The Idea in Brief

No two recessions are alike, so you’re in poorly charted waters every time. How should you market in this downturn? Resegment consumers according to their emotional responses to the recession:

Slam-on-the-brakes

• consumers feel hardest hit and reduce all spending.

Pained-but-patients

• economize, but less aggressively.

Comfortably well-offs

• keep buying, but more selectively.

Live-for-todays

• carry on as usual, though delaying major purchases.

Also identify how members within each segment categorize purchases:

Essentials

• are necessary for survival.

Treats

• are justifiable indulgences.

Postponables

• are desired items that can be bought later.

Expendables

• are unjustifiable.

Tune your marketing strategies accordingly. For example, for slam-on-the-brakes consumers buying treats: shrink packaging sizes, hold prices down, and advertise your products as “you deserve it” small indulgences.

The Idea in Practice

Additional suggestions for tailoring your marketing strategies to consumers’ recession psychology:

Manage Your Marketing Investments

To get the biggest returns from your marketing budgets:

• Assess opportunities. Determine which of the four segments (slam-on-the-brakes, pained-but-patient, comfortably-well-off, live-for-today) your core customers belong to and into which consumption category (essentials, treats, postponables, expendables) they assign your products or services. Then tailor your marketing strategy accordingly.

Example:

Prospects are reasonably good for generic products and store brands sold to slam-on-the-brakes consumers who’ll forgo familiar brands in favor of lower prices.

• Plan for the long term. Don’t panic and alter your brand’s fundamental value proposition. You may attract a few new customers. But you’ll confuse and alienate your loyal customers, weakening your position once recovery begins. Instead, keep investing in market research to discern what consumers will want when the recession eases.

• Balance your communications budget. Invest in Internet advertising: It’s targeted and relatively cheap, and its returns are easily measured. But don’t ignore broadcast media: It’s vital for building and sustaining mass-market consumer brands.

Market Throughout a Recession

To pare costs and shore up sales while preserving your brands’ long-term health:

• Fine-tune your product portfolios based on shifts in customers’ buying habits. For example, with durables purchases that can’t be postponed, pained-but-patient consumers will trade down to models that stress good value rather than enhanced features.

• Improve affordability; for instance, by reducing thresholds for quantity discounts, reducing serving sizes (and pricing), and lowering consumers’ upfront adoption costs.

• Bolster trust in your brand by reinforcing consumers’ emotional connection to the brand and demonstrating empathy for their plight.

Example:

Dell has crafted an array of messages customized to resonate with each segment; for instance, “Depend on Dell for simple solutions in tough times” and “Weak economy, powerful you.”

• Position your brand for the inevitable recovery by preparing now for possible long-term shifts in consumers’ values, attitudes, and purchasing behaviors.

Example:

The shock of the current downturn and anger over the malfeasance that fueled it will likely accelerate preexisting consumer trends toward reduced materialism, commitment to sustainability, higher expectations of corporate social responsibility, and resentment of marketing that treats people as soulless, mechanical consumers. Customers will increasingly demand that businesses act in their—and society’s—best interests. And they’ll factor companies’ business practices into their brand choices.