ERASMUS UNIVERSITY ROTTERDAMErasmus School of Economics

MSc Economics and Business Specialization: Marketing

Title of master thesis:

Negative news, Consumer Confidence and Consumer Behavior: The effect of recession in the Netherlands and Greece

Supervisor: Prof. Dr. Feray Adiguzel

Nikolaos KyriakopoulosStudent number: 373151

Acknowledgements

This Master Thesis is my final step to the completion of my studies at the Erasmus

University of Rotterdam. Before starting to analyze this research I would like to thank

some people whose impact on this thesis was crucial.

First of all, I would like to thank Dr. Feray Adiguzel for her help, patience and critical

guidance in order to develop a one-page proposal to a complete thesis.

I would also like to thank my family for their psychological support in every stage of

this journey.

Finally, I have to thank my friends Despoina, Natalia, Ioannis and Anthi for their

support during my studies at Erasmus University.

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Management Summary

The aim of this study was to discover the differences between Greek and Dutch

consumers during the Recession that hit the Eurozone. The main interest was the

effect of consumer confidence on consumer behavior in a number of decisions for five

product categories: restaurants, shoes, juice, vacations and cars. The decisions studied

were the intentions of consumers to economize or stop consuming the products, based

on the model of Van Raaij & Eilander (1983) and Bronner & De Hoog (2012).

Another important aspect of this thesis was the examination of the impact of negative

economic news on consumer confidence and in turn on consumer behavior for Dutch

and Greek consumers.

It was found that Greek consumers had lower confidence levels compared to Dutch

consumers and preferred to economize on shoes (74,6%) and juice (88,1%) more than

Dutch consumers. On the other hand, Dutch consumers intended to economize more

on restaurants (64,1%) and on vacation (73,9%). This probably implies that Dutch

consumers perceived restaurant and vacation categories as necessities, whereas Greek

consumers did not sacrifice the purchase of shoes and juice. Under negative economic

news, Dutch consumers increased the level of discontinuation of restaurant visits

compared to without negative economic news. It was also found that those consumers

who were exposed to negative economic news were more willing to economize on

restaurants than to stop going to restaurants.

This research also investigated how consumers in Greece and in the Netherlands

economized on certain aspects. In other words, what kind of tactics (Price, Quantity,

Quality and Lifestyle) consumers employed in order to economize. It was concluded

that Greek consumers in general engaged to more tactics compared to Dutch

consumers. However, the most significant difference was on Quantity tactics. This

result showed that Greek consumers reduced the amount of products they purchased

or delayed the purchase of some goods. It was also found that those who had a regular

paid job employed less economizing on all aspects compared to those who were in

other employment categories (part-time, pension, self-employed and unemployed).

Furthermore, using the model of Kaytaz & Gul (2014), it was found that those who

suffered from employment uncertainty adjusted more their habits in order to cope

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with the crisis. More interestingly, those Greek consumers who had employment

uncertainty adjusted more their coping decisions compared to Dutch consumers who

had the same problem.

The impact of news on consumer confidence in this study was not significant,

supporting the view of Linden (1982). This argumentation is in contrast to other

papers [Hollanders & Vliegenthart (2011), Alsem et al. (2008), Vuchelen (1995) and

Blood and Philips (1995)], which believed that there is a significant effect of news on

consumer confidence.

The outcomes of this research can be used from international companies in order to

employ effective marketing strategies. Companies that operate in both Northern and

Southern countries can understand the differences between Greek and Dutch

consumers for the Hospitality (restaurants), Tourism (vacations), Clothing and

Footwear (shoes) and Food & Beverages (juice) sectors and address their needs

accordingly. For example, knowing that Greek consumers perceive the shoes and

juice categories as necessities can help them to form their strategies based on the

perception that consumers will not sacrifice these products due to the crisis.

This study can become a starting point for more research on country differences on

consumer decisions and to identify how different types of negative or positive events

can influence consumer confidence and purchasing behavior through various channels

(social media, word of mouth, movies).

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Table of ContentsACKNOWLEDGEMENTS 2MANAGEMENT SUMMARY 3

TABLE OF CONTENTS 5

CHAPTER 1: INTRODUCTION 6

RESEARCH QUESTION AND SUB-QUESTIONS 8MANAGERIAL RELEVANCE 8SCIENTIFIC RELEVANCE 10

CHAPTER 2: THEORETICAL FRAMEWORK 13

RECESSION AND ECONOMIC DOWNTURN 13EUROZONE CRISIS: AN OVERVIEW 13DEFINITIONS OF RECESSION 14CONSUMER BEHAVIOR 15MENTAL ACCOUNTING AND BUDGETING 15ECONOMIZING-COPING DECISIONS IN RECESSION 17CONSUMER EXPECTATIONS 20CONSUMER CONFIDENCE 23HYPOTHESES DEVELOPMENT 28ECONOMIC SITUATION: GREECE 28ECONOMIC SITUATION: THE NETHERLANDS 29CONSUMER BEHAVIOR UNDER DIFFERENT ECONOMIC CONDITIONS 30NEWS, MEDIA AND CONSUMER CONFIDENCE 32CONCEPTUAL MODEL 36

CHAPTER 3: METHODOLOGY 37

3.1 RESEARCH DESIGN 373.2 DATA COLLECTION METHOD 373.3 EXPERIMENTAL DESIGN 383.4 SURVEY DESIGN 383.4 SAMPLING METHOD 423.5 RELIABILITY TEST 423.6 MAIN VARIABLES USED IN ANALYSES 433.7 HYPOTHESES TESTING 43

CHAPTER 4: RESULTS 45

4.1 DESCRIPTIVE STATISTICS 454.2 HYPOTHESES RESULTS 474.3 ADDITIONAL RESULTS 56

CHAPTER 5: CONCLUSION 60

5.1 CONCLUSIONS AND DISCUSSIONS 605.2 MANAGERIAL IMPLICATIONS 625.3 SCIENTIFIC IMPLICATIONS 635.4 LIMITATIONS 645.5 FUTURE RESEARCH 65

CHAPTER 6: REFERENCES 66

CHAPTER 7: APPENDIX 71

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Chapter 1: Introduction

The current recession is nowadays a major issue for all the countries worldwide and

affects people’s lives in many ways. More specifically, the European region is tested

for its ability to survive to one of the biggest economic crises of all time.

Netherlands and Greece are two countries that belong to the core of European

Economic Union, however they represent two highly dissimilar economies and face

the recession very differently.

Netherlands is a clear example of a powerful northern economy that faces the

emerging crisis not as heavily as most of southern countries of Europe. However, the

impact is considerable. Its GDP growth rate reached negative levels at -0,8% in 2013

and the unemployment rate increased to 8,2% in 2013 from 6,4% in 2012 (Statistics

Netherlands). Greece, on the other hand, is in a very deep recession recording an even

lower GDP growth rate of -2,6% in the end of 2013 (source: Eurostat) and an average

unemployment rate of 27,3% in 2013 (Hellenic Statistical Authority).

After examining the above statistics, it can be inferred that these two countries are in

very different positions regarding the recession. One can also argue that these

countries are highly representative of the South and North of Europe in terms of

economic conditions. This fact ensures the implication of this research in the essence

that the findings of this study can be extended to other European countries that share

similar characteristics with Greece and the Netherlands.

This paper examines the role of people as consumers that are making decisions based

on their interaction with the economic, political, social and cultural environment.

Consumers become optimistic or pessimistic about the future, based on the

“evaluations and expectations of household finances, unemployment and inflation

levels, national or international economic developments, and interest rates” (Van

Raaij & Gianotten, 1990). The significance of consumer confidence in contemporary

economics is portrayed in the study of Matsusaka & Sbordone (1995), who argue that

a fall in consumer confidence can play an important role in economic fluctuations and

can result to a decreased GDP and even to a recession. However, Ludvigson (2004)

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stated that even though many studies examined the measures of consumer confidence,

“the mechanisms by which household attitudes influence the real economy are less

well understood”.

The role of news and media is crucial in forming the evaluations of current conditions

and in developing future expectations. It is well known that through the news

consumers are becoming informed about all the key economic, political and social

developments. Shocking news such as the 11 September 2001 terrorist attack, the

presidential elections in United States and the 2008 failure of Lehman Brothers are

affecting peoples’ perceptions about today and the future on a very high level.

However, one cannot neglect the impact of minor everyday substances of

negativity/positivity that are communicated through everyday news and are

influencing marginally but significantly in the long term. As a result, the importance

of news in forming the attitudes of consumers makes this topic something that is well-

worth examining.

As in contemporary marketing consumers are in the center of attention, in this thesis

there is an attempt to understand how they make choices in the environment where

they live. This environment, as explained earlier, is characterized by turbulence and in

turn makes their decisions increasingly important. As a result, this study tries to add to

scientific literature by shedding light to how consumers economize and adjust their

budget in order to cope with the crisis that hit the Eurozone the last 5-6 years. Finally,

the need to map the differences between consumers in Greece and in the Netherlands

in terms of consumer decisions made the inclusion of this topic in the research very

critical.

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Research Question and Sub-questions

What are the effects of consumer confidence on consumer behavior in Greece and the

Netherlands due to economic recession?

Sub-questions:

How do negative economic news, mass media and press influence consumer

confidence?

What are the differences between Greek and Dutch consumers in relation to negative

economic news?

How consumer decisions of Greek and Dutch consumers changed after the recession?

Managerial relevance

In the first inauguration of Franklin D. Roosevelt as a president of the United States in

1933 one of the most significant parts was his reference to the importance of

consumer confidence to the hit by the Great Depression nation. More specifically he

mentioned:

“So, first of all, let me assert my firm belief that the only thing we have to fear is...fear

itself - nameless, unreasoning, unjustified terror which paralyzes needed efforts to

convert retreat into advance.”

Roosevelt was very concerned of the negative impact of pessimism among the

consumers of United States. This signified the importance of consumer confidence to

consumption and the economy as a whole. As a result, the tracking of confidence and

the evaluation of the insights that it can provide can be very crucial for the consumers,

the policy makers and the companies.

Nowadays, the economic instability made the strategic decisions even harder.

Managers and marketers are trying to predict the consumers’ behavior so as to adjust

their strategies similarly. However, as mentioned earlier, the future expectations of the

consumers are very unpredictable, while are influenced by a number of factors such as

social cultural values, economic outlook, media and politics. The expectations of

consumers are affecting in turn the buying behavior making the marketing strategy a

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very complicated task to accomplish. Consumer confidence, as a measure of

predicting consumer behavior, takes different values depending on whether a country

is in deep crisis or has moderate levels of crisis impact. After getting the results of this

thesis, marketers could have an indication of how to utilize measures of consumers’

attitudes.

This research will enable marketers to gain insight on how economic recession shapes

the consumer behavior in Netherlands and Greece. Consumers in Greece may respond

differently in adverse economic conditions than Dutch consumers who have a long

history of economic stability. In the contrary the turbulent economic, political and

social environment that characterizes Greece may result to different responses by

consumers. A number of marketing decisions may be helped by this study. One

example of these decisions is the pricing strategy. Knowing that consumers switch to

lower priced goods during the recession will help large companies such as fast

moving consumer goods (FMCG) giants to manage their pricing strategies

accordingly. Such companies that operate in an international level will be benefited

from the comparison between Greece and the Netherlands. As a consequence, they

can adapt their pricing strategies based on country specific characteristics of these two

countries.

Advertising strategies are also considerably affected by economic contractions. The

decreasing available budgets make advertising a luxury for businesses. To withstand

with the difficulties, companies must make effective advertising campaigns that will

be close to consumers’ perceptions regarding the crisis. As it will be more thoroughly

explained in the literature review, consumers during economic crises employ more

simple lifestyles and change their behavior so as to cope with the crisis. According to

Ang (2001), companies should make more informative advertisements in order to

demonstrate the positive aspects of the products and the solutions they can offer. As a

result, the findings of this study may enlighten marketers and advertisers on how

consumers behave so as to have successful advertising approaches.

Finally, the government can also use the findings of the present thesis to better

understand the dynamics of consumer behavior and the way they are influenced by the

emerging economic crisis. This can help it adopt policies that are effective and

beneficial for the society and the economy in general. Types of policies such as

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legislations regarding the import/export taxes and subsidies to manufacturers of goods

can become more updated and realistic through a scientific approach towards the

consumer behavior.

Scientific Relevance

The effect of business cycles on consumer behavior is a very popular topic in

marketing literature and has been researched thoroughly for many different countries

for many years. However, economic crises differ highly in intensity and affect the

nations, as well as the consumers, in a different manner. Additionally, Mueller (1963)

stated that “ one of the chief problems of forecasting business conditions or consumer

spending is that each business cycle is in some respect a unique historical event”.

A large number of studies were conducted in crisis-hit countries that examined the

impact of such crises in consumer behavior and explored a number of decisions that

became adversely affected. To put them in chronological order, Schipchandler (1982)

studied the impact of the stagflation that hit the United States in the late 70’s and

analyzed the consumption patterns that where modified due to this economic

phenomenon. Wikstrom (1997) studied the price adjustments that consumers

employed in the early 80’s in Finland. Moreover, Ang et al (2000) made a very

extensive research in a large number of consumer decisions that where affected by the

crisis that emerged in Asia in 1997. This research is one of the most deep in terms of

the large variety of insights of consumers’ attitudes. Argentina, which is one of the

most well known recession-hit countries of the 21-century, was the center of focus for

Zurawicki and Braidot (2005). Furthermore, Dutt & Padmanabhan (2011) made a

similar comparison as this thesis attempts to do, by comparing OECD and non-OECD

countries in terms of consumer behavior in response to the current crisis. Finally,

Kaytaz & Gul (2014) examined the strategies that Turkish consumers developed in

order to be able to cope with the crisis. All these studies were similar to this paper

however, only described the impact of economic downturns to consumer behavior and

didn’t connect it to measures such as consumer confidence.

As far as the consumer confidence measures are concerned, there are numerous of

studies that evaluate the ability of such measures to predict the consumption. These

studies will be presented in detail in the theory chapter, however, it can be concluded

10

that their goal is mainly to evaluate these measures, as they use some product

categories such as cars or generally durables in order to compare whether the

consumption of these products follows the same direction as the consumer confidence

measures. These studies have a very different scope as the current one, which aims to

gain in depth knowledge of consumer purchasing patterns in relation to consumer

confidence.

Finally, there is a considerable body of research that associates many types of news

with consumers’ attitudes. An example of this kind of research is the study of Tims et

al. (1989), which found a significant effect of news to consumer confidence. Alsem et

al (2008), and Hollanders & Vliegenthart (2011) conducted similar studies in the

Netherlands exploring the effect of news from newspapers to consumer confidence.

Finally, Wu et al. (2002) found that consumer confidence is more adversely affected

by economic news during an economic downturn. The previously mentioned studies

examine one country at a time, and do not make between country comparisons.

Furthermore, they examine different economic contractions, which were possibly less

deep as the current one. Nevertheless, each economic crisis must be examined

separately because assumptions about one event may be violated in another situation.

