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ABSTRACT

The study examines the Effect of Economic Recession on Consumer Buying Behaviour in Bayelsa State.  The survey method was used in this study. In this design, a questionnaire was the instrument used for data collection. The population for this study comprises of all the residents in Ogbia Town, Ogbia Local Government Area of Bayelsa State. Since the population of the study is unknown, the researcher decided to select a sample size of 175 residents in the Ogbia Town, Ogbia Local Government Area of Bayelsa State for the study. The researcher used both primary and secondary data methods to obtain the relevant data necessary for the study. To test the hypotheses in this study, the Pearson Product Moment Correlation procedure (PPMC) and T-test was used. This is because they required a test of the significant relationship between economic recession and consumer buying behaviour. Findings reveal that there is a significance relationship between economic recession and consumer buying behaviour in Bayelsa State. Based on the findings of the study summary, conclusion and recommendations were made that the federal government should come up with good and effective economic policies in order to balance the nation’s trade policy and general economy and the federal government should diversify the economy by putting more financial and human resources into the agricultural sector and the domestic industries for GDP growth.

 

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Economic recession is the situation in which the economy of a country suffer a fall caused by several financial factors; a decrease in Gross Domestic Product (GDP), increase in inflation etc (Stefura, 2010:784). Also, recession is an economic crisis in the business cycle contraction, which results in a general slowdown in economic activities in two or more quarters (Mathias et al 2017:1). Furthermore, economic recession can be seen as a downturn of a nation’s economy; thereby affecting the wellbeing of citizens and slow growth in business activities. Consumer behaviour is the process that individuals or groups go through in making their purchasing choice in order to satisfy their needs (Sharma & Sonwalkar, 2013:34). Consumers are reported to have change in their buying behaviour during and after recession period. Hence, this study is to discuss the effect of economic recession on consumer buying  behaviour in Bayelsa State; its concepts, causes and implication on the general economy.

For the past few years, Nigeria economy have been in “jeopardy.” There have been symptoms of recession in the Nigeria economy but fully manifested under the administration of President Muhammedu Buhari due to certain drastic actions taken to solve perennial domestic problem (Mathias et al, 2017:1). Within the last quarter of 2016 – 2017, there has been reports on low Gross Domestic Product (GDP), increased inflation, and the lingered issue of unemployment got worsen as most company workers lost their jobs, all attributed to the fall in oil price and perhaps the poor economic policies of the present administration. Over 80% of Nigeria’s revenue comes from oil exportation while over 14% revenue is from the Gross Domestic Product (GDP).

The general effect of recession on Nigeria economy in recent years affects both business activities and consumer. Most State are experiencing serious economic crisis as revenue anticipated from the federal government dropped unfavourably. Workers in civil service commission experience substantial and subsequent delay in payment of salaries, thereby affecting the social and psychological wellbeing of citizen. A report on vanguard (online) dated April 25, 2017 showed that 12 states which include Kogi, Lagos , Osun, Kwara, Ondo, Ekiti, Oyo, Benue, Nasarawa, Abia, Imo and Bayelsa  were yet owing civil servants and stakeholders salaries. Although from historic view point, there was an economic depression in the United States in 1930s. Recently, in the dawn of 2008, there was a global financial and economic meltdown resulting from the collapse of the US sub-prime mortgage institution; then the euro zone crisis, amongst others.

Bayelsa, like other states in Nigeria is going through perhaps its worst economic crisis in recent years owing to the drastic reduction in its revenue arising from the drop in oil price (Thisday, 2016 online). However, Bayelsa State has one of the largest and natural gas deposits in Nigeria and as such petroleum production is extensive in the state, which contributes over 30% of Nigeria oil (federal Republic of Nigeria website). The major occupation of the people of Bayelsa State is fishing, farming, palm oil milling, trading, carving and weaving amongst other. But instead of encouraging and carrying out these activities efficiently, which would grow the internal revenue of the state and promoting economic growth, it was abandoned; families and individual who do them focused mainly for house-hold and personal consumption and not full Scale commercialization. The people of Bayelsa tend to focus their attention on oil (Crude) and what it holds for them. They are mostly into civil service and politics; having greater percentage of its population as civil servants who rely mostly on salaries from the government as their primary source of income. Unfortunately, the economic recession in the country has place a great effect on them; where payment of salaries to both civil servants and stakeholder is a problem to the state government for the past few years. This is as a result of the reduced revenue allocated to the state and low IGR over the years. This has not only affect salary earners but also had negative impact on business activities in the state.

