More than Segments: A Musing on Post-Recession Consumer Complexities

November 9, 2009

Understanding the “how” and “why” of consumer decision making has always been a challenge. The recession further complicated it. One would never know it, however, reading the litany of articles that have come out over the last few years concerning the evolving recessionary consumer. The majority reduces purchasing models to price—the intricacies of underlying motivations and consumer values are all but dismissed. The message that price is the single motivating factor for a given behavior misses the mark. Yes, consumers have been spending less. Yes, consumers have been saving more. But they are also spending more money on vitamin supplements. They are still purchasing premium priced products like Tide laundry detergent and Kellogg’s Special K cereal. These facts fly directly in the face of the price-driven theory. What has been over looked? Plenty.

I was surprised to come across a recent study published by Decitica Marketing Strategy & Research (www.decitica.com); Marketing to the Post-Recession Consumers: How distinct segments emerging from the recession will create challenges and opportunities for marketers. I was surprised not by their findings, but by their willingness to investigate how varied groups differ in ways besides spending ability. The study concludes that the effects of this recession on consumer behavior have invalidated many of the assumptions underlying consumer segmentation. For example, psychosocial factors such as attitudes and behaviors may now be more relevant than traditional demographics. Additionally, researchers warn that marketing strategies that do not fully recognize the diversity of consumers’ recession experiences will not have the desired effect given current conditions.

The study identifies four types of consumers: Steadfast Frugalists, Involuntary Penny-Pinchers, Pragmatic Spenders, and Apathetic Materialists.

• Steadfast Frugalists commit to prudent behaviors enthusiastically.

• Involuntary Penny-Pinchers are those that have changed their behaviors out of shear necessity—they do not seem to derive significant
pleasure in hunting for bargains.

• Pragmatic Spenders are those most willing and able to resurrect their pre-recession spending habits.

• Apathetic Materialists are those least concerned with price but may not have significant spending power because much of the group is
made up of Gen Y.

The study goes on to identify the satisfaction and confidence levels associated with frugal behaviors for individuals across all groups.

As the study notes, the great recession has not affected the population uniformly in terms of budgetary restrictions or emotional response. Assessing the emotional impact of the recession on these distinct segments will provide the marketing community some valuable insight assuredly. But emotions only tell part of the story. The study neglects to mention how the recession has changed consumer values. Have consumer values changed? Instead of looking at the characteristics of a segment, marketers should look at the values that drive purchasing behaviors. Values are continuing to be reevaluated as behaviors that were previously forced upon consumers are coming to be viewed as pleasurable. However, this transition is not going to last much longer. Marketers need to quickly zero in on those values that are shifting and react to them. Because, as we all know, values are what ultimately drive purchase behaviors. As consumers change theirs, so too will their purchases change. And therein lies the opportunity.

posted by Northlich November 9, 2009 in cultural storms