Table 1.1 Overview of associated studies

Study Context Consumer Confidence

Effect of news on consumer confidence

Consumer Decisions

Method

Van Raaij & Eilander (1983)

Recession in the early 80’s

Yes No Yes Survey Data

Tims et al. (1989)

U.S. media content

Yes Yes No Longitudinal analysis

Wikstrom (1997)

Negative growth and decreased income from 1977-1983 in Finland

No No Yes Secondary data

Ang et al. (2000)

Asian crisis of 1997

No No Yes Secondary Data and Survey

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Zurawicki and Braidot (2005)

Argentinian Crisis in 2001-2002

No No Yes Household survey

Alsem et al (2008)

Dutch newspapers spin bias (1998-2002)

Yes Yes No Longitudinal analysis and secondary data

Hollanders & Vliegenthart (2011)

Dutch newspapers (1990-2009)

Yes Yes No Longitudinal analysis and secondary data

Dutt & Padmanabhan (2011)

Current crisis (2007 onwards)

No No Yes Historical Data

Bronner & De Hoog (2012)

Dutch tourism Industry during the Recession (2010)

No No Yes Panel Data

Kaytaz & Gul (2014)

Current crisis (2008-2009)

No No Yes Secondary Data

Schipchandler (1982)

Stagflation in US (late 70’s)

No No Yes Secondary data

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Chapter 2: Theoretical framework

Recession and Economic downturn

Eurozone crisis: An overview

The current economic recession that affects many European countries including

Greece and the Netherlands is considered one of the most severe in history since the

Great Depression in 1929. Andersson & Matson (2010) argued that: “the combination

of the financial crisis and the decline of demand in globally strongly interdependent

economies, is unprecedented”. Krugman (2009) referred to this crisis as “Half of

Great Recession” and other economists called it “Great Recession”.

More specifically, in 2009, the Eurozone was hit by the global financial crisis, which

started in the USA in 2007 with considerable consequences. The crisis then migrated

to the Eurozone becoming a sovereign debt crisis. European banks were largely

exposed to debts coming from countries such as Greece, Portugal and Spain making

the European banking system very unstable.

To avoid multiple defaults and in face of a Pan-European collapse the European

governments and the International Monetary Fund decided to take decisive measures.

These measures included large bailout programs to mainly southern countries, the

enforcement of structural reforms and the establishment of austerity measures. The

aim of these actions was to stabilize the banking system, decrease the governmental

debts and address the trade imbalances in the problematic countries.

According to Pissarides (2013), these measures in indebted countries had a relatively

big impact in unemployment while they brought deep recession before the structural

reforms having time to have an impact on the economy.

As a result, inside the Eurozone there is a contradiction between the Northern

countries, which are mildly hit by the recession and some Southern countries where

the recession is deep and destructive.

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Definitions of Recession

Recessions as economic phenomena attracted a lot of interest and discussion

concerning their emergence and their development. There has been serious debate

regarding two possible definitions of a recession. The reason why this issue is so

controversial is because through these definitions also comes the dating of a recession.

Burns and Mitchell (1946) defined recession as “a substantial prolonged decline in

economic activity that occurs broadly across various sectors of the economy.”

The most controversial definition is attributed by many scholars to Julius Shiskin

(1972) and defines a recession as “a decline in the seasonally and calendar adjusted

real gross domestic product (GDP) in at least two successive quarters”. This definition

even though it is very popular, is regarded very simplistic and can lead to results that

are not aligned with the reality (Layton & Banerji, 2003).

A more comprehensive method of defining and detecting a recession is proposed by

the National Bureau of Economic Research (NBER), which holds the Business Cycle

Dating Committee. The NBER (2001) describes a recession as “a significant decline

in economic activity spread across the economy, lasting more than a few months,

normally visible in real GDP, real income, employment, industrial production, and

wholesale-retail sales”.

Layton and Banerji (2003) argue that: “a recession occurs when a decline appears in

some measures of aggregate economic activity and causes further decreases in other

key measures of activity”. Furthermore, Stock and Watson (1993) suggest that three

D’s must be affected to consider a slowdown as a recession. First of all, the duration

of the slowdown must be long enough (duration), then it should comprise a deep

decline in economic activity (depth) and finally, it should be diffused across various

sectors of the economy (diffusion).

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Consumer Behavior

Mental accounting and budgeting

Consumers apply a number of mental techniques when they make choices and

especially purchasing decisions. They usually put labels to the products or services

they consume and can categorize a restaurant visit as “entertainment” or as

“fulfillment of nutritional needs”. The fact that consumers also set budgets on specific

categories is also very relevant in todays’ economic downturn. Kamakura & Du

(2012) mentioned that during the current recession consumers in the United States

reduced significantly their budgets in non-essential categories and increased the share

of budget to essential categories. In this thesis it is expected that consumers will

reduce their expenditures in non-essential categories such as “entertainment”. For

example, they may limit their budgets for the category “going out for dinner”, or even

change a categorization of goods.

As a result, the aim of this analysis is to understand the complex structure of how

individuals decide when they face the challenge of purchasing products, making

choices and allocating budgets to categories. Studies in this specific area of consumer

behavior are relatively new and are forming the dynamic scientific field of behavioral

economics. The main focus of this chapter will be on the theory of Mental Accounting

first proposed by Thaler in 1980.

The antecedent of the theory of Mental Accounting in Behavioral economics is the

Prospect Theory proposed by Kahneman & Tversky (1979). It was created in order to

critically argue against the utility theory on the basis that it better explained how

people act under uncertainty. After experimental justification, Kahneman & Tversky

found that people use a reference point, which is usually the “status quo”, and

estimate their gains and loses in relation to this reference point. This concept is called

“framing” and is regarded as very critical in order to determine how behavior is

formed. Another essential aspect is the fact that decision makers are more inclined to

be risk-averse with respect to gains and risk-acceptant with respect to loses. This

propensity means that people are more willing to risk in uncertain situations than

when the gains are sure.

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Thaler (1980, 1985) proposed the theory of Mental Accounting based on the

foundations of prospect theory from Kahneman and Tversky (1979). Thaler (1999)

defined mental accounting as “the set of cognitive operations used by individuals and

households to organize, evaluate, and keep track of financial activities”. In order to

establish this theory Thaler (1980) used the concept of “framing” from Prospect

Theory, where a reference point is taken and then gains and losses are evaluated

accordingly. Furthermore, very important is to understand how consumers are setting

budgets.

Sefrin and Thaler (1988), in their study of the Behavioral Lifecycle Hypothesis,

proposed an alternative model to the Lifecycle Hypothesis (Modigliani & Brumberg,

1954). In this study they stated that households’ possessions are labeled under three

main accounts, which are namely: current income, current assets and future income.

More specifically, they mention that consumers are more inclined to spend when

income is referred to current rather than to future income. Thaler (1985) also stated

that mental accounts are influencing consumers’ decisions. Henderson and Peterson

(1992) illustrated this by offering the example of consumers who prefer to spend on

holidays when they get a disposable amount as a gift rather than when getting the

same amount as a salary increase. As a result, the fact that they label an amount as a

gift and not as salary increase changes their decision.

Heath and Soll (1996) found that consumers are setting budgets and afterwards track

their expenses in order to remain inside their financial boundaries. They also state that

the expenditures that are more easily labeled in only one category are those that are

more heavily affected from the budgetary cuts. As a result, those products that fall in

more than one category are those that can survive from limited budget in this category

and move to another budgetary category. To make this concept more clear, Heath and

Soll (1996) use the example of a dinner, which can fall in more than one categories

and can be moved from “entertainment” category to “nutritional” and therefore avoid

the budgetary limitations of “entertainment” dimension.

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Economizing-Coping decisions in Recession

Consumers during the present economic crisis are facing the challenge of adjusting

their consumption of goods due to the decreasing income and due to their expectations

about the future. As a result they often need to make some crucial adjustments to their

purchasing habits. In this paper it is proposed that the adjustments are mainly taking

the form of economization.

Van Raaij and Eilander (1983) first introduced the notion of economizing tactics and

argued that consumers are taking measures to overcome the shortage of income and

therefore adjust their available budget. More specifically, Van Raaij and Eilander

(1983) proposed ten economizing strategies consisting of four main categories: price,

quantity, quality and life-style budget adjusting strategies. The breakdown of these

four classes is the following:

Price strategies:

a) Cheaper store, discount storeb) Cheaper brandsc) Sales and bargains

Quantity strategies:

a) Buying lessb) Postponement and delay

Quality strategies:

a) Higher quality, durabilityb) Lower quality (lower price)

Life-style strategies:

a) Do-it-yourself productsb) Sharing and borrowingc) Voluntary simplicity, ascetism

In this chapter, there will be an extensive presentation of past literature regarding

consumer decisions-economizing tactics during different economic downturns in

many countries. These examples will give us an indication of how consumers adapted

their purchasing behavior in real hardships and will help us to better anticipate the

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adjustments of consumers in the current economic crisis.

To begin with, Schipchandler (1982) mentioned that consumers in the United States

during the stagflation in the mid- and late 70’s changed their consumption

considerably. They mostly employed price reduction strategies preferring products on

sales and promotions. However, consumers avoided moving from one store to the

other to compare prices, primarily because of the high gas prices. Through this

economic turbulence consumers also reduced restaurant visits and in general the

purchases of non-essential expensive products. Another significant finding of this

study was that consumers also adopted lifestyle strategies changing their behavior

drastically. A new trend of “homemade” and “do-it-yourself” lifestyle, made

consumers willing to even take care of their own cars and buy spare car parts to

perform car maintenance services.

Similar consumption patterns found Wikstrom (1997) in Finland in the early 80’s.

More specifically, Finnish consumers reduced the purchase of costly foods such as

delicatessen, meat and pastries. Interesting is however, that consumers increased the

consumption of other more healthy and somewhat high-priced foods such as fresh fish

and seafood. To be able to purchase these foods they changed their habits, eating a

larger breakfast at home and a lighter dinner. The previous findings underline that

consumers in Finland reduced the costs of consumption in general by making

significant changes to their lifestyle.

Ang et al. (2000) studied the impact of the Asian crisis of 1997 to consumers and

provided an extensive analysis of the curtailing strategies used by Asian consumers in

order to cope with this economic hardship. In terms of price adjustments consumers

preferred discount stores and concentrated on lower prices. A clear example of the

price importance is the fact that consumers were more positive towards less expensive

products without any extra gifts than paying a higher price accompanied with gifts.

Furthermore, when travelling they chose less expensive destinations, avoiding to

travel abroad. Asian consumers also economized employing quantity strategies and

more particularly limited the volume of their purchases and also limited the

consumption of “end-of-aisle” products. Interesting is also the different consumption

behavior regarding the size of the packages. Those who were seriously hit by the

crisis preferred smaller packages whereas the others purchased larger quantities for a

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smaller price per item. The durability of the products was also an important factor,

which helped consumers to maintain the products for a larger period of time and as a

consequence economize in the long term. Finally, the lifestyle of Asian consumers

changed dramatically to a more simple way of living. For instance, instead of eating

to restaurants they preferred cooking at home. They also became less inclined towards

luxurious products, choosing to not to discontinue the consumption of necessities.

In the onset of the new century a lot of studies were conducted because of the

continuing economic instabilities worldwide. Zurawicki and Braidot (2005) studied

the impact of the economic crisis in Argentina in 2001. Consumers applied pricing

tactics extensively substituting the expensive branded products with cheaper store

brands. This finding was justified for both alcoholic and non-alcoholic products.

Consumers also reduced the purchases of toys for children and delayed the family

vacations. However, the biggest adjustment and economization regarded the lifestyle

of consumers. Argentinian consumers preferred cooking at home than going to

restaurants, they shared they car with others and substituted going to theaters with

meeting friends at home and watching movies in the television. This sharing behavior

enabled them to economize extensively while adopting a more ascetic way of life.

Dutt & Padmanabhan (2011) examined the current crisis in its most difficult level in

2009. They made a distinction between OECD and non-OECD countries and

discussed the differences between them. The main finding was that in both countries

consumers delayed the purchase of durables, which are logically more expensive than

nondurables. Consumers in OECD countries in return to the consumption reduction of

durables increased the use of services. They remained stable, however, in the

purchases of nondurables and semi-durables. On the other hand, consumers in non-

OECD countries only increased the consumption of nondurables and in line with the

decrease of durables also decreased semi-durables products.

Finally, Kaytaz & Gul (2014) conducted an extensive research in the crisis-hit Turkey

in 2008 and 2009 gaining valuable insights of consumers’ coping strategies. More

specifically, they found that consumers opted for cheaper food and non-food products

on a very large extent. Another pricing adjustment was that Turkish people send their

children to less expensive public or privately owned schools. Moreover, Turkish

consumers decreased the amount of entertainment services and decreased the social

19

gatherings, which are more discretionary expenditures. As found in the previously

mentioned papers, this study also found that the change in lifestyle is a common

adjustment measure in coping with the crisis. Consumers engaged in own production

of food products in order to save money and preferred to walk or use public

transportation than to drive a car. These changes are showing that consumers

preferred to follow voluntary simplicity in order to cope with the reduced income, the

increase of unemployment and the low confidence levels that took place in Turkey in

2008.

Carrigan & De Pelsmacker (2009) mentioned that during the recent economic crisis

consumers in U.S increased the consumption of beer and replaced expensive types of

entertainment with less expensive habits such as movies at home and alcohol

drinking. In the contrary, during the same time period beer companies in Belgium

faced financial problems due to a decrease of beer consumption. This finding

highlights that recession takes different faces in different countries and consumers

make different kinds of adjustments. Furthermore, Carrigan and De Pelsmacker

(2009) added that Dutch consumers preferred to repair their shoes in order to

maximize the lifetime of their shoes. According to the model of Van Raaij and

Eilander (1983) this is a quality tactic connected with higher durability of the

products. Finally, in the same paper of Carrigan and De Pelsmacker (2009), it is stated

that consumers in the United Kingdom engaged heavily to lifestyle tactics, as second

hand items became a trend, which helped consumers to cope with crisis.

Consumer Expectations

The notion of Expectations

One of the objectives of this thesis is to understand how negative news affect

consumer confidence and in turn consumer behavior. The role of expectations in this

study lies between news and confidence and indicates the psychological constructs

that form behavior. Moreover, Van Raaij (1989) mentioned that news and other

sources of information have a significant effect on consumers’ expectations. Van

Raaij (1989) made a distinction of the effects of news as short-term and long term.

The short-term effects are those that change consumers’ perceptions at the time they

are publicized and therefore, cause favorable or unfavorable behavior. On the other

20

side, the long-term effects do not change the attitudes instantly, but take considerable

time until the consumers’ reactions will take place.

In 1932, Tolman defined expectations as “beliefs about behaviors that will be

followed by positive or negative events”. A more contemporary definition refers to

expectations as “beliefs about events or behaviors that will occur or that will be

disclosed in the future” (Hoorens, 2012).

The fundamental characteristic of expectations is the object to which they are related.

There are many kinds of objects such as economic conditions, people and life in

general. As a result, Kelley and Scheewe (1975) stated that an expectation is regarded

as the relationship between a class of behavior and the object.

Kelley and Scheewe (1975) also proposed a typology of expectations with three

general types of expectations namely social/life, product and service and price and

wage expectations.

The present study examines the latest category, where consumers are making

estimations about the future levels of prices in the economy and adjust their buying

behavior accordingly. The same happens with their expectations about the wages,

which are part of the consumers’ disposable income and affect their intention for

spending significantly.

