the survey, 12.5% of people expecting a refund plan to treat themselves or their families to a major purchase such as a new television, furniture or car, up from 11.0% last year. Others will stash their refund away in savings (40.3%), put it towards everyday expenses (28.8%) or go on vacation (10.0%).

“A little bit of ‘free money’ will go a long way for Americans this year,” said Tracy Mullin, President and CEO, NRF. “Retailers planning special promotions over the next few months may find that shoppers are a bit more receptive to opening up their wallets than they have been for the past year.”

As the internet becomes more of a mainstay in homes across the country, the number of people who file their taxes online continues to increase. This year, 54.4% of U.S. taxpayers will file their taxes online, up from 50.1% in 2007. Additionally, one-third (33.6%) of consumers will prepare their taxes using computer software, 23.5% will use an accountant, 17.6% will use a tax preparation service, 11.8% will have a friend, spouse or other relative prepare their taxes for them and 13.5% will prepare their taxes by hand.

“After spending the last year paying down debt or building up a nest egg, Americans are relishing the idea of spending their tax returns,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “Consumers focused solely on essential purchases during this economic downturn, and many are ready to treat themselves to something nice for a change.”

According to the survey, 60.6% of Americans filed their taxes by the end of February, meaning that many tax returns have already been received or are on the way. An additional 24.4% will file in March and 15.0% will wait until the last minute and file in April.

“2010 Tax Returns Consumer Intentions and Actions Survey,”  BIGresearch for the National Retail Federation (NRF).  Web.  2 Mar.  2010.

The ultimate goal of any marketing campaign is to get the customer to buy.  The practice of studying consumer behavior and attempting to sway the decision making process has given rise to the field known as behavioral economics.  Writing for McKinsey Quarterly, Ned Welch sums up several behavioral techniques  marketers can employ in their campaigns to increase sales.

1. Minimize the pain of payment – Consumers don’t like to part with their cash. This simple fact allowed marketers to successfully employ the buy now-pay later strategy in the easy credit economy of the recent past. But now that consumers have tightened their purse strings, they’re paying more attention to the type of money they’re spending. According to Welch, it’s easier to part with pocket money and most difficult to let go of savings. To succeed with consumers, marketers would do well to position their products as affordable in terms of pocket money.
2. Use a default option – When consumers are confused or conflicted, marketers should suggest an option that seems natural or a ‘best choice’ for most.
3. Limit choices – It’s no secret that most of us are overwhelmed when faced with too many choices, whether we’re purchasing laptop PCs or a chocolate dessert. Welch references a study published in the Journal of Personality and Social Psychology that showed how too many choices (24) of jam stalled consumer purchases and generated negative feelings about displayed products while a display of 6 options generated higher sales.
4. Appeal to “context-specific willingness to pay” – When consumers are presented with various options, whether on a shelf or in an ad, they’ll decide which product they’ll purchase based on its relative value to others in the group. In this context, they may spend more than originally planned.

Marketers who consider these behavioral concepts and remove barriers to purchase in their ad campaigns and buying environments will generate higher sales. As Welch indicates, “[u]nderstanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.”
[Source: Welch, Ned. A marketer’s guide to behavioral economics. McKinsey Quarterly. February 2010. Web. 15 March 2010.]

The good news is fewer B to B marketers are cutting marketing budgets in 2010. But nearly half (43%) anticipate only level funding for marketing expenditures when compared to last year. That’s the findings of the Target Marketing’s Media Usage Forecast 2010.

Based on the class of customer served, planned  level funding for marketing among survey respondents breaks out as follows:

• B-to-B: 55%
• B-to-C: 42%
• Serves both types of customers: 40%

The better news is that these businesses, on average, plan to increase marketing expenditures by an amount ranging from 22%-23%.  The greatest number of businesses plan increased spending on specific media forms as follows:

• E-mail 68.4%
• Direct mail 31.8%
• Advertising on Web sites 32.9%
• Affiliate marketing 22%
• Search engine optimization 47.7%
• Search engine marketing 45.2%

Customer acquisition remains a key goal of marketing investment. And survey respondents indicated that their top forms of acquiring new customers in 2010 will be e-mail (84.6%) and direct mail (70.4%). It’s the same story for customer retention, though businesses rely even more heavily on e-mail (88.6%) than direct mail (65.6%) for this purpose.

[Source: Mummert, Hallie. Media Usage Forecast 2010. Target Marketing Mag. March 2010. Web. 15 March 2010]

According to The Compete Online Shopper Intelligence study, over 80 million consumers use shopping comparison sites every month. Sites like Cnet, Bizrate, and Yahoo! Shopping each attract over 20 million shoppers.  Only 6% of consumers surveyed as part of the study indicated that they conducted no research prior to their last online purchase. 

From instant price comparisons, to first hand consumer reviews, to video demonstrations, shoppers are taking advantage of this wealth of information. Consumers depend on search engines more than other resources to help them shop online.  When shopping online, 3 out of 5 shoppers said that they always or often use search engines.  More consumers use search engines than they do coupon sites, retailer emails, consumer reviews, or shopping comparison sites.

The study finds that the differences in consumer behavior across various industries have vast implications for retailers within each sector. Sales assistants, both in store and on web chat, are utilized by online shoe shoppers more than any other shoppers.  Online kitchenware & household appliance purchasers are among the most reliant on in store product displays.

In the apparel industry, only 1 out of 10 apparel shoppers stated that they used a search engine for their last online purchase.  Instead, they rely on retailer emails and catalogs to learn about products.  That means consumers are more likely to purchase from apparel retailers they have purchased from in the past and are less likely to discover new retailers.

Electronic shoppers, on the other hand, actively seek out new products and manufactures, says the report.  Search engines, professional reviews, social generated reviews, and recommendations from family and friends were among the top 5 resources used.  Electronic manufactures can reach and influence these consumers more easily though a variety of media.

It is essential, says the report, for retailers to understand how consumers in their space shop online, in order to effectively retain and acquire customers. Retailers should understand their particular customer niche and develop strategies unique to them, concludes the report.

“The Compete Online Shopper Intelligence study,” conducted by Compete.com.  Web.  March 2010.