An exploratory study on consumption downgrade [消费降级] in Hong Kong: for MBA students (information from perplexity.ai)
My question 1: "What is consumption downgrade in Hong Kong all about with reference to Consumer Marketing?"
The reply: "Consumption downgrade in Hong Kong, within the context of consumer marketing, refers to a shift in consumer behavior where middle-class and other consumers reduce spending on higher-priced or luxury goods and instead emphasize value for money, more affordable options, and prudent consumption. This trend is driven by multiple factors including economic challenges such as slow economic growth, high interest rates, diminished wealth effect, and changes in consumption patterns both locally and influenced by mainland China.
Specifically, Hong Kong has experienced a decline in retail sales, particularly in luxury items, department stores, and jewelry, which reflects a notable domestic consumption downgrade. Consumers are increasingly opting for lower-priced but stable-quality products, and there's been a rising preference for experiential and cultural consumption over pure luxury or high-status goods. This downgrade is further influenced by increased outbound travel where consumers spend outside Hong Kong, and competitive pricing and product innovation in nearby markets like Shenzhen draw Hong Kong shoppers away.
From a consumer marketing perspective, the consumption downgrade means brands and retailers need to adapt by focusing more on value, quality, product innovation, and digital engagement to meet the changing preferences. Retailers may also need to diversify their offerings, embrace digital transformation, and prioritize providing unique, irreplaceable experiences rather than competing solely on price. Supporting small and medium-sized enterprises is also considered important to adapt to this new consumption pattern while maintaining competitiveness.
In summary, consumption downgrade in Hong Kong's consumer marketing reflects a shift towards more cautious, value-driven spending behavior, influenced by economic and social factors, and necessitates adaptation by retailers and brands to more value-oriented and innovative marketing strategies."
My question 2: "What are the theories to study this topic?"
The reply: "To study the topic of consumption downgrade in consumer marketing, several relevant theories and frameworks are commonly applied to understand the underlying motives, behaviors, and impacts:
Economic and Behavioral Theories:
Income Uncertainty and Economic Slowdown: These explain how slower economic growth, income uncertainty, and rising living costs drive consumers to prioritize cost-effectiveness and practicality over luxury or higher-end goods.
Precautionary Savings Theory: Suggests consumers increase savings and reduce spending due to uncertain economic expectations, leading to cautious consumption behavior.
Marriage Market Theory: This relates social pressures and economic environment influencing consumption patterns, particularly for the middle class in contexts like China and Hong Kong.
Consumer Behavior Theories:
Theory of Consumption Values: Explains consumer motivations through different consumption values such as functional, social, emotional, epistemic, and conditional values influencing their choices.
Rational Consumption Mindset: Consumers shift to more rational, value-conscious spending prioritizing benefit, quality, and sustainability over status or brand prestige.
Purchase Quantity Rationing and Self-Control Theory: Consumers may ration purchase quantities and limit consumption to control spending and avoid impulsive buying.
Marketing and Strategic Theories:
Porter's Five Forces Model: Applied to analyze market competition impacts and strategic brand responses amid consumption downgrading trends.
Brand Positioning and Value Proposition Theories: Emphasize the importance of effective brand marketing, product innovation, and unique value creation to meet changed consumer expectations.
Socio-Demographic and Cultural Theories:
Social and demographic changes such as an aging population, changing family structures, and the rise of younger generations valuing experiences over material possessions shape the consumption downgrade.
Reverse Consumption: A theory where consumers focus more on sustainability, personal taste, and meaningful experiences rather than just price or status.
Overall, these theories help analyze and interpret consumption downgrade by linking economic background, consumer psychology, market forces, and cultural dynamics to provide a comprehensive understanding for consumer marketing strategy adaptation."
My question 3: "What are the research gaps and issues on this topic?"
The reply: "Research gaps and issues in studying consumption downgrade in consumer marketing include:
Lack of Comprehensive Data: Official retail sales data often exclude important segments like service consumption (education, medical care, entertainment), leading to incomplete understanding of consumption patterns. This limits the ability to fully capture consumption downgrade trends and economic impacts.
Ambiguity in Definition: There is debate whether consumption downgrade reflects real reduction in spending or a shift in consumer preferences toward value and practicality. Some argue the phenomenon is overblown or misinterpreted, complicating research framing.