Expectations creation

According to Van Raaij (1989), expectations derive from past experiences,

perceptions of current stimuli and inferences made by trial and error learning. To

better understand how expectations may differ for consumers in Greece and the

Netherlands, based on the previous statement, it can be added that the past

experiences for instance of Dutch consumers that are connected with a stable

economic, political and social environment, may influence their evaluations of current

events. In contrast the turbulent general environment in Greece may influence

expectations in a different way.

Katona (1975) suggested two different methods of learning: by repetition and by

problem solving. The first can be described as low involvement learning because it

21

only requires the repetition and memorizing of content. However, problem solving by

trial and error requires more cognitive involvement and incorporates external factors.

For example, an oil crisis may induce consumers to consider the consequences of this

crisis to their personal finances. However, Van Raaij (1989) mentions that in special

conditions expectations can be self-fulfilling. For instance, if some prognostications

about a negative occurrence are made, then these predictions can lead to the projected

negative situation by influencing people’s perceptions.

As mentioned earlier in the definitions of expectations, the beliefs are a key part in the

formation of expectations. Fishbein and Ajzen (1975) proposed the concept of attitude

theory, which indicates that beliefs link objects with attributes. Furthermore, they

state that there are three main types of beliefs: descriptive, inferential and

informational beliefs.

Descriptive beliefs are those, which are directly linked to environmental cues

(Olson, 1978). These beliefs are formed with certainty because they are the

outcome of direct and personal knowledge and experience with an event.

The Inferential beliefs are indirectly inferred from environmental cues (Olson,

1978). The one who forms these beliefs need to consider some knowledge that

was learned in an earlier occasion.

Informational beliefs are those derived from external informational sources.

Thus, the person makes the informational beliefs after receiving information,

which is based on a connection between the attribute and the object. This

connection is made by the outside source. The reliability of the source in the

previously mentioned concept can increase or decrease the strength of the

belief.

In his study Micromotives and Macrobehavior, Schelling (1978) proposed that the

choices of individuals are affected by the fact that they act in the social context.

Expectations are also influenced by the interaction of people with others and the term

aggregate effects, indicates that the result is not just a sum of individual decisions.

Van Raaij (1984) uses the example of the decision to drive a car, which depends

heavily on whether others are also planning to use the car because of possible traffic

problems. Schelling (1978) suggests five types of aggregate expectations: Self-

22

fulfilling, self-negating, self-displacing, self-equilibrating and self-confirming

expectations.

Consumer Confidence

Consumer confidence is a measurement that is widely known and has strong

supporters and equally strong critics. However, it is accepted as a tool that helped

researchers to understand how consumers perceive the current and future state of the

economy and the general business environment. Fuhrer (1993) argued that consumers

“may not know the latest figures for... GNP, but they know that a neighbor has lost his

job or that paychecks aren’t stretching as far as they once did.” As a result, they form

expectations before these expectations are being captured in other economic

measures.

This chapter will explain and analyze the large amount of literature that aims to

examine the usefulness of consumer confidence in predicting consumers’ behavior.

Theoretical Foundations of consumer confidence

According to Katona (1968), the discretionary expenditures of consumers are

associated with the ability to buy and willingness to buy. More specifically, the ability

to buy is the income generated in a certain period and the assets that the consumers

own or have access to. Willingness to buy represents the intention of a consumer to

purchase products or services and depends on the expectations consumers have about

the economic conditions of their household and the nation as a whole. Van Raaij

(1989) mentions that consumers are evaluating measures of the economy such as

unemployment levels and interest rates and are becoming optimistic or pessimistic

about the future. Furthermore, Mueller (1963) notes: “optimism and pessimism are

intervening variables which alter the response of consumers to merely financial

variables such as fluctuations in personal income”.

Kumar et al (1995), however, offer an important perspective to the relationship

between willingness to buy and consumer confidence and as a result to consumer

spending. They state that consumers are willing to purchase items in order to satisfy

their needs. This feeling of satisfaction results to higher confidence levels and more

willingness to buy.

23

Juster (1966), explaining the main point behind consumer sentiment surveys, states

that the purchasing of durables is behaving to some extent independently of other

financial variables such as income. As a result, he proposes that fluctuations in the

buying patterns of those items are better predicted by consumer confidence variables

such as consumer sentiment.

Mueller (1963) makes a very important observation stating that consumers’ attitudes

are a very different concept than personality traits and basic values. She therefore

explains that personality traits are shaped in childhood and do not change

significantly. On the other hand, consumer attitudes such as optimism and pessimism

are created by changes in the economic and political environment.

Fuhrer (1988) suggested that expectation surveys give insights that are not possible

when using standard macroeconomic data. The additional information that can be

derived is information about current developments; forward looking information and

animal spirits information. The first category refers to current information that has not

been extracted yet from other sources and can forecast data that will be known at a

latter stage. The second category indicates that expectation surveys provide not easily

quantifiable information that is related to economic or political events. The last

category refers to consumer behavior that forms expectations under the influence of

self-fulfilling properties.

In this study two main indices will be examined; the Index of Consumer Sentiment

(ICS) issued by Michigan University and the Consumer Confidence Index from the

Conference Board.

The Index of Consumer Sentiment (ICS)

In 1952 George Katona and the Michigan Survey Reasearch Center created the Index

of Consumer Sentiment (ICS), which was initially issued in a quarterly basis and after

1978 published monthly results on consumer confidence. The ICS is based on five

questions, which are divided in two categories: current conditions questions and

expectations questions. The current conditions questions consist of two questions

asking whether the respondent would recommend the purchase of expensive

household items and whether his/her present financial condition is at the same level as

it was a year ago. The expectations component contains three questions, which are

24

related with the anticipated business and employment conditions and the expected

changes in the respondents’ income. These questions are concerned with the “medium

to long-term” (Huth et al., 1994) consumer expectations ranging chronologically from

less than a year to five years.

The Consumer Confidence Index (CCI)

The Consumer Confidence Index (CCI) is the second index that will be analyzed in

this paper. The Conference Board constructed the CCI in 1967 in order to provide the

confidence levels of the US households every two months and since 1977 provides

monthly results. As does the Index of Consumer Sentiment (ICS), CCI is based on

present situation and expectations questions. However the questions have significant

differences. The present conditions component surveys the business and job

conditions in the current time frame taking a “snapshot approach” (Bram &

Ludvigson, 1998). The expectations questions are asking the business and

employment conditions and the expected family financial situation in a six months

period. The CCI puts these expectations in the short term in opposition to the ICS,

which is related with more long-term expectations.

Predictive value of Consumer Confidence Indexes

In this chapter the relevance of consumer confidence measures in economic

forecasting will be extensively analyzed through previous literature. The theoretical

basis is as mentioned earlier the work of Katona (1968).

Going a step further, Kumar et al. (1995) found that Katona’s theory is accepted by

their analysis and concluded that when forecasting consumer expenditures it is more

efficient to use measures of consumer confidence than depending solely to economic

variables. These findings agree with the analysis of Eppright et al. (1988), who

discovered that consumer expectations indexes explained better the changes in

consumer spending than the economic variables.

Mueller (1963), Curtin (1982) and Huth et al. (1994) studied the forecasting value of

the Index of Consumer Sentiment concerning the automotive industry. They came to

the conclusion that the ICS is capable of delivering insights regarding the future sales

of cars. More specifically, Mueller (1963) stated that consumer attitudes surveys have

25

significant added value in order to predict changes in cars’ expenditures. She also

mentions that the information extracted from these measures cannot be found in other

financial variables.

Another study, which highlighted the importance of Consumer Confidence as a

forecasting measurement, was from Fuhrer (1993). He found that there is a significant

contribution of consumer confidence in forecasting consumer expenditures by

analyzing data from 30 years of consumption.

Furthermore, Acemoglu & Scott (1994), Carrol et al. (1994), Slacalek (2004) and

Parigi & Schlitzer (1997) suggested that aggregate consumer expectation measures

have considerable predictive usefulness and can therefore forecast the development of

consumption.

One of the first who made the connection between the business cycles and a measure

of consumer confidence was Linden (1982). He therefore found that the Consumer

Confidence Index (CCI) predicted very accurately the changes of the GDP.

Additionally, Howrey (2001) in his study suggests that the use of ICS can help

forecasters to increase the validity of their predictions regarding a possible recession

in the future.

Even though Garner (1981,1991) doubted the forecasting ability of consumer

confidence indexes on spending of durables, he stated that ICC and ICS can have an

increased value when they are used as a tools to predict the change in spending due to

events not related with the economy and the economic conditions. Examples of these

unexpected occasions are a war or a disaster that can cause a dramatic shift in the

perceptions of consumers regarding the economy.

On the other hand, it is worth to mention those studies that were opposed to consumer

confidence measures as forecasting tools. As mentioned earlier, Garner (1981,1991)

was critical on the forecasting ability of ICS and CCI regarding the spending on cars

and houses. The same findings were proposed in the study of Kamakura and Gesner

(1986), who reject the view that these indexes can be regarded as leading indicators.

Moreover, Abelle (1983) stated that the variations of spending in automobiles are not

anticipated by the unexplained part of the Index of Consumer Confidence.

26

Batchelor and Dua (1998) stated that sometimes consumer confidence gives confusing

results to forecasters. They also expressed their fears that the dependence on

consumer attitudes measures can result in a late anticipation of a recession.

From the above literature analysis, it is clear that the opinions regarding the

usefulness of consumer confidence indicators as forecasting tools are somewhat

contradictory. Kamakura and Gesner (1986) state that a possible reason could be the

different statistical analyses and methodologies that were used to get to these results.

27

Hypotheses development

Economic Situation: Greece

As mentioned before, Greece was one of the earliest victims of the Economic crisis,

which hit the Eurozone in 2009. The crisis was converted into a recession, following

the declines in all aspects of economic activity. In this chapter, some crucial economic

indicators will demonstrate the harmful results of recession in key areas of the Greek

economy.

First of all, the Gross Domestic Product (GDP) in Greece was shrinking with a rate of

2,6% as of the 4th Quarter of 2013 (National Statistical Service of Greece). The

negative Growth Rate of the Greek economy started in 2008 reaching its peak in 2011

with -7,1%. This shows that the downturn is getting slower, however the length of this

negative growth is very considerable.

Another indicator, which shows the difficult position of Greece, is the Economic

Sentiment. In February 2014 the amount is 94,8 whereas the average in the EU is

105,0 (source: Eurostat). The gap in this case between Greece and the other nations is

considerable and confirms the difficulties that all sectors of the economic activity are

facing.

The same conclusions are made after examining the Consumer confidence indicator,

which is part of the Economic sentiment. As happened previously, the levels of

Greece in terms of consumer confidence (-65,5) are relatively smaller than those of

the other countries in the Eurozone (-9,5) as of February 2014. Here, the difference is

even bigger and gives a clear view of how deeply consumers are affected by the

ongoing recession.

Finally, unemployment, which according to Tella et al. (2001) is related with less life

satisfaction and decrease in general happiness, is very relevant in understanding the

psychological condition of Greek citizens. In fact, the unemployment rate of Greece

for the 3rd quarter of 2013 was the highest in Europe with 27,6% whereas the

European average was 10,9%.

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Economic Situation: The Netherlands

Holland, as a Northern European country faces the economic crisis very differently

than Greece and the other countries who suffer from the very high debts and generally

the economic slowdown. It is however, rather inaccurate to say that Holland is facing

the recession lightly and with no problems. In fact, considering the dynamics of the

powerful Dutch economy, one can argue that the contraction is having considerable

effects on it.

As far as the GDP growth is concerned, the Dutch economy contracted by 0,8% in

2013. This shows an improved condition from 2012 when the GDP growth rate was

-1,3% (Statistics Netherlands). Compared to Greece, the Gross Domestic product is

shrinking with a lower rate, the difference is still small and the other indicators can

shed more light to this matter.

The Economic Sentiment in Holland for the February 2014 was also higher than that

of Greece. More specifically, it was lower (98) than the average European Consumer

Sentiment indicator of 105.

The huge difference however is illustrated in the consumer confidence indicator. The

Netherlands has one of the highest amounts in the European Union with -5,4 whereas

the average is -9,5. The chasm between Greece and the Netherlands in terms if

consumer confidence is relatively big, which shows the dissimilar consumers’

perceptions regarding the economic contraction.

The same conclusion can be extracted after examining the unemployment rate.

Holland suffered during 2013 one of the highest unemployment rates in its economic

history reaching an all time high in July 2013 with 8,7% (Statistics Netherlands).

Even if these were high levels for the Dutch economy, they are lower than the

European average (10,8).

From the above observations, it can be inferred that the Dutch economy is

experiencing a significant economic hardship, however still remains in the group of

countries, which are withstanding the recession with lesser damages than the majority

of the EU economies. Some interesting perspectives regarding the working status of

Greek and Dutch citizens are illustrated in the following table:

29

Part-time Employment Rates

Self Employment

Long-term Unemployment Rates

Average Wages (US Dollars)

Greece 9,7% 36,8% 59,3% 26.062Netherlands 37,8 % 15,3% 33,7% 46.646

Source: oecd.org

The differences between Greece and the Netherlands are perfectly captured by the

Better Life Index from OECD organization. Interesting regarding the psychology of

Greek consumers is the indicator Life Satisfaction, which measures zero (0), the

lowest among all OECD countries. On the other hand, the Netherlands scores 8,8,

which is one of highest. The table below summarizes some interesting indicators:

Better Life Index (1-10)

Housing Income Jobs Life Satisfaction

Work-Life Balance

Greece 3,8 1,9 2,2 0 7,2Netherlands 6,9 5,3 8,7 8,8 8,8

Source: oecd.org

Based on the previous observations about the differences between the Dutch and

Greek consumers and the economy as a whole, the following hypotheses can be

extracted:

H1: Consumer confidence will be higher in the Netherlands than in Greece.

H2: Due to the economic crisis, Greek consumers will adjust more their coping

strategies in comparison to Dutch consumers.

Consumer behavior under different economic conditions

This paper follows the approach proposed by Bronner & de Hoog (2012) specified for

the tourism industry. However, this model can be easily extended to explain

differences in behaviors between countries concerning discretionary expenditures,

which are the main point of research in the current study. As a result, in this paper the

specification of tourists’ reactions will be replaced by consumers’ reactions in

general.

30

More precisely, Bronner and de Hoog (2012) proposed that there are two main

dimensions of crisis events affecting consumer (tourist) behavior. These two

dimensions are the Range of scope and the Depth of those events. More precisely, the

range of scope refers to the geographical level of the crisis, with two extremes local

and worldwide. On the other hand, the depth is represented by the vertical axis

(Figure 1) and describes how serious is the effect of a crisis to available income and

consumer confidence.

Figure 1: “Relation Between Type of Crisis and Individual Consumer Reactions” (Bronner & de Hoog, 2012)

Each quadrant reflects different consumer decisions that are taking place, influenced

primarily by income and consumer confidence and the geographical location of the

crisis. According to Bronner & de Hoog (2012), in Quadrant A it is expected the

substitution of the product or service with another alternative, due to local turbulences

and moderate effects of the crisis to income and consumer confidence. The authors

proposed the example of political instabilities in African countries that made these

countries unappealing to tourists. As a consequence, tourists substituted these

locations with other places with similar characteristics. In Quadrant B, which is again

characterized by moderate effects to income and confidence, but there is a global

range of crisis, it is suggested that consumers will economize on specific properties of

the product or service (Van Raaij and Eilander, 1983). As far as Quadrant C is

concerned, it is clear that the worldwide scale and the very deep effects on consumer

confidence and income will test consumers’ ability to continue the product use. As a

31

result, consumers mostly discontinue the product use, a strategy referred as “pruning”.

