Understanding consumer sentiment

"There's a sucker born every minute."
Attributed to P.T. Barnum (1810 – 1891)

Just what or who is a consumer? I regularly hear that consumer sentiment is rising or falling, or that consumers are waiting in line for the newest gadget from Apple Computer. Who are these people? Why do we care that they're more optimistic this month than last month, or that they're willing to get up at 3 a.m. to buy a cellphone on which no one will ever call them anyway?

Here's what www.dictionary.com has to say:

Con·sum·er -- 1. a person or thing that consumes. 2. Economics. a person or organization that uses a commodity or service. 3. Ecology. an organism, usually an animal, that feeds on plants or other animals.

Since all three of those definitions fit everyone at one time or another, that doesn't take us very far. I wonder if there isn't a fourth, more interesting definition that goes unspoken.

Spending by humans is a factor in the make-up and growth of the economy and economists study their behavior in order to derive laws or test theories about their discipline.

But when marketers refer to people as "consumers" they are usually talking about people in terms of their shopping behavior. When we see the economic indicator "consumer sentiment," what, actually is being measured? In the United States, the data usually comes from telephone surveys in the Index of Consumer Expectations of the Reuters/University of Michigan Surveys of Consumers.

In August, "The Index of Consumer Sentiment was 83.4 in the August 2007 survey, down from 90.4 in July, and just above the 82.0 recorded in August of 2006. This is the third year that confidence has recorded lows around mid year, with confidence recovering by year-end in 2005 and 2006. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, was 73.7 in the August 2007 survey, down from 81.5 in July, and well above last August’s low of 68.0. The Current Economic Conditions Index was 98.4 in the August 2007 survey, down from 104.5 in July, but well below the 103.8 recorded in August of 2006."

Think about it for a moment: People's confidence dropped 7.0 index points in one month -- to 83.4 in August from 90.4 in July. Set aside the question of how obvious it is, and how hard to measure, when someone's personal confidence index slides (Does he suddenly began to shuffle nervously, adopt a harried look, bite his lip? Are the pollsters trained to detect those things over the phone?). Short of losing their jobs, what could make "consumers" change their attitudes so quickly? I have an answer: More than likely, the people referred to, the consumers in question, are SUCKERS. The marketers know it, the economists know it, and now you know it.

Suckers, in my imagination, anyway, are swept up by every fad and fashion, are capable of holding mutually contradictory beliefs with no cognitive dissonance, and are at the mercy of the marketing messages with which they are ceaselessly bombarded. Shopping is what they do.

Does anyone care about my shopping habits? I doubt it. I try to go shopping (other than for necessities like food) at least once a year, whether I need it or not. But if I were a consumer in the sense being used here -- i.e., one of those people I see on TV who are waiting at the doors of Wal-Mart before dawn a day after Thanksgiving (so-called Black Friday) in order to max out their credit cards a month before Christmas -- why, I should think the marketing professionals would be very interested in my habits. Manipulating me would be very lucrative indeed. And [sniff] it is this mass of suckers that has made of America the greatest retail market in the world.

"Consumers" howled when Apple stiffed them by cutting $200 from the price of "the year's most sought after gadget." But honestly, did anyone with a modicum of sense really believe that it was worth standing in line to pay $600 for a cellphone? That $200 price cut represented the "Sucker Premium" that each of those "consumers" paid to have the rebel image that comes with their favorite brand. Apple offered them each -- get this -- a $100 store credit in recompense. Teehee.

Another place where it is easy to see why "consumer" means "sucker" is, of course, Wall Street. People are greedy; and even if cases where they aren't stupid, they're usually lazy. Ergo, it follows that separating people from their money should require only that you promise them something for which they don't have to work, and more often than not, you can count on them not to do their homework to find out if what you're saying is reasonable. Only a "consumer" could think that an Internet company could simultaneously A) have no revenue or any sort of business model that would someday allow for revenue, and B) undervalued. I once got into a very silly argument with a consumer who was trying to explain why prices could only go up for Beany Babies (a toy of the sort that McDonald's gives away with Happy Meals). She believed, sincerely, I think, that she was doing me a favor by helping me to get in while the getting was good. Alas, Beany Babies aren't doing too well these days. Subprime loans, anyone?

Suckers are not necessarily bad people. In fact, some of my best friends are suckers. Really. And maybe experiences like the iPhone scam will have the effect of educating an entire generation. But the historical evidence suggests not.

And remember, if you have to ask who the sucker is, it's you.