Consumer in Bayelsa State has a significant effect on their buying behaviour as there is delay of salary payment to civil servants. The overall effect of economic recession have reduced drastically the buying power of consumers as money is not regularly available as usual (before the recession). During the period of recession, disposable income is reduced and consumer confidence usually falls. Consumer tends to be careful in their purchase decision during economic crisis. They mostly postponed or simply differ purchase of luxury products during the period. When an economy is booming, there is often an upturn in the consumption of luxury goods and consumer durables. And vice versa (Katerin and Tomas, 2015:290).

Nevertheless, the economic crisis in the state have over the years arose old trade practices between farmers and fishermen and women. They exchange harvested crop with fish so as to meet up with daily meal demand of the family since there is no enough income to freely spend on food items. The failure for state government to pay salaries regularly have reduced the buying ability of these consumers and so changed the buying pattern within the period. Also as a result of the high price of food items and basic necessities, consumers with decrease in  income tend to change their buying  behaviour whereby seeking out the best offers of product and services.

1.2  STATEMENT OF PROBLEM

The economic recession have made most consumers to cut down on expenses and will continue to do so until they become stable in their finances (Stefura, 2010:785). Also, Pop and  Rosca and Perrions et al (2009), think that during the period of recession, many unexpected changes bring to the consumer a feeling of insecurity, they doubt about the nature of upcoming event and so, they become much more careful when dealing with certain expenses, consumers, during recession tend to reduce their expenditure level and seek the best out of product and services.

The uncertainty of the future due to the low level of income disposable to consumers, have lead them to change their purchase behaviour during recession. Consumers takes drastic measures if they must survive in order to face the unknown in the future.

Consumer faced with economic recession tend to choose products or services with more caution, they think twice before buying, giving up on impulsive buying. They are selective and they take advantage on promotions, discounts, coupons and all the method that helps them save money. Therefore, this study is to discuss the effect of economic recession on consumer buying behaviour in Bayelsa State.

1.3 OBJECTIVE OF THE STUDY

The aim of this research is to study the effect of economic recession on consumer buying behavior in Bayelsa State. The specific objectives are:-

  1. To study the effect of increased price of commodities on consumer behaviour.
  2. To study the effect of recession on the change in income of consumer.
  3. To add to knowledge; on the effect of economic recession on consumer behaviour in Bayelsa State.

1.4 SIGNIFICANCE OF THE STUDY

This study is of great importance to the society at large as it will help the government of Nigeria and Bayelsa State formulate lasting economic policies to aid productivity amidst of recession; owing to the backwardness of its industries.

Furthermore, this study will be significant to managers and entrepreneurs who tend to satisfy their customers and potential customers. It will educate them of what product. Price, place and promotion that is of great appeal to consumers during recession.

Also, it will serve as an “eye-opener” to consumers in Bayelsa State on their overreliance on salary job with the civil service commission of which economic crises places them at great disadvantages.

This research also will be beneficial to researchers who intend to embark on similar topic as the study will serve as a guide. Finally, this study will be of great benefit to academias, studies and general public.

1.5 RESEARCH QUESTION

  1. To what extent have the current economic recession affect consumer buying behaviour?
  2. How does high price of commodity change consumer buying behaviour?
  3. How does recession change consumer income?

1.6 RESEARCH HYPOTHESES

For the successful completion of the study, the following null research hypotheses were formulated by the researcher:

HO1: There is no significant relationship between economic  recession and consumer buying behaviour in Bayelsa State.

HO2: There is no significant relationship between high price of commodity and consumer buying behaviour in Bayelsa State.

HO3: There is no significant relationship between recession and change in consumer income in Bayelsa State.

1.7 SCOPE OF THE STUDY

This research is focused on the effect economic recession on consumer buying behaviour in Bayelsa State; this study covered only Ogbia Town, Ogbia Local government Area of Bayelsa State.

1.8 LIMITATION OF THE STUDY

This study was limited by several factors. They include:

Availability of Research Material: The research material available for the researcher was insufficient thereby limiting the study.

Time: The time frame allocated to the study does not enhance wider coverage as the research has to combine other academic activities examination with study.

1.9 DEFINITION OF TERMS

Business Cycle: It is the fluctuation in economic activities that an   economy experience over a period of time.

Gross Domestic Product: This simply refers to the measurement of a country’s total output.

Consumer: Is the final user of a product or service.

Internally Generated Revenue: Moonies collected by a government of Levis and taxes on facilities, income, sales of goods and services.

Impulse Buying: This refers to unplanned decision to buy a product or service, made just before a purchase.

 

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