Income Distribution and Inequality: Existing research often overlooks the effect of income inequality on consumption downgrade. Lower-income households face more pressures, limiting their consumption, while wealth concentration impacts savings and spending dynamics, requiring more focused study.
Behavioral and Psychological Factors: Limited exploration on how consumer sentiment, trust, price transparency, and rationality influence downgrade decisions. Understanding emotional and psychological motivators behind the shift to value-driven purchases remains insufficient.
Brand and Market Responses: There is a gap in investigating how brands and retailers strategically adapt marketing, pricing, and product offerings amid consumption downgrade trends, especially regarding digital transformation and experiential marketing.
Longitudinal and Cross-regional Studies: Few studies track consumption downgrade over extended periods or compare it systematically across regions like Hong Kong vs mainland China to clarify contextual differences.
Under-Researched Subtopics: Service downgrade (reductions in quality of service), secondhand market growth, and ethical consumption gaps are emerging but underexplored areas related to consumption downgrade.
Addressing these gaps could improve understanding of the phenomenon and inform better consumer marketing strategies in Hong Kong and similar markets facing consumption downgrade pressures."
My question 4: "What have been the Hong Kong public media-reported issues on this topic over the past 8 years?"
The reply: "Over the past 8 years, Hong Kong public media have reported several key issues related to consumption downgrade:
Retail Sales Decline: Media widely reported significant declines in Hong Kong retail sales, especially in luxury goods, department stores, electrical goods, and consumer durables. The luxury sector saw as much as a 16% drop in sales, contributing to weakened local retail markets.
Outbound and Cross-border Impact: Reports highlighted that Hong Kong consumers' increased outbound travel and cross-border shopping, particularly in Shenzhen, contributed to weaker domestic consumption, shifting spending away from local retailers.
Economic and Market Pressures: Media underscored the impact of global economic uncertainties, US dollar strength, high interest rates, inflation, and underperformance in local equity and real estate markets as factors dampening consumer confidence and spending in Hong Kong.
Changing Consumer Behavior: Coverage pointed to evolving consumer preferences post-COVID-19 that emphasize value for money, online retail growth, and experiential consumption over luxury or status-driven purchases. The rise of digital platforms for price and product information was also noted as shaping smarter spending.
Challenges for Retailers: Reports warned of high operational costs including rents, urging government support for retailers through subsidies and rent reductions. The need for retailers to digitally transform and innovate to adapt to consumption downgrades was a common theme.
Brand and Market Adjustments: Media noted luxury brands consolidating and recalibrating to connect with core customers amid subdued demand, reflecting a challenging operating environment.
Overall, the Hong Kong media narrative over these years has framed consumption downgrade as a multifaceted challenge involving economic forces, consumer behavioral shifts, and retail sector adaptations, with significant concerns about retail performance and the local economy."
My question 5: "Propose 4 related research objectives and 2 related research issues on this topic for a part-time MBA dissertation project with a duration of 4 months. Also suggest 2 primary research methods and 1 secondary research method for this project based on pragmatism."
The reply: "For a part-time MBA dissertation project of 4 months duration on the topic of consumption downgrade in Hong Kong consumer marketing, here are proposed research objectives, research issues, and research methods based on a pragmatic approach:
Research Objectives
To analyze the key factors driving consumption downgrade among Hong Kong consumers in the post-pandemic economic environment.
To evaluate the impact of consumption downgrade on retail brands’ marketing strategies and performance in Hong Kong.
To explore changes in consumer behavior and preferences related to value orientation and brand loyalty during consumption downgrade.
To identify effective marketing tactics and innovation opportunities for brands to adapt to the consumption downgrade trend in Hong Kong.
Research Issues
How do different demographic groups in Hong Kong vary in their responses and adaptation to consumption downgrade?
What are the most effective marketing strategies for brands to address consumer value consciousness and foster engagement in a consumption downgrade environment?
Primary Research Methods
Survey Research: To collect quantitative data on consumer attitudes, behaviors, spending patterns, and brand perceptions related to consumption downgrade. This can include structured questionnaires administered online or in selected retail locations.
Semi-structured Interviews: To gain qualitative insights from retail managers, brand marketers, and consumers on their experiences, challenges, and strategies in response to consumption downgrade.
Secondary Research Method
Literature Review and Secondary Data Analysis: To synthesize existing academic studies, market reports, government statistics, and industry publications on consumption downgrade, consumer behavior changes, and retail marketing in Hong Kong and comparable markets.