Finally, Quadrant D illustrates the local nature and the deep effects of the economic

or political instability. In this quadrant, consumers economize substantially, however,

they must not be confused with consumers who just stop using a product or service.

The reason is that, even though they cut expenses significantly, their consuming

behavior incorporates some minor product/service use.

In the chapter concerning the economic situation in both Greece and the Netherlands,

it was hypothesized that consumer confidence will be higher in the Netherlands than

in Greece. Based on the theory of Bronner and de Hoog (2012) presented above, we

conclude that Greek consumers are making purchasing decisions located in the

Quadrant C because of the worldwide economic crisis which is affecting the entire

Eurozone and the serious effects on consumer confidence. It is thus expected that

Greek consumers will prefer to stop the use of those products they used than

economizing on certain aspects. On the other hand, the Netherlands, which is also a

crisis-hit country of the Eurozone, is expected to have considerable higher values in

terms of consumer confidence. As a result, consumers in the Netherlands are expected

to be located in Quadrant B, engaging more economizing than just discontinuing the

use of the products they used in the past.

From the previous argumentation the following hypotheses can be proposed:

H3: Consumers with higher levels of confidence are not expected to stop their product

use and are more likely to employ economizing tactics.

H3, a: Dutch consumers are more likely to employ economizing tactics than stop the

product use.

News, Media and Consumer Confidence

Nowadays, people are overwhelmed by many types of media and use them for

multiple purposes. The most important role of the media is to inform people about

significant events that occur in the society. This chapter examines the effect of news

on consumer confidence and the previous literature that explains how the evaluations

of consumers regarding the economic conditions change due to exposure to news.

32

Mueller (1963), was one of the first in the literature of consumer confidence who

connected the news with the expectations, stating: “Expectations are not merely a

projection of recent trends but are influenced by current perceptions and news

received”.

Fan (1988), Fan & Tims (1989) and Fan & McAvoy (1989) argued that the

ideodynamic modeling is a mathematical tool that enables researchers to forecast the

changes in public opinion after analyzing information extracted from the mass media.

Fan & Tims (1989) found that the analysis of the news from Associated Press could

help to forecast the attitudes of citizens regarding the presidential elections. Similar

findings were derived from Fan & McAvoy (1989) regarding public perceptions on

the proliferation of AIDS in the late 80’s and their linkage to information campaigns.

Tims el al. (1989) in their study “The cultivation of consumer confidence” proposed

that positive and negative news can have a significant effect on consumer sentiment.

More specifically, they mention that based on the ideodynamic model “news

messages only influence opposing sentiments”. For example, people who hold

optimistic and positive attitudes will only be affected by negative news and not by

positive sources of information.

Alsem et al. (2008) and Hollanders & Vliegenthart (2011) concentrated their research

in the Netherlands and found that there is a considerable impact of negative news

from newspapers to consumer sentiment. According to Soroka (2006), “Public

responses to negative economic information are much greater than are public

responses to positive economic information”. Additionally, Vuchelen (1995)

conducted his study in Belgium and examined how political events create different

types of news. Moreover, he proposed that these news affect consumer confidence

significantly.

Going a step further, Hollanders & Vliegenhart (2011) found that the effect of

negative news to consumers’ perceptions can be formed differently depending on the

structure of the economic crises. More specifically, they state that in occasions that

affect the economy indirectly, such as a natural disaster, the effect of negative news is

less powerful than in a sovereign debt crisis that is directly connected with the

economy itself. Finally, Blood and Philips (1995), apart from supporting the fact that

33

negative news have a considerable effect on consumer confidence, suggest that there

may be an opposite effect from consumer confidence to the economic news.

The theories explained earlier, and more specifically the study of Tims el al. (1989),

which proposes that “news only influence opposing sentiments”, provides us with the

theoretical grounds to postulate that the effects of negative economic news will be

higher in countries with higher consumer confidence levels. As a result, the following

hypotheses can be proposed:

H4: The effect of negative economic news on consumer confidence will be higher in

the Netherlands than in Greece.

H5: Under negative economic news consumer confidence will be lower compared to

without negative economic news.

It is expected that even in the condition that consumers are exposed in negative

economic news, some of them will have higher levels of confidence. As a result, those

who will have higher levels of confidence (under negative economic news) will be in

Quadrant B according to the model of Bronner and de Hoog (2012) and will prefer to

economize than stop the product use. Based on this argument it is hypothesized that:

H6: Under negative economic news, consumers with high levels of confidence are not

expected to stop the product use and are more likely to employ economizing tactics.

De Fleur & Rokeach (1982) stated that, when the media influence consumer’s

perceptions of the personal and national economic conditions by creating feelings of

fear about the future economic situation, people may stop the purchase of

automobiles, foods and other products that they previously bought. Furthermore, Van

Raaij (1989) claimed that: “in a climate of positive attitudes and optimistic

expectations people will be more likely to spend than in a climate of negative attitudes

and pessimistic expectations”.

As a result, consumers who are exposed to negative economic news compared to

those without negative economic news will have lower levels of confidence. Based on

34

the framework of Bronner and de Hoog (2012), it is anticipated that under negative

economic news consumers will move towards the Quadrant C and stop the product

use. It is therefore expected that:

H7: Under negative economic news, consumers are more likely to stop the product use

compared to without negative economic news.

Again, considering the theory of Bronner and de Hoog (2012) it is anticipated that

Dutch consumers will have lower confidence levels under negative economic news.

As a result, we expect them to move from Quadrant B (product economizing) to

Quadrant C (stop product use). Consequently, it can be proposed that:

H7, a: Under negative economic news, it is expected that Dutch consumers will be

more likely to stop the product use compared to without negative economic news.

35

Conceptual Model

Consumer Confidence

Consumer Confidence

Consumer Behavior

Consumer Behavior

NL/GR

NL/GRH5

H1

H3

H3a

H6

H7a

H7

No news

Negative news

H2

H4

36

Chapter 3: Methodology

The aim of this chapter is to analyze the research methodology that was used in order

to assess the hypotheses that were proposed in the previous chapter. More

specifically, the research design will be thoroughly analyzed in addition to the

questionnaire design and the statistical methods that will be utilized in this research.

3.1 Research design

The quantitative methodology was chosen as an ideal approach in order to answer to

questions such as “how much, how often, how many, when, and who” (Cooper &

Schindler, 2014). This study measures and calculates specific variables using

quantitative data, which according to Coolican (2014) are measurements that use

numbers.

In general, the other dimension of the research design consists of three main types:

exploratory, descriptive and explanatory. In this study the main focus is on the

explanatory element because its purpose is to illustrate how Greek and Dutch

consumers make purchasing decisions depending on their consumer confidence and

under the influence of negative economic news. According to Cooper & Schindler

(2014), the explanatory study aims to “explain the reasons for the phenomenon that

the descriptive study only observed”. In this case, we don’t only want to know how

consumer decisions change between Greece and the Netherlands, but how these

changes are connected with consumer confidence and the negative news.

3.2 Data collection method

For this study a survey is considered as the most suitable data collection method. The

use of surveys in research occurs when we want to effectively “derive comparable

data across subsets of the chosen sample so that similarities and differences can be

found” (Cooper & Schindler, 2014). More specifically, the large number of necessary

respondents and the geographical distance between Greece and the Netherlands made

the use of an online survey inevitable. The online survey software that was used in

order to design and distribute the questionnaire was “Qualtrics”.

37

3.3 Experimental Design

In this thesis a between-subjects, or alternatively independent groups design, was

used. According to Cozby & Bates (2011), “in an independent groups design,

different participants are assigned to each of the conditions using random

assignment”.

The selection of this design is justified because the main purpose of this thesis is to

observe the differences between two groups: Greek and Dutch consumers.

Participants are assigned randomly to each of the two conditions, which are in this

thesis the negative economic news.

Table 3.1 Experimental Design2 x 2 Between

Subjects Design

Negative Economic News No News

Greece Greece - Negative

economic news

Greece – No news

The Netherlands The Netherlands –

Negative economic news

The Netherlands –

No news

3.4 Survey design

In order to construct the survey three main scales were used, in addition to a

hypothetical scenario, which served the purpose of examining the effect of negative

news on consumer confidence.

First of all, the questionnaire started with a question asking whether the respondent is

a permanent resident of the Netherlands or of Greece. This question was used because

it is assumed that permanent residents of a country are consequently consumers of this

country.

Scenario

As far as the hypothetical scenario is concerned, it was taken from “The New York

Times” website and more specifically from the Global Business section. The use of a

38

real economic crisis report was employed in order to be more professional and appear

as more realistic. The hypothetical scenario appeared in half of the respondents

randomly and also appeared evenly in terms of the country of residence of the

respondents. As a result half of Greek residents read the scenario and half of them

didn’t. The same was done for Dutch residents.

Consumer Confidence

The first scale that was used is the Index of Consumer Sentiment (ICS), which is -as

mentioned in the theory chapter- a measure used by the University of Michigan in

order to extract the consumers’ attitudes regarding the current and future economic

conditions. It uses a three-point ordinal scale with responses such as “good times

/uncertain, depends/bad times” and “better/same/worse”.

In general, the ICS as index is calculated as the sum of the favorable minus the

unfavorable replies plus 100, for each of the items. Afterwards, this number is divided

to the 1966 baseline total and then to the outcome of this calculation we add 2.

However, the scope of this study is not to compare consumers’ attitudes through time

but to understand how confidence affects consumer behavior currently. As a result,

there was no comparison with consumer sentiment levels from previous months or

years. If this was the case, the published figures of the ICS could be utilized. Instead,

this thesis aims to understand the influence of consumer confidence at the individual

level at the time the questionnaire was distributed. Consequently, the calculation of

this measure was executed by summing up the responses of consumers as in any scale.

Consumer Behavior

Furthermore, the construct that was used to measure consumer behavior was the

model from Bronner and De Hoog (2012), which incorporated the model of Van Raaij

and Eilander (1983). The presentation of this construct is executed by presenting the

dichotomous selection of “economize on certain aspects” and “stop the consumption”

on five different products or services. These products/services are: eating at

restaurants, buying two pairs of winter shoes, consuming fresh orange juices, going to

vacation and buying a car. The intention behind the selection of these consumer

options was to include products or services that are in different levels of essential and

non-essential products. In terms of operationalization of the specific element of the

39

dichotomous selection that was mentioned earlier, those respondents who select the

option “stop the consumption” are directed to the next question and those who select

“economize on certain aspects” receive a list of eight product or service

economization options based on the model of Van Raaij and Eilander (1983). These

economizing tactics were selected as four sets of two tactics per set. These sets

represent the price, quantity, quality and lifestyle tactics (explained in detail in the

theory chapter). A six-point Likert scale was used to capture consumers’ attitudes

regarding the possible economization of each product. Finally, after each

product/service attitudes questions was asked, an item asking whether the respondent

perceives the product as a necessity or not was used.

Coping Strategies

In order to gain some more in depth understanding of how consumers are affected

from the recession, the scale of “Coping strategies with the crisis” from Kaytaz & Gul

(2014) was added. Some items were excluded from the scale because there were

considered not relevant with the sample that we would take. In this scale three items

were added from the similar scale “Impact of crisis on consumers” from Ang (2001)

where there was a comparison of the Singaporean crisis with other crises. Moreover,

two items, regarding the local or global brands preference and the willingness to go to

a cheaper store despite the distance, were incorporated.

Demographics

In the end of the survey some demographic questions were asked regarding the

gender, age, nationality, salary, extra income, education level, working situation and

living status. Finally, three questions closed the survey and asked questions regarding

the debts, the perception of the respondent regarding his/her optimism or pessimism

and whether the crisis affected his/her employment conditions.

40

Table 3.2: Overview of the Scales used

Construct/Variable Source Scale Scale Type

Consumer Confidence

Survey Research Center -

University of Michigan

Q1: Do you think now is a good or bad time for people to buy major household items?Q2: Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?Q3: Now turning to business conditions in the country as a whole—do you think that during the next twelve months, we’ll have good times financially or bad times or what?Q4: Looking ahead, which would you say is more likely—that in the country as a whole we’ll have continuous good times during the next five years or so or that we’ll have periods of widespread unemployment or depression, or what?Q5: Now looking ahead—do you think that a year from now, you (and your family living there) will be better off financially, or worse off, or just about the same as now?

Ordinal Scale (3 points)

“good times /uncertain,

depends/bad times”

and “better/sam

e/worse”

Economizing on: “eating at restaurants”, “Purchasing 2 pairs of winter shoes”, “Consuming fresh orange juice”, “Going to vacations”, “Purchasing a new car”

Van Raaij and Eilander (1983)

Q1: Choosing less expensive dishesQ2: Visiting restaurants with promotionsQ3: Making smaller orders Q4: Reducing restaurant visitsQ5: Going to lower food quality restaurants (ex. Fast food)Q6: Going to self service restaurants (lower service quality)Q7: Meeting with friends and share cooking costsQ8: Cooking at home

Six point Likert Scale-

Interval Data

Coping Strategies with

the crisis

Kaytaz & Gul (2014), Ang

(2001)

Q1: I argue more about financial matters.Q2: I find it harder to make ends meet.Q3:I must work harder to be able to afford my present way of life.Q4:I decreased the amount of food consumption.Q5:I replaced the consumption of expensive food items with cheaper ones.Q6:I prefer to buy local brands instead of global brands.Q7:I replaced the purchase of expensive non-food products with cheaper ones.Q8:I prefer to buy my groceries from a cheaper store despite it is not the closest to my house.Q9:I started to buy second hand items.Q10:I decreased the use of entertainment services.Q11:I decreased the frequency of meeting with

3 points“Yes, No,

Not Applicable”

41

friends.Q12:I withdrew or postponed the admission of children to a school, college or kindergarden.Q13:I dropped from language, computing, and similar courses.Q14:I reduced the visits to the doctor for preventive medical control.Q15:I reduced sports activities.

Consumer Behavior

Bronner & de Hoog (2012)

Q1: Stop consuming the productQ2: Economize on certain aspects Binary

3.4 Sampling method

In this research the use of non-probability sampling is preferred mainly for practical

reasons. More specifically, the purposive sampling approach was employed.

According to Cozby & Bates (2011), in purposive sampling, “the aim is to obtain a

sample of people who meet some predetermined criterion”. The purpose of this

research is to extract differences between Greek and Dutch consumers. As a

consequence, the need for a careful selection of respondents was necessary in order to

find the right sample. The main distribution of the online survey was executed by

posting the hyperlink from Qualtrics in Facebook groups and by sending it through

emails. In the latter stages, when there was a need for some Dutch respondents, the

survey was distributed to Dutch students in the Erasmus University area.

3.5 Reliability test

The most commonly used measure of reliability is the Cronbach’s alpha and measures

the internal consistency of a multi-item scale (Cooper & Schindler, 2014). In this

study the only multi-item scale is the “Coping Strategies with the crisis, as a result a

reliability test will be conducted. For the scale “Coping strategies” the value of

Cronbach’s alpha was .850 indicating that this scale has good internal consistency.

