When popular sentiment recovers, and our economic underpinnings feel more stable day-to-day, how will the behavior of the American consumer have changed?
The marketing strategy firm Decitica has released a thoughtful and interesting study that suggests marketers will have to think about consumer segmentation differently, and that posits that the changes in behavior currently manifested will remain present for an extended period of time.
Decitica operates with the assumption that people will do things in the future that they are doing repeatedly today with a high degree of satisfaction and confidence. That perspective suggests that “The Great Recession,” as the researchers term it, has the power to change consumer behavior on a broad scale. The two factors driving this potential for change are the sheer length of the recession, which creates the context for repeated actions, the the sheer breadth of the recession, which creates the context for a forceable change in behavior because of a change in circumstance.
The Decitica survey identies four distinct consumer segments emerging from the recession:
- Steadfast Frugalists, 20% of the population;
- Involuntary Penny-Pinchers, 29% of the population;
- Pragmatic Spenders, 29% of the pipulation; and
- Apathetic Materialists, 22% of the population.
In their report, the researchers characterize the first two segments as being particularly challenging for marketers to influence, because of constraints in either their resources or habits. The second two segments offer more potential for marketers to influence.
In terms of demographic segmentation, the frugalists and the penny-pinchers are 60% female. Pragamatic spenders are largely male, and the aparthetic materialists, who are predominantly members of GenY, have slightly more men than women in their ranks.
What does Decitica’s research tell us about the shift in disposition of these four segments?
First, buying isn’t a pleasure sport anymore. The percentage of men with a household income of more than $75,000 who say they get a lot of pleasure from buying things has declined from 61% to 48% in the last year, and the respondents don’t expect the pleasure of buying to significantly increase in the year to come.
Impulse buying has declined dramatically, by close to 200 basis points on average for all fourth of the consumer segments.
This change in buying behavior has been accompanied by a increase in negative emotions like stress, worry and fright. The majority of respondents report that the levels of stress and worry that they have experienced in the past year continue to exist.
These results, which are more closely denominated to actual consumer activity, align with the broader sentiment surveys published by Gallup and The Conference Board. In addition, the short-term buying intention and consumer sentiments reported by BigResearch reinforce the conclusions presented by Dectica.
The implications are significant for marketers. In an environment where shopping is not an activity that satisfies emotional needs, a marketer needs to effectively communicate to a consumer the utility and relative value of the goods or services. A perceived need has to be clearly satisfied.
This suggests that we will shift back to an advertising and marketing approach that is clearly benefits driven, and that product design and development will focus on core quality and application.
Ironically, this kind of market generates more relative value for companies with strong brand identities that support their basic product promise. And, ironically, the marketing tools available to companies in the Web 2.0 world — such as social media and content marketing tools — can create a marketing information environment that generates the security and confidence that cautious and concerned consumers will need to make buying decisions.
Here’s the Decitica presentation summarizing their survey findings.