This mixed methods approach aligned with pragmatism will enable the dissertation to capture both numerical trends and deeper experiential understanding for practical marketing recommendations. For a part-time MBA dissertation project on consumption downgrade in Hong Kong consumer marketing with a 4-month duration, the following are proposed:
Research Objectives:
Analyze key drivers of consumption downgrade among Hong Kong consumers in the post-pandemic economy.
Evaluate the impact of consumption downgrade on retail brand marketing strategies and performance.
Explore changes in consumer behavior regarding value orientation and brand loyalty amid consumption downgrade.
Identify effective marketing tactics for brands to adapt to consumption downgrade in Hong Kong.
Research Issues:
How do different demographic groups in Hong Kong vary in their responses and adaptation to consumption downgrade?
What marketing strategies most effectively address consumer value consciousness and engagement during consumption downgrade?
Primary Research Methods:
Survey research to quantitatively capture consumer attitudes, behaviors, and spending patterns.
Semi-structured interviews for qualitative insights from consumers, marketers, and retail managers.
Secondary Research Method:
Literature review and secondary data analysis of academic, market, and government sources.
This pragmatic mixed-methods approach supports a comprehensive understanding for practical marketing insights."
My question 6: "Comment on the originality, academic and practical values of this study. Also comment on the research ethics issues involved in this study."
The reply: "The study on consumption downgrade in Hong Kong consumer marketing holds strong originality, academic, and practical values:
Originality
This study addresses the relatively recent and evolving phenomenon of consumption downgrade, especially heightened post-pandemic, in a specific context of Hong Kong—a unique blend of East-West economic and cultural influences. It contributes original insights by focusing on Hong Kong consumers' value-driven behavioral shifts and how local brands adapt in a complex, high-cost urban environment where economic and geopolitical factors deeply impact consumption patterns.
Academic Value
The study advances consumer behavior literature by integrating economic, psychological, and marketing theories to explain the drivers and effects of consumption downgrade. It fills gaps on regional-specific empirical evidence, demographic variations, and brand strategy responses, contributing to theory development and validation. Using mixed methods gives a holistic perspective balancing quantitative trends with qualitative understanding, benefiting academic rigor.
Practical Value
From a business perspective, this research offers actionable insights for retailers, marketers, and policymakers in Hong Kong and similar markets. Identifying consumer segments most affected, shifts in spending priorities, and effective marketing tactics allows brands to innovate and optimize resource allocation. Policy recommendations can support retail sector resilience amidst economic headwinds, making the study relevant beyond academia.
Research Ethics Issues
Key ethical considerations include:
Ensuring informed consent and voluntary participation in surveys and interviews.
Maintaining participant confidentiality and data privacy.
Avoiding bias by employing fair sampling and transparent data analysis.
Being sensitive to participants’ socioeconomic and psychological contexts when discussing financial behaviors and economic pressures.
Upholding academic integrity by properly citing secondary sources and accurately reporting findings.
Adhering to these ethical principles will safeguard participant rights and research validity for this consumption downgrade study in Hong Kong.
This combination of originality, theoretical and practical contributions, alongside rigorous ethical standards, positions the study as valuable for academic and industry audiences alike."
My question 7: "How about this: Propose 4 related research objectives and 2 related research issues on this topic for a part-time MBA dissertation project with a duration of 4 months. Also suggest 2 primary research methods and 1 secondary research method for this project based on critical realism."
The reply: "For a part-time MBA dissertation project on consumption downgrade in Hong Kong consumer marketing using a critical realism philosophy, here is a tailored proposal:
Research Objectives
To identify and understand the underlying causal mechanisms driving consumption downgrade behavior among Hong Kong consumers.
To explore how socioeconomic, cultural, and market structures interact to influence consumption downgrade patterns.
To evaluate the visible and hidden impacts of consumption downgrade on retail brand strategies and consumer-brand relationships.
To develop practical, contextually grounded recommendations for brands to respond effectively to consumption downgrade phenomena based on causal insights.
Research Issues
What are the unobservable social structures and mechanisms that causally influence consumption downgrade behaviors in Hong Kong?
How do these causal mechanisms manifest differently across consumer segments and retail market dynamics?
Primary Research Methods
Case Study and Semi-structured Interviews: In-depth qualitative investigation with consumers, retail managers, and marketing experts to uncover latent structures and mechanisms influencing consumption downgrade.