42

3.6 Main variables used in analyses

Independent variables

X1: Dummy variable, which denotes the country of residence, 1 = the Netherlands and

0 = Greece

X2: Dummy variable, which denotes the existence of negative economic news, 1 =

negative news and 0 = no news

X3: Continuous variable income

X4: Continuous variable consumer confidence

X5: Dummy variable, whether the consumer perceives the product as a necessity or

not

Dependent variables

Y1: Continuous variable consumer confidence

Y2: Binary variable, which denotes the economizing or stop the product use condition,

1 = economizing and 0 = stop the product use

3.7 Hypotheses Testing

H1, H4, H5: Multiple Regression

Hypotheses H1, H4, H5 will be mainly tested using a multiple regression in order to

determine the significance and the direction of the effect of the independent variables

to the dependent variable. However, additional t-tests will be conducted for

hypotheses H1 and H5 to compare the means between groups.

The regression model is following:

Y1=bo+b1X1+b2X2+b3 (X1*X2) + error

b1 should be significant and positive to support H1

b2 should be significant and negative to support H5

43

b3 should be significant and positive to support H4

H2: Independent Samples t-test

Comparison variable: continuous variable “coping strategies” [Kaytaz & Gul (2014),

Ang (2001)]

Independent variable: categorical variable “country of residence”

In order to confirm H2, the following must be true:

Mean (Coping strategies, Greece) > Mean (Coping strategies, the Netherlands)

H3, H3a, H6, H7, H7a: Five Logistic Regressions

Hypotheses H3, H3a, H6, H7 and H7a will be tested through the same five logistic

regressions (one for each product), in order to determine the significance and the

direction of the effect of the independent variables to the dependent variable. In this

case the dependent variable is the binary variable, which indicates whether the

consumer decided to economize, or not. The fact that this variable is categorical

makes it necessary to use logistic regression. Finally, a dummy variable, which

denotes whether the consumer perceives this product as a necessity, was added to the

model in order to gain more insights about consumers’ decisions.

The logistic regression model is the following:

Y2=bo+b1X1+b2X2+b3X3+ b4X4+ b5 X5+ b6 (X3*X4)+ b7 (X2*X4)+ b8 (X1*X2) + error

b1 should be significant and positive to support H3a

b2 should be significant and negative to support H7

b4 should be significant and positive to support H3

b7 should be significant and positive to support H6

b8 should be significant and negative to support H7a

44

Chapter 4: Results

4.1 Descriptive Statistics

The data collection lasted for 10 days and 218 total responses were collected.

Unfortunately, 8 of them were uncompleted and had a large number of missing values

and consequently could not be included into the survey. As a result, the remaining 210

observations constitute the data that can be further used in the analyses.

Demographics

As mentioned earlier, the main objective of this research is to understand the

differences between Dutch and Greek consumers. After conducting the data

collection, the amount of Greek and Dutch consumers was 118 and 92 respectively.

This means that 56.2 percent were Greek consumers and 43.8 percent were Dutch

consumers.

Men are representing the 48.1% of the sample whereas the percentage of women is

51.9%. As a result, the sample is almost equally weighted in terms of gender. As far

as the age is concerned, the minimum age is 21 and the maximum 69, with a mean

score of 32.09. Most respondents were between the age of 25 and 30. This is an

indication that the participants are most of them of considerable high age and life

independent in order to make purchasing decisions.

Some other insights can be extracted from the demographic questions such as the

working situation of all the respondents. Of the 118 Greek respondents, 46% of them

had a regular full-time job whereas the 29% of them was self-employed. On the other

hand, in the Netherlands, 72% of the participants had a regular full time job, 14% was

unemployed and there were no respondents with pension as an income. The

following pie charts illustrate the working situation of the respondents:

45

Figure 4.1: Pie chart for Greek consumers

7%

29%

46%

8%

10%Pension

Self-employed

Regular paid job

Part-time job

Unemployed

Figure 4.2: Pie chart for Dutch consumers5%

72%

9%

14%Pension

Self-employed

Regular paid Job

Part-Time job

Unemployed

Finally, the following bar graph depicts how the respondents’ income is allocated

between Greece and the Netherlands. The conclusion from the interpretation of this

bar graph is that the average income is much higher for Dutch consumers than that of

Greek consumers.

Figure 4.3: Average income of Greek and Dutch consumers

46

4.2 Hypotheses Results

Hypotheses H1, H4, H5

As explained in the methodology chapter, a standard multiple regression analysis was

conducted so as to test hypotheses H1, H4 and H5. In this model the R Square value is

equal to .220, which means that this model explains 22 per cent of the dependent

variable, which is consumer confidence (Table 7.2). Furthermore, the model is

statistically significant (F=19.381, P=. 000<. 05), and as a consequence, the null

hypothesis is rejected. Finally, there is not a presence of multicollinearity as it can be

observed from the VIF values, which are all smaller than 10.

As it can be understood in the Coefficients table below, the standardized beta

coefficient for the variable country (.538) makes the strongest unique contribution

among the variables of the model. Furthermore, the only significant coefficient in this

model is that of variable country, with a significance level of P=. 000<0.05. The other

variables “dummy_scenario” and “int_news_country” are insignificant with P

values .809 and .144 respectively. From the previously mentioned findings and

understanding that the unstandardized beta coefficient is positive and significant

(2.768), it is understood that consumer confidence in the Netherlands will be

significantly higher in than in Greece.

As a result, the model equation can be written as follows:

Y1 = 5.740 + 2.768X1

Coefficientsa

Model Unstandardized Coefficients

Standardized

Coefficients

t Sig. 95.0% Confidence

Interval for B

Correlations Collinearity Statistics

B Std. Error Beta Lower Bound

Upper Bound

Zero-order

Partial

Part Tolerance

VIF

1

(Constant) 5.740 .680 8.444 .000 4.400 7.081Country 2.768 .445 .538 6.216 .000 1.890 3.646 .449 .397 .382 .506 1.976Dummy_Scenario

-.102 .419 -.020 -.243 .809 -.928 .725 -.105 -.017 -.015 .562 1.779

int_news_country

-.930 .634 -.149 -1.468 .144 -2.180 .319 .158 -.102 -.090 .365 2.737

a. Dependent Variable: total_confidence

47

Table 4.1 Testing of Hypotheses H1, H4, and H5

Hypothesis 1

Consumer confidence will be higher in the Netherlands than in Greece.

As mentioned earlier, the coefficient of the variable denoting the country of residence

of the consumer is significant and positive. Furthermore, this conclusion can be

enhanced by the t-test that was conducted and showed that there is a significant

difference between Greek (M=8.4576, SD=2.54748) and Dutch [M=10.7717, SD:

1.91640; t (208)= -7.257] consumers in terms of consumer confidence (Table 7.3).

Finally, the Eta square value=0,213 shows that the magnitude of the differences in the

means is very big (Cohen, 2013). As a consequence, this hypothesis is confirmed.

Hypothesis 4

The effect of negative economic news on consumer confidence will be higher in the

Netherlands than in Greece.

From the Table 4.1, it is understood that the coefficient of the interaction between

negative economic news and country is not significant. As a result, Hypothesis 4 is

rejected.

A t-test (Table 7.4) was also conducted in order to find the levels of consumer

confidence under negative economic news. The levels of consumer confidence with

and without negative economic news are illustrated in the table below:

Table 4.2: Consumer confidence for Greek and Dutch consumers

Consumer Confidence Means, SD

The Netherlands - No news M=10.7717, SD= 1.91640

The Netherlands – Negative economic news

M=10.2444, SD= 1.93244

Greece – No news M=8.4576, SD= 2.54748

Greece – Negative economic news M=8.4068, SD= 2.51971

48

Hypothesis 5

Under negative economic news consumer confidence will be lower compared to

without negative economic news.

As it was found in the previous hypothesis, the coefficient of the existence of negative

scenario is not significant. This finding is enhanced by the t-test, which showed that

there is not a statistically significant difference in the mean consumer confidence

score under negative economic news (M=9.2019, SD=2.45099, t (208)= -1.515), and

without negative economic news (M=9.7358, SD= 2.64864, t (207.295)=-1.517), even

if under negative economic news is slightly lower (Table 7.5). From all the above

observations, it can be concluded that this hypothesis cannot be confirmed.

Hypothesis 2

Due to the economic crisis, Greek consumers will adjust more their coping strategies

in comparison to Dutch consumers.

Hypothesis 2 will be tested using an independent samples t-test. The aim of this

hypothesis is to determine the differences in the means between Greek and Dutch

consumers, in terms of coping strategies. In order to operate the t-test the dependent

continuous variable “coping strategies” is used and the categorical independent

indicating the country of residence of the consumer. It was found that there is a

significant difference in scores for Greek consumers (M= 7.40, SD= 2.72) and Dutch

consumers [(M= 3.10, SD= 2.32, t (208) = 12.803, p= .000] (Table 7.6). The magnitude

of the differences in the means is high (eta squared= 0.41). As a result, Hypothesis 2 is

confirmed.

In the Table 4.3 it is illustrated that more Greek consumers adjusted their habits due to

the economic crisis. The more adjustments from Greek consumers were that they had to

work more to be able to afford their way of life (83,7%), replaced expensive non food

products with cheaper ones (78,8%), decreased the use of entertainment services

(78,3%) and preferred Greek brands instead of international brands (76,6%), argued

more about financial matters and found it hard to make ends meet. On the other hand,

49

Dutch consumers made much smaller adjustments in general. They argued more about

financial matters (50%), replaced the consumption of expensive food items with cheaper

ones (39,3%), preferred local brands instead of global brands (38,6%) and decreased the

use of entertainment services. Finally, consumers from both countries didn’t prefer

second hand items having almost the same percentage (11,5%).

Table 4.3: Coping strategies with the crisis

Changing or adapting habits (%) Greece The Netherlands

I argue more about financial matters. 77,6% 50%

I find it harder to make ends meet. 77,1% 18,4%

I must work harder to be able to afford my present way of life. 83,7% 30,4%

I decreased the amount of food consumption. 29,9% 4,4%

I replaced the consumption of expensive food items with cheaper ones. 64,6% 39,3%

I prefer to buy local brands instead of global brands. 76,6% 38,6%

I replaced the purchase of expensive non-food products with cheaper ones. 78,8% 34,4%

I prefer to buy my groceries from a cheaper store despite it is not the closest to my house. 59,8% 28,3%

I started to buy second hand items. 11,5% 11,4%

I decreased the use of entertainment services. 78,3% 36%

I decreased the frequency of meeting with friends. 36,2% 6,6%

I withdrew or postponed the admission of children to a school, college or kindergarten. 16,3% 2,5%

I dropped from language, computing and similar courses. 24,7% 9,8%

I reduced the visits to the doctor for preventive medical control. 46,4% 8,2%

I reduced sports activities. 42,1% 4,5%

Hypotheses H3, H3a, H6, H7, H7a

In order to test hypotheses H3, H3a, H6, H7 and H7a five logistic regressions will be

50

conducted (for each product category), in order to test the effect of the independent

variables to the binary dependent. The binary dependent variable indicates whether

the consumer decided to economize or not.

Logistic regression for Restaurant

The logistic regression for the product category “restaurants” indicates that based on

the Hosmer & Lemeshow test, which according to Pallant (2010) is “the most reliable

test of model fit”, the model is worthwhile (sig. value=. 809 >.05) with a chi-square

value of 4.505 (Table 7.7). As far as the coefficients are concerned, the effect of

country [exp(1.141)=3.130, p-value=.032], the interaction effect of news and

confidence [exp(.307)=1.359,p-value=.028], the interaction effect of news and

country [exp(-1.513)=.220,p-value=.032] and the dummy variable denoting whether a

product is perceived as a necessity or not [exp(1.494)= 1.000, p-value=.001), are

significant. All other variables are not significant. The effect of country has a positive

direction, meaning that Dutch consumers relative to Greek are more likely to

economize on restaurants instead of stop going to restaurants. As a result, a 64,1% of

Dutch consumers decided to economize on eating to restaurants and a 35,9% intended

to stop going to restaurants, whereas a smaller percentage of Greek consumers

(54,2%) decided to economize on restaurants and a larger percentage (45,8%)

compared to Dutch consumers decided to stop the product use. Furthermore, the

interaction effect of news and confidence has a positive direction, which means that

consumers of higher confidence levels and exposed to negative economic news are

more likely to economize compared to those who are not exposed to news. The

dummy variable denoting the perceived necessity is also positive, meaning that,

consumers who perceive “restaurants” as necessity are more likely to economize on

restaurants. Finally, Dutch consumers relative to Greek ones, when they are exposed

to negative news are more likely to stop going to restaurants than economizing.

Variables in the EquationB S.E. Wald df Sig. Exp(B) 95% C.I. for EXP(B)

Lower UpperStep 1a

dummy_country(1) 1.141 .532 4.591 1 .032 3.130 1.102 8.886Dummy_Scenario(1) -1.623 1.207 1.807 1 .179 .197 .019 2.103cont_income .000 .001 .007 1 .934 1.000 .998 1.002total_confidence -.062 .137 .202 1 .653 .940 .718 1.230int_income_confidence .000 .000 .012 1 .914 1.000 1.000 1.000int_news_confidence .307 .140 4.815 1 .028 1.359 1.033 1.788

51

int_news_country(1) -1.513 .706 4.585 1 .032 .220 .055 .880necessity_rest_total 1.494 .460 10.545 1 .001 4.453 1.808 10.969Constant -.037 1.273 .001 1 .977 .964

Table 4.4: Logistic regression for restaurant

Logistic regression for Shoes

For the logistic regression for the product category “shoes” it is similarly observed

that the model is of a good fit, with sig value=. 474 > .05 and chi-square=7.594 (Table

7.8). The coefficients that are significant are the country of residence of the consumer

[exp(-1.423)=.241, p-value=.021] and the variable indicating if the product was

perceived as a necessity or not [exp (1.398)=4.048, p-value=.000]. The direction of

the coefficient of country variable is this time negative indicating that Dutch

consumers compared to Greek consumers are more likely to stop purchasing shoes. In

other words, Greek consumers economized more than Dutch consumers. Furthermore,

those consumers who perceived shoes as a necessity are more likely to economize on

purchasing shoes. In this case, the percentage of Greek consumers who decided to

economize on shoes was 74,67% and those who stopped the product use was 25,4%.

On the other hand, the percentage of Dutch consumers who intended to economize on

shoes was 67,4% and those who discontinued the product use were 32,6% (Table

7.13).

Variables in the EquationB S.E. Wald df Sig. Exp(B) 95% C.I.for

EXP(B)Lower Upper

Step 1a

dummy_country(1) -1.423 .617 5.316 1 .021 .241 .072 .808Dummy_Scenario(1) -1.154 1.331 .751 1 .386 .315 .023 4.285cont_income .001 .001 .954 1 .329 1.001 .999 1.003total_confidence .128 .147 .750 1 .387 1.136 .851 1.516int_income_confidence .000 .000 .306 1 .580 1.000 1.000 1.000int_news_confidence .118 .153 .589 1 .443 1.125 .833 1.518int_news_country(1) .955 .771 1.535 1 .215 2.598 .574 11.767nec_shoes_total(1) 1.398 .354 15.631 1 .000 4.048 2.024 8.097Constant -1.359 1.399 .943 1 .331 .257

Table 4.5: Logistic regression for Shoes

Logistic Regression for Juice

The logistic model is again significant (sig value=. 640>.05, chi-square value =6.061)

(Table 7.9). The only significant coefficient is that of the necessity dummy variable

[exp (3.564)= 35.293, p-value=. 000], which means that consumers who perceive the

52

product juice as a necessity are 35.293 times more likely to economize on juice.

