This is the 2nd in a series of several posts this week from a review of the April issue of the Harvard Business Review, which focuses on navigating in a downturn economy.
Article Review: How to Market in a Downturn (by John Quelch and Katherine Jocz).
The authors suggest that marketers in any company consider four (4) psychological states that their markets might be segmented into:
1. Slam-on-the-Brakes: People most affected by the recession—lower income or anxious consumers. They halt all but the most necessary of purchases.
2. Pained-but-Patient: More stable and optimistic about the long term. Less certain about the future. Cautious about larger, less necessary purchases. Typically the largest segment of population, who are often unscathed by employment issues.
3. Comfortably Well-Off: These folks continue to purchase nearly at the same levels as pre-recession. They think they can ride out the bad time.
4, Live-for-Today: This group tends to be urban and younger consumers, unconcerned about savings, who yearn for experiences, less than possessions. They tend to buy today and are unlikely to change their habits.
I like the easy-to-comprehend matrix that describes each class of consumers and well worth studying and applying to your particular market segment.
The authors have also have created a second and equally useful matrix called “Tailoring Your Tactics” to the above 4 psychological market against types of products at risk described as follows:
--Essentials—basics products/services needed to sustain life (survival)
--Treats—indulgent products/services considered justifiable
--Postponables—needed products or wanted but can be put off
--Expendables—products/services that are both unnecessary and unjustifiable.
For example, the authors suggest when marketing Treats to the Pained-but-Patient consumer, offer frequent patron use items (buy 3 and get one free), advertise products as morale boosters, and advertise products as options to more expensive and frivolous luxuries.
The authors also offer a list of “7 Smart Ways to Economize on Advertising.”
For example: “#4 Advertise brands jointly with a marketer in a different product category that targets a similar consumer segment.
This article is well worth the read in its entirety for any business in the midst of trying to redefine a strategy for troubled waters.