Targeting consumers in tough times

As a result of the recession, consumers are behaving differently as they make decisions about what and when they will buy. Learning more about just how differently consumers are reacting to the recession could prove meaningful and open the door to new opportunities as some expect the new consumer behavior to last far beyond the economic downturn.

In order to examine the differences between how consumers are coping with the recession, The Nielsen Company in their Economic Impact Segmentation study conducted in 2009 developed a segmentation of households based on their consuming behavior and reaction to the recession. The analysis grouped consumers into eight economic impact segments, ranging from the Recession-Indifferent to the Panic-Stricken.

One of the most interesting findings was that income level alone did not directly correlate with the segments. As income level went up, consumers did not necessarily become more recession-indifferent along with it. More than one-half (57%) of the Stock-Up-and-Save households earn over $50,000 a year, compared with 52% of the Panic-Stricken and only 47% of the Recession-Insensitive group.

What does it all mean? Well, there are probably other factors at work besides income level that determines how a household reacts to a recession; age, size of family and location come quickly to mind. So it may not be a great idea to target just higher income level households to boost sales.

The Recession-Insensitive and the Recession-Indifferent were actually the two segments The Nielsen Company reported that marketers should be targeting. It’s these two groups who will continue to spend in these tough times.

Consumer groups classified by their behavior and reaction to the economic decline are:

- Recession-Indifferent - those who will not alter their purchasing habits at all.

- Recession-Insensitive - only slightly affected by the economic downturn but will cut back on spending for luxuries such as entertainment and dining out.

- Switch-to-Private-Label - tend to be younger, larger households and often represent plain, rural living. They will buy generic or store brands.

- Light-Coupons-and-Sales - typically represent older, smaller households who use coupons lightly and take advantage of sales.

- Stock-Up-and-Save - generally older couples who live in comfortable affluence. They remain loyal to name brands but depend on coupons and sales to stock up.

- Switch-Stores-for-Best-Deal - consumers who typically live in cosmopolitan centers and will switch stores looking for the best bargain.

- Brand-Disloyal/Promo-Sensitive - consumers who will switch from name brands to generics or whatever brands are on sale.

- Panic-Stricken - those who will take drastic action to greatly reduce living expenses and cut back in all areas to do whatever it takes to save money.