Furthermore, at the significance level of 0.1 it can be found that the coefficients for

the country variable [exp (-1.672)= .188, p-value=. 066<0.1] are negative. This means

that Dutch consumers compared to Greek consumers, are more likely to stop the

consumption of juice than to economize. As a result, Greek consumers relative to

Dutch preferred more to economize on Juice than discontinue the product use.

To better explain the above results, 88,1% of Greek consumers decided to economize

on the purchase of Juice, whereas 11,9% decided to stop the purchase of juice. The

Dutch consumers who preferred to economize on juice were a much lower percentage

(58,7%) compared to Greek consumers. The percentage of Dutch consumers who

decided to stop the purchase of juice was 41,3% (Table 7.14).

Variables in the EquationB S.E. Wald df Sig. Exp(B) 95% C.I.for

EXP(B)Lower Upper

Step 1a

dummy_country(1) -1.672 .908 3.390 1 .066 .188 .032 1.114Dummy_Scenario(1) -2.406 1.838 1.714 1 .190 .090 .002 3.307cont_income -.002 .001 2.440 1 .118 .998 .995 1.001total_confidence -.176 .216 .668 1 .414 .838 .549 1.279int_income_confidence .000 .000 2.293 1 .130 1.000 1.000 1.000int_news_confidence .103 .202 .261 1 .609 1.109 .746 1.648int_news_country(1) 1.659 1.073 2.392 1 .122 5.253 .642 42.987nec_juice_total(1) 3.564 .666 28.611 1 .000 35.293 9.563 130.256Constant 3.256 2.085 2.440 1 .118 25.953

Table 4.6: Logistic regression for juice

Logistic Regression for Vacation

For the logistic regression of the product category “vacation” the Hosmer and

Lemeshow test (Table 7.10) suggests that the model has a high goodness of fit (sig

value=. 906>.05, chi-square= 3.408). Furthermore, the only significant coefficient is

that of the necessity variable [exp (2.022)= 7.552,p-value=. 000], which also has a

positive direction. This means that consumers who perceive vacation as a necessity

are more likely to economize on vacations. If we set a higher significance level of 0.1

we can observe that the country coefficient [exp (1.103)=3.012, p-value=. 056<0.1] is

positive, implying that Dutch consumers are more likely to economize on vacations

compared to Greek consumers. As with the Restaurant category, the percentage of

53

Dutch consumers who decided to economize on vacation (73,9%) is much higher than

that of Greek consumers (59,3%). On the other hand, more Greek consumers

preferred to stop the product use (40,7%) in comparison to Dutch consumers (26,1%)

(Table 7.15).

Variables in the EquationB S.E. Wald df Sig. Exp(B) 95% C.I.for

EXP(B)Lower Upper

Step 1a

dummy_country(1) 1.103 .576 3.659 1 .056 3.012 .973 9.323Dummy_Scenario(1) -.390 1.272 .094 1 .759 .677 .056 8.184cont_income -.001 .001 .360 1 .548 .999 .997 1.001total_confidence -.096 .146 .433 1 .511 .908 .682 1.210int_income_confidence .000 .000 .234 1 .629 1.000 1.000 1.000int_news_confidence .049 .141 .122 1 .727 1.050 .797 1.385int_news_country(1) -.201 .736 .075 1 .784 .818 .193 3.457nec_vacation_total(1) 2.022 .363 30.950 1 .000 7.552 3.704 15.395Constant -.084 1.343 .004 1 .950 .919

Table 4.7: Logistic regression for vacation

Logistic Regression for Car

For the logistic regression of the product category “car” is again found that the model

is worthwhile, with sig value=. 381>0.05 and chi-square=8.561 (Table 7.11). As far as

the coefficients are concerned, it is observed that only the coefficient denoting

whether the product is regarded as a necessity [exp(2.605)=13.526, p-value=0.000) is

significant. Moreover, it has a positive direction, which means that consumers who

perceive cars as a necessity are more likely to economize on cars than stop buying

cars.

Variables in the EquationB S.E. Wald df Sig. Exp(B) 95% C.I.for

EXP(B)Lower Upper

Step 1a

dummy_country(1) .735 .600 1.504 1 .220 2.086 .644 6.756Dummy_Scenario(1) 1.722 1.410 1.491 1 .222 5.595 .353 88.758cont_income .000 .001 .049 1 .825 1.000 .998 1.002total_confidence .166 .154 1.160 1 .281 1.181 .873 1.597int_income_confidence .000 .000 .120 1 .729 1.000 1.000 1.000int_news_confidence -.242 .156 2.422 1 .120 .785 .579 1.065int_news_country(1) .233 .777 .090 1 .764 1.262 .275 5.792nec_car_total(1) 2.605 .385 45.775 1 .000 13.526 6.360 28.766Constant -3.040 1.504 4.086 1 .043 .048

Table 4.8: Logistic regression for car

54

Hypothesis H3

Consumers with higher levels of confidence are not expected to stop their product use

and are more likely to employ economizing tactics.

In order for the hypothesis to be supported the coefficient denoting the confidence of

consumers must be significant and positive. This hypothesis is not supported for all

the product categories, as all of them are not significant.

Hypothesis H3a

Dutch consumers are more likely to employ economizing tactics than stop the product

use.

This hypothesis will be supported if the coefficient indicating the country of residence

of the consumers is significant and positive. This hypothesis is accepted only for the

product category “restaurants” and “vacation”, while for “shoes” and “juice” is

significant, but to the opposite direction. For the other product categories the

hypothesis is rejected while the coefficients are not significant.

Hypothesis H6

Under negative economic news, consumers with higher levels of confidence are not

expected to stop their product use and are more likely to employ economizing tactics.

In order for the hypothesis 6 to be accepted the coefficient denoting the interaction of

news and confidence must be significant and positive. In this case, it is accepted only

for the product category restaurant which significant and positive. For all the other

categories, the coefficient is not significant and as a consequence the hypothesis is

rejected.

Hypothesis H7

Under negative economic news, consumers are more likely to stop the product use

55

compared to without negative economic news.

The condition for this hypothesis to be supported is that the coefficient of the variable

indicating the existence of news must be significant and negative. This hypothesis is

rejected for all product categories, while the coefficients are all not significant.

Hypothesis H7a

Under negative economic news, it is expected that Dutch consumers will be more

likely to stop the product use compared to without negative economic news.

The condition for this hypothesis to be supported is that the coefficient of the variable

indicating the interaction of negative economic news and the country of residence

must be significant and negative. This hypothesis is only supported for the product

category “restaurants”, while the coefficient is significant and negative. For the other

product categories this hypothesis is rejected because the coefficient is not significant.

4.3 Additional results

Economizing tactics between countries and working situations

The question raised here is, whether there is a difference between Greek and Dutch

consumers across the different working situations of these consumers, in terms of

their scores on a variety of economizing tactics (price, quantity, quality and lifestyle).

In order to answer the above question a Multivariate Analysis of Variance

(MANOVA) was conducted with dependent variables the economizing decisions,

which are (as mentioned in the methodology chapter) categorized as four sets of two

decisions per product. These sets are denoting price, quantity, quality and lifestyle

economizing tactics (Van Raaij and Eilander, 1983). As a result the total

economization per tactic was computed and four (4) new variables were computed in

SPSS. These are Price, Quantity, Quality and Lifestyle. The maximum value per

variable is 60 and the minimum value is 0, where the consumer chose not to

economize at any product. The previously mentioned variables were entered in a

MANOVA analysis as dependent variables, whereas the working situation (five

levels) of the consumer and the country of residence, were the independent variables.

56

As far as the analysis is concerned, the sample was checked and was found that in

each cell the number of cases was higher than the number of dependent variables (4).

The sig value of Box’s test was higher than .001 meaning that the assumption of

homogeneity of variance- covariance matrices was not violated. The Levene’s test

was significant for the all the variables indicating that the equality of variance was

also not violated. Furthermore, it was checked that the homogeneity of variance-

covariance is not violated. The Wilks Lamda (.045) is significant only for the country

group, which means that there is a statistically significant difference between Dutch

and Greek in terms of the combined dependent variables of economizing tactics.

However, when the results were considered separately, there is no significant

difference in the between subject effects (sig values are higher than .05). However, at

the significance level of .1 the country variable can be significant for the Quantity

tactics.

From the mean section we can observe that Greek consumers employ higher lifestyle

tactics (M=22.953, SD=1.034), whereas Dutch consumers have lower values

(M=20.783, SD=1.393). The same pattern is observed for all other variables as Greek

consumers have higher scores. The biggest difference however, is observed in

Quantity tactics with Greek consumers having a mean of 29.635 (SD=1.281) whereas

Dutch consumers have lower scores (M=26.209, SD=1.726). This means that Greek

consumers have economized more on all aspects, however the differences are not

significant, except from the Quantity tactic where a considerable difference can be

observed at the .1 level.

In terms of the working situation of the consumers, it is indicated that the working

category “part-time” has the higher means in all economizing tactics except from the

Quality tactic. The higher values are found afterwards in the pension and self-

employed category. This implies that those who do not have a permanent-fulltime job

did economize the most. This argument is enhanced by the fact that those who worked

on a regular basis had the lower levels of economizing in each tactic. More

specifically, the economizing tactic “quality” was the one that had the least

economization from the regular paid consumers (M=18.990, SD=. 769).

Impact of employment uncertainty and country of residence on Coping strategies

57

A two-way ANOVA was conducted in order to explore whether there is a difference

in coping strategies for Greek and Dutch consumers, who have unstable employment

conditions due to the economic crisis. More specifically, there was an item in the

questionnaire asking: “Did you change a job or become unemployed because of the

current economic crisis?” As a result, it can be assumed that those who responded Yes

have unstable employment conditions. It is therefore interesting to investigate if there

are changes between Greek and Dutch consumers in terms of employment insecurity

during the recession. In order to conduct this testing, a two-way ANOVA with

dependent variable “Coping strategies” and independent variables employment

insecurity and country of residence, was utilized. The Sig level in Levene’s test was

equal to .296, and as a consequence, the homogeneity of variances assumption was

not violated. Afterwards, the interaction effect between the country of residence and

the employment uncertainty should be checked. The result is not significant [F

(1,180)=. 104, p-value=. 748>.05)], therefore the main effects can be safely

interpreted. The main effects of country and employment insecurity are significant

with values of F (1,180)=89.212, p-value=. 000<. 05 and F (1,180)=13.105, p-value=.

000<. 05 accordingly.

As a result, we can observe that those who became unemployed or changed their job

due to the economic downturn did higher adjustments to withstand the recession

(M=6.88,SD=3.12) compared to those who did not report employment changes

(M=4.95, SD=3.29). Furthermore, even if the interaction effect of country of

residence and employment uncertainty is not significant, we can observe that Dutch

consumers who had employment problems employed less coping adjustments

(M=4.5, SD=2.25) in relation to Greek consumers (M=8.48, SD=2.57).

58

Table 4.9: Summary of hypotheses results

Hypotheses Outcome

H1: Consumer confidence will be higher in the Netherlands than in Greece Supported

H2: Due to the economic crisis, Greek consumers will adjust more their

coping strategies in comparison to Dutch consumers. Supported

H3: Consumers with higher levels of confidence are not expected to stop

their product use and are more likely to employ economizing tactics.Not supported for all the

product categories

H3a: Dutch consumers are more likely to employ economizing tactics than

stop the product use.

Supported for

“Restaurants” and

“Vacation”

H4: The effect of negative economic news on consumer confidence will be

higher in the Netherlands than in Greece. Not supported

H5: Under negative economic news consumer confidence will be lower

compared to without negative economic news. Not supported

H6: Under negative economic news, consumers with higher levels of

confidence are not expected to stop their product use and are more likely to

employ economizing tactics.

Supported for

“Restaurants”

H7: Under negative economic news, consumers are more likely to stop the

product use compared to without negative economic news.Not supported for all the

product categories

H7a: Under negative economic news, it is expected that Dutch consumers

will be more likely to stop the product use compared to without negative

economic news.

Supported for

“Restaurants”

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Chapter 5: Conclusion

5.1 Conclusions and Discussions

This research reached to a number of conclusions regarding negative economic news,

consumer confidence and consumer behavior for Greek and Dutch consumers. Some

conclusions can also be derived for the product categories for which Dutch consumers

differentiate from Greek consumers in terms of the decision to economize or not.

Furthermore, an important aspect of this thesis is to observe how consumers can

structure their economizing tactics in relation to the country where they reside and

their employment status.

To begin with, it was observed that due to the better economic situation and the better

living conditions in the Netherlands compared to Greece, Dutch consumers have

higher confidence compared to the Greek ones. Moreover, Greek consumers adjusted

more their coping strategies compared to Dutch consumers, as it was expected. These

two findings highlight that consumers in Greece compared to Dutch ones are in a

more difficult condition, they realize it through the lower consumer confidence, and

take more considerable measures so as to withstand the difficulties.

Moreover, it was found that there is a significant impact of employment uncertainty

on the adjustments that consumers employed to cope with the economic crisis. It was

also found that Greek consumers who reported employment problems made more

coping adjustments compared to Dutch consumers who had the same problems. This

could also be attributed to the different economic conditions between Greece and in

the Netherlands, as Greek consumers who lose or change their job due to the crisis

may feel more insecure and adjust their strategies at a higher level compared to Dutch

consumers who may feel less insecure and believe that they will find another job or

overcome the problems with less adjustments.

In terms of economization, Dutch consumers preferred to economize on “eating to

restaurants” and “going to vacations” at a larger extent compared to Greek ones, and

did not choose to stop these consumption habits. However, for the product categories

of shoes and juice, Greek consumers compared to Dutch, preferred to economize

60

more than stop buying these products. After finding that those who perceived a

product as a necessity preferred to economize on this product (for all product

categories), we can infer that Dutch consumers probably considered “going to

restaurants” and “going to vacation” as necessities and economized more on these

products. On the other hand, Greek consumers perceived more as necessities the

“purchase of shoes” and the “consumption of juice”.

Another aspect that was studied, was whether the employment situation and the

country of residence had an impact on the way consumers decided to economize on

certain aspects of the product employing different economizing tactics (price,

quantity, quality and lifestyle). It was found that Greek consumers employed a higher

level of economizing for all economizing categories, with the most considerable

difference compared to Dutch consumers being the Quantity tactic where Greek

consumers had considerable higher scores. This observation showed that Greek

consumers decided to reduce the amount of products they purchased or delayed their

purchases. In terms of employment situation of consumers it was found that those

who had a full time regular job economized at a lower level on all economizing

tactics. In the contrary, those who didn’t have a regular paid job economized more,

with those who were part-time employees having generally the higher levels of

economization in all tactics except from the quality tactic.

