Harvard Business Review: The New Market Segments
Most businesses categorize their customers into segments. As a marketing target, you might be in the "30-38 Year Old" group, "Women Executives With Adolescents" cohort or the "Tweens With Twitches and Disposable Income" slice.
But the econ crisis has fundamentally changed consumer behavior, and probably nullified our tried-and-true market segmentation lists. Now is the time to put your customers into four new groups, according to How To Market in a Dowturn, the lead article in the April Harvard Business Review, coauthored by Harvard Business School marketing professor John Quelch and Katherine Jocz. ( Watch an HBR interview with Quelch.)
According to the researchers the new consumer groups you might consider are:
Slam on the Brakes. This group is spooked to the core by the downturn and is doing everything it can not to spend, or at least delay it. For things they must buy they are searching out lower-cost substitute brands.
Pained But Patient. Optimistic long term, PBPers are economizing, but not to the extent of slam on the brakers. If the news gets worse, they'll cut back more dramatically.
Comfortably Well Off. In the top 5 percent income bracket, well-offers are still spending but with a little more selectivity and a lot less conspicuously. High-end purchases continue.
Live for Today. Savings? What savings? The LFTs spend as they always have, although willing to delay a major purchase if need be. "Typically urban and younger, they are more likely to rent than to own, and they spend on experiences rather than on stuff," write Quelch and Jocz.
Put the Puzzle Together
Once you've divided your customers into these segments, figure out how each group prioritizes its potential purchases. Are they considered essentials, treats, postponables, or expendables?
This analysis will help you assess which of your brands have the best chances for success and allocate resources accordingly, according to the authors.
This is one of the best looks into changing consumer behavior that I've come across, and it's full of examples from past downturns that back up the conclusions. The article is not free, but for many marketers it might be worth the $6.50 download price.