New Survey Finds 73 Percent of Consumers Cutting Back
Big ticket items first to go, while services are scaled down

College Park, Md. – April 29, 2009 – Economic woes have 73 percent of consumers cutting back on household expenditures, according to the Consumer Technology Pulse released today by the University of Maryland’s Robert H. Smith School of Business and research firm Rockbridge Associates, Inc. Findings show that consumers are postponing purchases of big ticket items more than they are cutting back on, or discontinuing services. Of those surveyed, 78 percent personally know someone who has lost a job in the last year, and 27 percent are convinced the economy is in a depression.

“It is important to understand even customers who are not adversely impacted by the current downturn feel the need to tighten their spending to cover the risk of being affected at a later point in time,” said P.K. Kannan, professor and director of the Center for Excellence in Service at the Robert H. Smith School of Business. “Consumers feel an acute ‘sense of loss’ with each purchase.”

Researchers found that among consumer spending on services, non-essential services are being scaled back to the greatest degree. For example, 58 percent are doing less dining out, 53 percent are traveling less and 47 percent are attending fewer sporting events. In contrast, some services are faring better. Among those cutting expenses, 28 percent are planning to cut back or drop cable television service and only a quarter are planning to eliminate their landline telephone service.

“Devising ways to continue the relationship with customers even as they seek to scale back will be a key strategy for providers of these non-essential services,” said Kannan. “By focusing on nurturing and maintaining their customer relationships – by offering discounts, installment payment plans or bundle deals – firms can stand ready to recoup lost revenue when the economy recovers.”

“Consumers are changing how they spend their time as well as their money. They are watching more television and doing more social networking, but are doing less travel and less personal visiting with friends and family,” said Charles Colby, president of Rockbridge Associates, Inc. “The current environment creates a need for low-cost diversions and connecting with others.”

Other findings within the Consumer Technology Pulse include:

• 14 percent reported they had been laid off or lost their job in the past 12 months
• 31 percent reporting increasing the balances in their personal savings, checking or CDs
• 15 percent reported they stopped contributing to their 401K accounts
• 4 percent stopped contributing to their college savings funds

About the Consumer Technology Pulse
The survey is a snapshot of consumer sentiment sponsored by the Center for Excellence in Service at the University of Maryland’s Robert H. Smith School of Business and technology research firm Rockbridge Associates Inc. The survey consists of 500 adults (18 years or older) surveyed online. The survey has a margin of error of plus or minus 4 percentage points. Results are weighted to match the demographic characteristics of the U.S. population. A full report of results can be found online.

About the University of Maryland’s Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 13 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations on three continents — North America, Europe and Asia.

About Rockbridge Associates Inc.
Rockbridge Associates Inc. is a leading technology research firm based in Great Falls, Va. Clients include Fortune 500 companies, government agencies and associations. Rockbridge conducts primary research and consulting to help with product design, positioning, pricing, and customer satisfaction.