Afterwards, the effect of negative economic news on consumer confidence proved

surprisingly not significant. The reason behind this finding is probably that consumers

may not form to such a considerable extent their attitudes based on economic news.

This argument is reinforced by Linden (1982), who proposed that consumers form

their attitudes from their day-to-day experiences and not by economic news. The

effect of negative economic news, which was rejected in this thesis, affected either

directly or indirectly consumer decisions in terms of economizing or not. Hypotheses

4 and 7, which were based on the expectation that consumer confidence will be lower

under negative economic news were not confirmed at all. As a result, the effect of

negative economic news on consumer confidence for Greek and Dutch consumers,

and the likelihood of consumers to economize or not because of the impact of

negative news, were not significant and were therefore rejected.

61

Finally, the finding that under negative economic news Dutch consumers relative to

Greek consumers preferred more to stop going to restaurants than economizing on

restaurants makes some justification for the model of Bronner & de Hoog (2012). As

a result, when Dutch consumers were exposed to negative economic news, they

moved from Quadrant B (economization on going to restaurants) to Quadrant C (stop

going to restaurants). Greek consumers compared to Dutch ones are expected to stay

to Quadrant C, as they were anticipated to be even without negative economic news.

5.2 Managerial Implications

Companies can use the findings of this thesis in several different ways. Those

operating at an international level can benefit from the comparison between Greek

and Dutch consumers in essence that the economizing behavior is different for

nations, which are in different economic situations. For example, the fact that Dutch

consumers preferred to economize more on vacations compared to Greek consumers

as a response to the adverse economic conditions can help travel agencies to explore

alternative types of vacations in order to be able to address the needs of consumers

and differentiate their strategies in Greece and in the Netherlands. Similar strategies

can be employed for the hospitality sector where Dutch consumers were more likely

to economize compared to Greek consumers. Furthermore, the clothing (shoes) and

food and beverages (juice) sectors can use these results in order to understand which

products are considered more as necessities from Greek and Dutch consumers and

probably adjust the advertising campaigns based on the perceptions of consumers on

both countries.

Some of the support of the typology proposed by Bronner & de Hoog (2012) can help

companies incorporate it to their strategic decisions. This model is relatively new and

was destined for the tourism industry; however, this thesis can provide some

justification of its use to other industries such as the hospitality sector (restaurants).

Another important finding that can be utilized from companies is the fact that Greek

consumers employed higher level of economization than Dutch consumers in every

economizing tactic. The most significant difference was on Quantity tactic, meaning

that consumers either bought fewer products or postponed or delayed the purchase of

62

goods. Using this finding, companies can form strategies in order to increase the

demand for goods.

Finally, policy makers can benefit highly from the results of this research. For

instance, knowing that the employment uncertainty in Greece had a high impact on

coping strategies can be used from governments or the European Union in order to

realize how unemployment instability affects consumers in may ways. This can be

used as an argumentation weapon so as to increase policies, which are intended to

decrease unemployment.

5.3 Scientific implications

This paper adds to the current literature in several ways. First of all, as Mueller (1963)

noted, every economic crisis is a “unique historical event”. Due to the uniqueness of

this recession from the previous ones across the world, largely attributed to its

severity and its large duration, extensive research needs to be conducted to understand

the dynamics of consumer preference under economic downturn. This paper sheds

light to the differences between Greece and the Netherlands, which can be extended to

Southern and Northern countries in Europe.

Moreover, as mentioned earlier, some support is provided to the relatively new

framework of Bronner and De Hoog (2012). Especially for the “restaurants” category,

which is representative of entertainment, many conclusions can be derived. As a

result, this research may encourage the application of this model to a variety of

product categories.

Another important aspect regarding this model is that the differences of consumer

behavior between nations can be predicted based on the effect of economic crisis to

those countries and the range (worldwide-local) of crisis. These differences have been

observed for Greece and the Netherlands, while Bronner and De Hoog (2012) studied

the impact of the crisis only for Dutch consumers. The fact that these two countries

represent two highly dissimilar economies and are located in different Quadrants in

this model, adds significantly to the relevant literature.

Finally, the fact that the role of news on consumer confidence was not significant for

Greek and Dutch consumers adds to the existing scientific argumentation of the role

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of news. As mentioned earlier, Linden (1982) doubted the role of news in forming

consumer confidence. Consequently, this research is in line with the limited impact of

news on consumer confidence.

5.4 Limitations

One of the limitations of this research was that the economies of Greece and the

Netherlands showed signs of recovery some months prior of the survey distribution.

Especially for Greece, even if the consequences of recession are still having a

considerable to Greek society, the austerity measures have started to decrease. As a

result consumer behavior may became less stringent.

Moreover, recent press headlines such as “Greece Sees Fragile Signs of Recovery”

(The NY Times, 2014) and “Dutch Economy Emerging From Two-Year Recession”

(The Wall Street Journal, 2014) may affected to the impact of negative economic

news to consumer confidence. As a result, when a consumer has already heard

somewhat positive news, then he/she may be less willing to believe negative

economic news presented in this study by the scenario.

The small sample in some working situation categories is probably an indication that

the sample is not representative of the Greek and Dutch population. An example of

this limitation is that there is no Dutch consumer in the working situation “pension”.

Knowing how people in this category behave is of equal importance as those who

have a full time job.

Another limitation of this research is the fact that the survey was distributed online

through e-mails and social media. This made it difficult for people of higher ages to

participate in this research, as they are usually not accustomed with online means of

communication.

Finally, the language of the survey, which is English, was proved to be a barrier

especially for Greek respondents. During the survey design phase, it was anticipated

that the English language would be sufficient for Greek and Dutch consumers,

however, during the survey distribution period there were many cases where Greek

respondents could not answer the questionnaire due to limited knowledge of English.

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This was observed mainly for higher aged people. In contrast, for Dutch respondents

the English language posed no difficulty to them.

5.5 Future research

An interesting perspective could be to observe differences between countries that are

facing crises of local and worldwide level. Based on the model of Bronner and De

Hoog (2012) there could be a comparison between a countries that face local crises

such as wars or political turbulences.

Furthermore, another similar topic that could be researched is the role of political

decisions and economic reforming measures during a crisis to consumer confidence

and consumer behavior. Such decisions that could act as events that influence

consumer confidence and in turn consumer decisions could be monitored in order to

know how to “market” and communicate political decisions. Different types of events

could also be the pessimistic posts in social media- such as Facebook and Twitter-

that influence the users’ confidence and affect their purchasing behavior.

Finally, except from the extension of this research to other product categories, saving

and investment decisions could also substitute the role of economization. As a result,

more complex decisions on financial products could be included in future researches.

65

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Chapter 7: Appendix

Questionnaire

Dear Participant,

I am a master's student at Erasmus University of Rotterdam. I would like to thank you for the participation in the survey, which takes less than 10 minutes. I would like to take this opportunity to ask you a few questions to follow up on the effect of the current economic crisis on you. The information obtained here will be held in the strictest confidentiality. Your name will not be used in any document based on this survey.

Thank you in advance for your time and participation.

Which is the country of your permanent residence?o Greeceo The Netherlands

Scenario

Please take your time and read the following hypothetical scenario about some news you hear in the television. We are going to ask you some questions about it:

“Unemployment in the euro zone increased to a record 11.4 percent in August, according to data released on Monday, highlighting the pain inflicted by the slowing world economy and the financial problems troubling many of the countries that share the euro. The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe’s recession is deepening despite the continued efforts of policy makers and finance ministers to cure the region’s malaise”.

Please read the following questions and choose the option that best

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describes your answer: 

Do you think now is a good or bad time for people to buy major household items? 

Good time to buy Uncertain/Depends Bad time to buy

Would you say that you (and your family living there) are better off or worse off financially than you were a year ago? 

Better Same Worse

Now turning to business conditions in the country as a whole—do you think that during the next twelve months, we’ll have good times financially or bad times or what? 

Good times Uncertain/Depends Bad times

Looking ahead, which would you say is more likely—that in the country as a whole we’ll have continuous good times during the next five years or so or that we’ll have periods of widespread unemployment or depression, or what? 

Good times Uncertain Bad times

Now looking ahead—do you think that a year from now, you (and your family living there) will be better off financially, or worse off, or just about the same as now? 

Better Same Worse

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Due to the economic crisis, some people might change their consumption behavior. For instance, they might stop the use of the products/services they use or economize on certain aspects by choosing alternatives. If you had to choose from these two options what would you do for the next five (5) product categories?

If you usually eat at restaurants, what would you do? o I would stop eating at restaurants.o I intent to economize on certain aspects.

I would economize by (Please indicate the level each option represents your preferences):

     Strongly Disagree Disagree

Somewhat Disagree

Somewhat Agree Agree

Strongly Agree

Choosing less expensive dishes

   

Visiting restaurants with promotions

   

Making smaller orders

   

Reducing restaurant visits

   

Going to lower food quality restaurants (ex. Fast food)

   

Going to self service restaurants (lower service quality)

   

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Meeting with friends and share cooking costs

   

Cooking at home    

Do you perceive "eating at restaurants” as a necessity? o Yeso No

If every winter you buy around two (2) new pairs of winter shoes, what would you do?

o I would stop buying new shoes.o I would economize on certain aspects.

I would economize by:

     Strongly Disagree Disagree

Somewhat Disagree

Somewhat Agree Agree

Strongly Agree

Buying cheaper shoes    

Buying from outlet stores    

Buying only one pair of shoes

   

Waiting until the next sales period

   

Buying higher quality shoes and keep them for many years

   

Buying local brand shoes for lower quality

   

Borrowing winter shoes from a relative

   

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Buying from a second hand shop

   

Do you perceive "buying two pairs of winter shoes” as a necessity? o Yeso No

If you usually consume fresh orange juices, what would you do?o I would stop consuming fresh orange juices.o I would economize on certain aspects.

I would economize by:

     Strongly Disagree Disagree

Somewhat Disagree

Somewhat Agree Agree

Strongly Agree

Going to a cheaper store despite it is not the closest to my house

   

Buying from promotions    

Reducing orange juice consumption    

Buying bigger packages for a lower price    

Buying lower quality orange nectar    

Buying a private label (store) brand for lower quality (ex. supermarket brands)

   

Squeeze oranges at home    

Changing the type of juice (ex. from orange

   

75

juice to apple juice)

Do you perceive "consuming orange juices" as a necessity? o Yeso No

If you go to vacations every summer, what would you do?o I wouldn't go to vacations this summer.o I would economize on certain aspects.

I would economize by:

     Strongly Disagree Disagree

Somewhat Disagree

Somewhat Agree Agree

Strongly Agree

Going to a cheaper travel destination    

Choosing a cheaper hotel    

Limiting traveling (ex. Once per year)    

Limiting the days of stay    

Choosing a hotel far away from the main point of interest

   

Choosing a lower stars hotel    

Choosing an    

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alternative type of accommodation (ex. camping)

Sharing the room with other people    

Do you perceive "going to summer vacations ” as a necessity? o Yeso No

If you need to buy a car, what would you do?o Wouldn’t buy a car.o I would economize on certain aspects.

I would economize by:

     Strongly Disagree

Disagree

Somewhat Disagree

Somewhat Agree Agree

Strongly Agree

Buying a cheaper car    

Taking a cheaper car insurance

   

Driving less    

Driving more fuel efficient

   

Buying an old used car    

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Doing Less maintenance    

Doing do-it-yourself repairs

   

Sharing a car with a close friend (and split costs)

   

Do you perceive "buying a car ” as a necessity? o Yeso No

Have you had to change or adapt any of your habits due to the global economic crisis?

      Yes No Not applicable

I argue more about financial matters.    

I find it harder to make ends meet.    

I must work harder to be able to afford my present way of life.

   

I decreased the amount of food consumption.    

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I replaced the consumption of expensive food items with cheaper ones.

   

   

I prefer to buy local brands instead of global brands.

   

I replaced the purchase of expensive non-food products with cheaper ones.

   

I prefer to buy my groceries from a cheaper store despite it is not the closest to my house.

   

I started to buy second hand items.    

I decreased the use of entertainment services.    

   

I decreased the frequency of meeting with friends.

   

I withdrew or postponed the admission of children to a school, college or kindergarten.

   

I dropped from language, computing and similar courses.

   

I reduced the visits to the doctor for preventive medical control.

   

I reduced sports activities.    

What is your gender?o Maleo Female

What is your age?

79

……………

What is your nationality?……………

Indicate your monthly salary:o less than 800o 800 - 1199o 1200 - 1599o 1600 - 1999o 2000 or more

How do you define yourself?o Optimistico Pessimistic

Do you have any extra income time to time?o From family/relatives/friendso From government (such as unemployment or social benefits)o From nonprofit organizationso No, I don't have any extra incomeo Other

What is your education level?

o Less than High Schoolo High Schoolo Bachelor's Degreeo Master's Degreeo Doctoral Degree

What is your working situation?o Pensiono Self-employed/own businesso Regular paid job

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o Part-time jobo Unemployed

What is your living status?o Living Single, no childreno Living Single, with childreno Married no childreno Married with children

Do you have more debts now compared to the period before the current economic crisis?

o Yeso Noo Not applicable

Did you change a job or become unemployed because of the current economic crisis?

o Yeso Noo Not applicable

TABLES USED FOR HYPOTHESES TESTS

Reliability analysis for “Coping Strategies”

81

Reliability StatisticsCronbach's Alpha N of Items

.850 15Table 7.1: Reliability analysis for coping strategies

Hypotheses Testing

Hypotheses H1, H4, H5

Descriptive StatisticsMean Std. Deviation N

total_confidence 9.4714 2.56059 210Country 1.44 .497 210Dummy_Scenario .50 .501 210int_news_country .2143 .41131 210

Correlationstotal_confide

nceCountr

yDummy_Scenari

oint_news_countr

y

Pearson Correlation

total_confidence 1.000 .449 -.105 .158Country .449 1.000 -.011 .591Dummy_Scenario -.105 -.011 1.000 .527int_news_country .158 .591 .527 1.000

Sig. (1-tailed)

total_confidence . .000 .066 .011Country .000 . .438 .000Dummy_Scenario .066 .438 . .000int_news_country .011 .000 .000 .

N

total_confidence 210 210 210 210Country 210 210 210 210Dummy_Scenario 210 210 210 210int_news_country 210 210 210 210

Model Summaryb

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .469a .220 .209 2.27769

a. Predictors: (Constant), int_news_country, Dummy_Scenario, Countryb. Dependent Variable: total_confidence

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression 301.630 3 100.543 19.381 .000b

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Residual 1068.698 206 5.188

Total 1370.329 209

a. Dependent Variable: total_confidenceb. Predictors: (Constant), int_news_country, Dummy_Scenario, Country

Table 7.2: Testing of Hypotheses H1, H4, and H5

Hypothesis 1

Group Statistics

Country N Mean Std. Deviation Std. Error Mean

total_confidenceGreece 118 8.4576 2.54748 .23451

Netherlands 92 10.7717 1.91640 .19980

Independent Samples Test

Levene's Test for Equality of Variances

t-test for Equality of Means

F Sig. t df Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the Difference

Lower Upper

total_confidence

Equal variances assumed

13.805 .000 -7.257 208 .000 -2.31411 .31890 -2.94280 -1.68543

Equal variances not assumed

-7.511 207.758 .000 -2.31411 .30809 -2.92149 -1.70674

Table 7.3: t-test for Hypothesis H1

t-test for Greek and Dutch consumers under negative economic news

Group Statisticsdummy_country N Mean Std.