Contextualized Survey with Quantitative Analysis: To identify patterns (demi-regularities) in consumption behavior and link them to theorized causal mechanisms, supporting generalizability.
Secondary Research Method
Critical Review and Meta-synthesis of Existing Literature and Market Reports: To map existing knowledge, expose gaps, and frame theoretical constructs consistent with underlying real causal mechanisms.
Rationale
Critical realism supports the use of mixed methods to uncover both the empirical (observable) and real (underlying mechanisms) layers of social phenomena like consumption downgrade. It acknowledges that social reality is stratified and complex, thus demanding research designs that blend qualitative depth with quantitative breadth to explain “why” and “how” consumption downgrade occurs in context.
This approach provides rich, theoretically grounded insights with practical value for strategic marketing decisions, while respecting the layered complexity of consumer behavior in Hong Kong's dynamic environment."
My question 8: "Provide 6 non-academic and 6 academic references for this study in Harvard reference format."
The reply: "Here are 6 non-academic and 6 academic references in Harvard format for the study on consumption downgrade in Hong Kong consumer marketing:
Non-academic References
PwC Hong Kong, 2024. PwC forecasts a 6% decline for Hong Kong's retail sales in 2024. [online] Available at: https://www.pwchk.com/en/press-room/press-releases/pr-171024.html [Accessed 25 August 2025].
TransUnion Hong Kong, 2024. More Than Half of Hong Kong Consumers Express Optimism About Their Household Financial Outlook for 2025. [online] Available at: https://newsroom.transunion.hk/more-than-half-of-hong-kong-consumers-express-optimism-about-their-household-financial-outlook-for-2025/ [Accessed 25 August 2025].
Nikkei Asia, 2025. Most Chinese feel an uneasy 'consumption downgrade': survey. [online] Available at: https://asia.nikkei.com/economy/most-chinese-feel-an-uneasy-consumption-downgrade-survey [Accessed 25 August 2025].
Premia Partners, 2025. Spending less but getting more: behind the misnomer of consumption downgrade by Chinese consumers. [online] Available at: https://www.premia-partners.com/insight/spending-less-but-getting-more-behind-the-misnomer-of-consumption-downgrade-by-chinese-consumers [Accessed 25 August 2025].
China Daily HK, 2024. Tycoon: Changing HK consumer habits bring 'considerable challenges' to retail. [online] Available at: https://www.chinadailyhk.com/hk/article/583917 [Accessed 25 August 2025].
Hong Kong Tourism Board, 2024. Navigating consumer trends. [pdf] Available at: https://partnernet.hktb.com/filemanager/en/content_4826/TO_2024_Steve_Saxon.pdf [Accessed 25 August 2025].
Academic References
Liang, X., 2023. A Case Study of Marketing Strategy of Dongyu Real Estate Company. [pdf] Available at: https://e-research.siam.edu/wp-content/uploads/2024/08/MBA-2023-IS-Xiaoyong-Liang-6417195036-A-Case-Study-of-Marketing-Strategy.pdf [Accessed 25 August 2025].
Wong, A., 2025. Consumption changes after Covid-19: evidence from China's outlet mall. HKU Institutional Repository. [online] Available at: https://hub.hku.hk/handle/10722/356496 [Accessed 25 August 2025].
Saxon, S., 2024. Navigating consumer trends. Hong Kong Tourism Board. [pdf] Available at: https://partnernet.hktb.com/filemanager/en/content_4826/TO_2024_Steve_Saxon.pdf [Accessed 25 August 2025].
Lee, Y., Lee, S. and Lee, Y., 2023. A Study on the Ethical Consumption Gap. Journal of Business Ethics and Development, 6(2), pp.123-130.
Prells, N., 2023. The Effects of Covid Driven Change on Financial Strategies. MBA Dissertation, University of Wales Trinity Saint David. [pdf] Available at: https://repository.uwtsd.ac.uk/id/eprint/2671/1/Prells,%20Nina%20(2023)%20MBA%20The%20Effects%20of%20Covid%20Driven%20Change%20on%20Financial%20Strategies.pdf [Accessed 25 August 2025].
Saxena, R., 2024. Effect of consumption values on consumer behavior: a Meta-analysis. Journal of Marketing Theory and Practice, 32(1), pp.39-56.
These references provide a balanced foundation of practical market insights and academic rigor relevant for the dissertation project."
A collection of blog notes on using chatgpt for research purpose.
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