Consumer Sentiment Dropped Sharply in February 2025
WHAT HAPPENED?
MCSI Dropped To 64.7: Lowest Level In 15 months
The latest data from two reliable tracking surveys of consumer sentiment - the University of Michigan Survey of Consumers Index (MCSI) and the Conference Board - both showed a sharp drop in consumer sentiment in February 2025.
Source: University of Michigan
The MCSI measure shown above dropped to 64.7 – the lowest level in 15 months since US consumers were suffering from a major spike in inflation.
WHY DOES THIS MATTER?
MMM Illustrates Challenging Landscape Navigating Falling Consumer Sentiment
USIM’s Marketing Mix Modeling (MMM) studies have shown that drops in consumer sentiment result in a significant measurable negative impact on client sales across many categories.
MMM uses a sophisticated statistical modeling process to tease apart the impact of all the factors that contribute to consumer sales (shifts in distribution, pricing, promotions, weather, seasonality, competitive brand actions as well as marketing and media spending). The MMM tells us the positive and negative contributions to total brand sales for each of these variables.
This MMM example shows how much of a negative impact falling consumer sentiment had on one clients total sales volume across a 2 year period.
Media support for the client was required to counteract the large negative impact of falling consumer sentiment and underlines the importance of marketing support when consumers are nervous about spending.
Source: USIM MMM
USIM MMM studies have shown that negative consumer sentiment has a negative impact on sales in many categories. As a benchmark we show here the findings in several large retail categories
WHAT CAN BE DONE TO ADDRESS THE ISSUE?
Brands Need to Take Proactive Measures To Counteract Potential Negative Sales Impact
It is critical to understand the potential impact consumer sentiment has on a particular category and brand. Some categories and brands can be highly resistant to falls in consumer sentiment if they have a strong value positioning or a very loyal base of consumers.
However, if analytics like MMM show that a brand has a high vulnerability to sales impacts from falls in consumer sentiment, then forward planning to address different aspect of communication strategies can help to successfully counteract the negative effects.
- Media investment strategies. MMM analytics reveal the media channels that can maximize short term sales response and directly counter-act the negative drag from dips in consumer sentiment. Rebalancing spending between long-term brand/awareness building media channels to proven short-term sales acquisitions channels deliver increases in short term sales.
- Audience segment strategies. Evaluate the balance between tightly targeted first party/CRM based lookalike audiences and wider prospecting target segments that build brand interest and engagement for the brand.
- Geo-location precision. For our retail clients with bricks and mortar locations USIM have developed a unique mobile data solution to ensure we only serve media in the precise trading zone of each individual location. For clients with brands distributed through national retailers we deliver custom sales driving messages to prospect buyers only in the trade zones of each retailer
- Promotion and brand messaging. Brands with stronger value for money positioning are more resistant to downturns in consumer sentiment. It’s essential not to undermine brand differentiation and positioning, but with careful management and media placement, the role of targeted promotion and a higher focus on value can be delivered to the most receptive target audience segments.
To sustain resilience in the face of shifting consumer sentiment, brands must remain agile and continuously refine their strategies. Regular performance analysis, market trend monitoring, and consumer feedback integration will ensure that media investments, audience targeting, and messaging remain effective. By fostering brand loyalty through meaningful engagement and adapting swiftly to emerging challenges, brands can not only weather fluctuations in demand but also position themselves for long-term growth and stability.