DeviationStd.

Error Mean

consumer_confidence_scenario Netherlands 45 10.2444 1.93244 .28807Greece 59 8.4068 2.51971 .32804

Independent Samples Test

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Levene's Test for

Equality of Variances

t-test for Equality of Means

F Sig. t df Sig. (2-

tailed)

Mean Differe

nce

Std. Error Differenc

e

95% Confidence Interval of the

DifferenceLower Upper

consumer_confidence_scenario

Equal variances assumed

5.928 .017 4.064 102 .000 1.83766

.45223 .94066 2.73467

Equal variances not assumed

4.209 101.993 .000 1.83766

.43657 .97173 2.70360

Table 7.4: t-test for Greek and Dutch consumers under negative economic news

Hypothesis 5

Group StatisticsDummy_Scenario N Mean Std. Deviation Std. Error

Mean

total_confidence1 104 9.2019 2.45099 .240340 106 9.7358 2.64864 .25726

Independent Samples TestLevene's Test for Equality of Variances

t-test for Equality of Means

F Sig. t df Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the DifferenceLower Upper

total_confidence

Equal variances assumed

.320 .572 -1.515 208 .131 -.53393 .35232 -1.22850

.16065

Equal variances not assumed

-1.517 207.295 .131 -.53393 .35206 -1.22800

.16015

Table 7.5: t-test for Hypothesis H5

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Hypothesis 2

Group StatisticsCountry N Mean Std. Deviation Std. Error Mean

consumer_habits_total_cont Greece 118 7.398 2.7179 .2502Netherlands 92 3.109 2.3226 .2422

Independent Samples TestLevene's Test for Equality of Variances

t-test for Equality of Means

F Sig. t df Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the DifferenceLower Upper

consumer_habits_total_cont

Equal variances assumed

2.238 .136 12.083 208 .000 4.2896 .3550 3.5897 4.9895

Equal variances not assumed

12.320 206.215

.000 4.2896 .3482 3.6031 4.9761

Table 7.6: t-test for Hypothesis H2

Hypotheses H3, H3a, H6, H7, H7a

Logistic regression for Restaurants

Hosmer and Lemeshow TestStep Chi-square df Sig.1 4.505 8 .809

Table 7.7: Logistic regression for restaurants

Logistic regression for Shoes

Hosmer and Lemeshow TestStep Chi-square df Sig.1 7.594 8 .474

Table 7.8: Logistic regression for shoes

Logistic Regression for Juice

Hosmer and Lemeshow TestStep Chi-square df Sig.1 6.061 8 .640

Table 7.9: Logistic regression for juice

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Logistic Regression for Vacation

Hosmer and Lemeshow TestStep Chi-square df Sig.1 3.408 8 .906

Table 7.10: Logistic regression for vacation

Logistic Regression for Car

Hosmer and Lemeshow TestStep Chi-square df Sig.1 8.561 8 .381

Table 7.11: Logistic regression for car

Product category: Restaurants

Economize on certain aspects Stop product/service use

Greece 54,2% 45,8%

Netherlands 64,1% 35,9%

Table 7.12: Percentages of economizing for Restaurants between Greek and Dutch consumers

Product category: Shoes Economize on certain aspects Stop product/service use

Greece 74,6% 25,4%

Netherlands 67,4% 32,6%

Table 7.13: Percentages of economizing for Shoes between Greek and Dutch consumers

Product category: Juice Economize on certain aspects Stop product/service use

Greece 88,1% 11,9%

Netherlands 58,7% 41,3%

Table 7.14: Percentages of economizing for Juice between Greek and Dutch consumers

Product category: Vacation

Economize on certain aspects Stop product/service use

Greece 59,3% 40,7%

Netherlands 73,9% 26,1%

Table 7.15: Percentages of economizing for Vacation between Greek and Dutch consumers

86

Product category: Car Economize on certain aspects Stop product/service use

Greece 30,5% 69,5%

Netherlands 42,4% 57,6%

Table 7.16: Percentages of economizing for Car between Greek and Dutch consumers

Additional Analyses

MANOVA with each economizing tactic as dependent variables and working

situation and country as independent variables:

Between-Subjects FactorsN

Working_Situation

Pension 8Self-employed 37Regular paid job 116Part-time job 18Unemployed 25

dummy_countryGreece 113Netherlands 91

Descriptive StatisticsWorking_Situation

dummy_country Mean Std. Deviation N

price_total

4 Greece 28.8750 12.87786 8Total 28.8750 12.87786 8

5Greece 30.0313 9.77648 32Netherlands 30.4000 5.59464 5Total 30.0811 9.26276 37

6Greece 25.5294 11.07132 51Netherlands 26.7231 10.03978 65Total 26.1983 10.47583 116

7Greece 33.2000 9.82966 10Netherlands 29.8750 12.20582 8Total 31.7222 10.74192 18

8Greece 30.3333 12.19786 12Netherlands 24.7692 11.68442 13Total 27.4400 12.02109 25

TotalGreece 28.2301 10.99432 113Netherlands 26.9231 10.24720 91Total 27.6471 10.66152 204

quantity_total 4 Greece 27.6250 11.21144 8Total 27.6250 11.21144 8

5Greece 30.0000 9.73852 32Netherlands 27.2000 6.61060 5Total 29.6216 9.35222 37

6 Greece 25.2353 11.46924 51

87

Netherlands 26.4923 9.86490 65Total 25.9397 10.57091 116

7Greece 33.9000 11.33774 10Netherlands 29.3750 10.05609 8Total 31.8889 10.72594 18

8Greece 31.4167 12.86615 12Netherlands 21.7692 12.22807 13Total 26.4000 13.22246 25

TotalGreece 28.1770 11.33045 113Netherlands 26.1099 10.13843 91Total 27.2549 10.83798 204

quality_total

4 Greece 22.2500 12.95873 8Total 22.2500 12.95873 8

5Greece 19.4688 7.47030 32Netherlands 22.0000 6.96419 5Total 19.8108 7.36296 37

6Greece 18.9804 8.40593 51Netherlands 19.0000 7.72577 65Total 18.9914 7.99619 116

7Greece 23.9000 5.70477 10Netherlands 19.6250 8.07001 8Total 22.0000 6.98738 18

8Greece 21.2500 8.24759 12Netherlands 17.3077 10.12739 13Total 19.2000 9.30054 25

TotalGreece 20.0265 8.32001 113Netherlands 18.9780 8.01800 91Total 19.5588 8.18333 204

lifestyle_total

4 Greece 20.7500 6.31891 8Total 20.7500 6.31891 8

5Greece 21.2813 7.98884 32Netherlands 21.0000 7.93725 5Total 21.2432 7.87191 37

6Greece 20.4510 9.64430 51Netherlands 19.9692 8.26886 65Total 20.1810 8.86282 116

7Greece 27.7000 5.03433 10Netherlands 23.6250 9.02279 8Total 25.8889 7.16108 18

8Greece 24.5833 8.75379 12Netherlands 18.5385 10.55632 13Total 21.4400 10.01699 25

TotalGreece 21.7876 8.72747 113Netherlands 20.1429 8.60952 91Total 21.0539 8.69245 204

Box's Test of Equality of Covariance Matricesa

Box's M 103.806F 1.061df1 80df2 3330.181

88

Sig. .336Tests the null hypothesis that the observed covariance matrices of the dependent variables are equal across groups.a. Design: Intercept + Working_Situation + dummy_country + Working_Situation * dummy_country

Levene's Test of Equality of Error Variancesa

F df1 df2 Sig.Price .656 8 195 .729Quantity .681 8 195 .708Quality .968 8 195 .462Lifestyle 1.049 8 195 .400Tests the null hypothesis that the error variance of the dependent variable is equal across groups.a. Design: Intercept + Working_Situation + dummy_country + Working_Situation * dummy_country

Multivariate Testsa

Effect Value F Hypothesis df

Error df Sig. Partial Eta Squared

Intercept

Pillai's Trace

.784 173.885b 4.000 192.000 .000 .784

Wilks' Lambda

.216 173.885b 4.000 192.000 .000 .784

Hotelling's Trace

3.623 173.885b 4.000 192.000 .000 .784

Roy's Largest Root

3.623 173.885b 4.000 192.000 .000 .784

Working_Situation

Pillai's Trace

.090 1.120 16.000 780.000 .331 .022

Wilks' Lambda

.912 1.119 16.000 587.207 .333 .023

Hotelling's Trace

.094 1.116 16.000 762.000 .335 .023

Roy's Largest Root

.056 2.749c 4.000 195.000 .029 .053

dummy_country

Pillai's Trace

.049 2.483b 4.000 192.000 .045 .049

Wilks' Lambda

.951 2.483b 4.000 192.000 .045 .049

Hotelling's Trace

.052 2.483b 4.000 192.000 .045 .049

Roy's Largest Root

.052 2.483b 4.000 192.000 .045 .049

89

Working_Situation * dummy_country

Pillai's Trace

.070 1.156 12.000 582.000 .312 .023

Wilks' Lambda

.931 1.162 12.000 508.276 .308 .024

Hotelling's Trace

.073 1.166 12.000 572.000 .305 .024

Roy's Largest Root

.059 2.868c 4.000 194.000 .024 .056

a. Design: Intercept + Working_Situation + dummy_country + Working_Situation * dummy_countryb. Exact statisticc. The statistic is an upper bound on F that yields a lower bound on the significance level.

Tests of Between-Subjects EffectsSource Dependent

VariableType III Sum

of Squaresdf Mean

SquareF Sig. Partial

Eta Squared

Corrected Model

Price 1058.374a 8 132.297 1.172 .318 .046Quantity 1564.648b 8 195.581 1.712 .098 .066Quality 414.051c 8 51.756 .766 .633 .030Lifestyle 823.750d 8 102.969 1.383 .206 .054

Intercept

Price 75575.849 1 75575.849 669.383 .000 .774Quantity 70933.651 1 70933.651 620.826 .000 .761Quality 38118.442 1 38118.442 563.957 .000 .743Lifestyle 43325.758 1 43325.758 582.068 .000 .749

Working_Situation

Price 625.304 4 156.326 1.385 .241 .028Quantity 593.184 4 148.296 1.298 .272 .026Quality 170.504 4 42.626 .631 .641 .013Lifestyle 489.849 4 122.462 1.645 .164 .033

dummy_country

Price 82.395 1 82.395 .730 .394 .004Quantity 379.087 1 379.087 3.318 .070 .017Quality 49.284 1 49.284 .729 .394 .004Lifestyle 181.791 1 181.791 2.442 .120 .012

Working_Situation * dummy_country

Price 279.265 3 93.088 .824 .482 .013Quantity 677.605 3 225.868 1.977 .119 .030Quality 182.292 3 60.764 .899 .443 .014Lifestyle 193.738 3 64.579 .868 .459 .013

Error

Price 22016.214 195 112.904Quantity 22280.097 195 114.257Quality 13180.243 195 67.591Lifestyle 14514.657 195 74.434

Total

Price 179004.000 204Quantity 175382.000 204Quality 91634.000 204Lifestyle 105765.000 204

Corrected Total

Price 23074.588 203Quantity 23844.745 203Quality 13594.294 203Lifestyle 15338.407 203

a. R Squared = .046 (Adjusted R Squared = .007)b. R Squared = .066 (Adjusted R Squared = .027)c. R Squared = .030 (Adjusted R Squared = -.009)d. R Squared = .054 (Adjusted R Squared = .015)

90

Estimated Marginal Means

1. Working_SituationDependent Variable

Working_Situation Mean Std. Error

95% Confidence IntervalLower Bound

Upper Bound

Price

Pension 28.875a 3.757 21.466 36.284Self-employed 30.216 2.555 25.177 35.254Regular paid job 26.126 .994 24.166 28.086Part-time job 31.538 2.520 26.567 36.508Unemployed 27.551 2.127 23.357 31.746

Quantity

Pension 27.625a 3.779 20.172 35.078Self-employed 28.600 2.570 23.531 33.669Regular paid job 25.864 1.000 23.892 27.836Part-time job 31.638 2.535 26.638 36.637Unemployed 26.593 2.140 22.373 30.813

Quality

Pension 22.250a 2.907 16.517 27.983Self-employed 20.734 1.977 16.836 24.633Regular paid job 18.990 .769 17.474 20.507Part-time job 21.763 1.950 17.917 25.608Unemployed 19.279 1.646 16.033 22.524

Lifestyle

Pension 20.750a 3.050 14.734 26.766Self-employed 21.141 2.074 17.049 25.232Regular paid job 20.210 .807 18.619 21.802Part-time job 25.663 2.046 21.627 29.698Unemployed 21.561 1.727 18.155 24.967

a. Based on modified population marginal mean.

2. dummy_countryDependent Variable

dummy_country Mean Std. Error

95% Confidence IntervalLower Bound

Upper Bound

PriceGreece 29.594 1.274 27.082 32.106Netherlands 27.942a 1.716 24.557 31.326

QuantityGreece 29.635 1.281 27.109 32.162Netherlands 26.209a 1.726 22.805 29.614

QualityGreece 21.170 .985 19.226 23.113Netherlands 19.483a 1.328 16.865 22.102

LifestyleGreece 22.953 1.034 20.914 24.993Netherlands 20.783a 1.393 18.035 23.531

Table 7.17: Additional testing: MANOVA

91

Two way between Groups ANOVA with dependent variable “Coping Strategies”

and country and employment uncertainty as independent variables

Between-Subjects FactorsN

dummy_country 0 981 86

employment_uncertainty 0 1391 45

Descriptive StatisticsDependent Variable: coping dummy_country employment_uncertainty Mean Std. Deviation N

00 7.0423 2.78484 711 8.4815 2.57757 27Total 7.4388 2.79199 98

10 2.7794 2.21154 681 4.5000 2.25571 18Total 3.1395 2.31701 86

Total0 4.9568 3.29882 1391 6.8889 3.12775 45Total 5.4293 3.35437 184

Levene's Test of Equality of Error Variancesa

Dependent Variable: coping F df1 df2 Sig.1.242 3 180 .296

Tests the null hypothesis that the error variance of the dependent variable is equal across groups.a. Design: Intercept + dummy_country + employment_uncertainty + dummy_country * employment_uncertainty

92

Tests of Between-Subjects EffectsDependent Variable: coping Source Type III

Sum of Squares

df Mean Square

F Sig. Partial Eta Squared

Corrected Model 929.276a 3 309.759 49.351 .000 .451

Intercept 4283.825 1 4283.825 682.497

.000 .791

dummy_country 559.954 1 559.954 89.212 .000 .331employment_uncertainty 82.256 1 82.256 13.105 .000 .068dummy_country * employment_uncertainty

.652 1 .652 .104 .748 .001

Error 1129.805 180 6.277Total 7483.000 184Corrected Total 2059.082 183a. R Squared = .451 (Adjusted R Squared = .442)

Grand MeanDependent Variable: coping

Mean Std. Error 95% Confidence IntervalLower Bound Upper Bound

5.701 .218 5.270 6.131

Table 7.18: Additional testing: two-way ANOVA

Figure 7.1: Profile Plot

93