Consumer Psychology in a Recession
John Quelch, professor at Harvard Business School, puts in a different perspective the market segmentation process. At a time when consumer confidence reaches the lowest level(25) since the launch of the consumer confidence index, it becomes clearer than ever that a new approach is much needed. Consumers tend to adapt their lifestyle to the exterior conditions, thus it is obvious that such a deep recession is bound to leave serious marks on consumer behavior. John Quelch goes further and introduces four new groups : The slam on the bricks, the pained but patient, the live for today and the comfortably well, divided by consumer psychology. The income or the lifestyle does not automatically place one into a category.
I will not go into details, as I don’t consider it necessary. Any segmentation can be a good one if it takes into consideration the economical context. The consumers will just try to replace their usual products with less expensive ones, will indulge less or even give up the non-essentials. Just ,,cutting costs’’. It can actually be a good lesson, adapting to a ,,normal’’, basic spending plan. But there will be a serious problem with recovery positioning, due to the fact that the longer the recession, the more consumers will teach themselves to abstain from unnecessary products, developing coping mechanisms. Therefore, the traditional segmentation scheme is obsolete and will remain this way even after the Recession has passed, although I seriously wonder if the consumers won’t fall into their old habits after some time.
But Recession doesn’t necessarily mean bankruptcy or being on the edge. ,,When credit is short, cash is king.’’ Who is strong on cash can gain additional market share just by keeping their marketing at the same level.
To conclude, the big R will surely refine the marketing strategy, the one thing we can count on is that the consumer psychology is taking a turn, and judging by the previous recessions, people are always looking for new products, that will bring added value to their lives, so it is highly recommended to concentrate on this if there are enough resources at hand.