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How can businesses tempt the new debt-averse consumer?

Michael Kidner, Circle After Image, Flowers Gallery

In  Harvard Business Review, Eric Janszen considers the current economic climate and discusses the challenge of selling to debt-averse consumers.

As the author points out, consumer spending financed by debt is over and the monthly payer is no longer active now the credit and housing bubbles have burst.

To win over debt-averse consumers, Janszen advises businesses to follow companies that succeeded in previous downturns by "promoting value and utility over luxury and brand".

Janszen believes that misuse of consumer credit is gone for good and that the reinflation of the credit bubble and "a return to the old days" is not possible.

He explains: "When a nation’s businesses and households take on too much debt and the economy stumbles, the cash flow needed for financing dries up, defaults rise, and a vicious cycle of falling incomes, asset prices, and collateral values begins. That cycle ends only when asset prices, debt levels, and incomes get back into balance."

Selling To The Debt-Averse Consumer
Eric Janszen
Harvard Business Review