The world knew consumer confidence was going to take a hit, but recent numbers put into stark relief how bad the situation is. A report by The Mercury News finds the consumer confidence index in freefall, down 26% from last month to 86.9, and down 33% from this time last year.
The report is not all doom and gloom, and notes that consumers’ outlook for the economy has improved slightly since last month. But the ramifications for the wider economy after a national lockdown drags into its second month.
According to the Conference Board, which publishes the research, the data is indicative “of a larger contraction, instead of a temporary shock.” Hopefully consumer outlook continues to increase and the confidence index bottoms out, but how can marketers adapt to such conditions?
The lessons of the 2008 financial crisis can bear repeating and marketers must pay close attention to the psychology of their consumer. According to a Great Recession-era Harvard Business Review article, consumers can be categorized into four groups; the slam-on-the-breaks segment, the pained but patient, the comfortably well-off, and the live for today segment. Each segment has its own motivations and thought processes, and understanding which category your average consumer aligns with is critical to tailoring your marketing messages.
The slam-on-the-breaks segment might include lower income individuals, but also those of higher-income that may be very anxious about the state of the economy. The pained-but-patient segment, which represents the largest group, includes those households that are still employed and therefore harbor a more optimistic outlook about the long-term recovery, but are less confident about the near-term.
The comfortably-well-off aren’t worried about their current or future predicament and feel comfortable in their ability to ride out the storm, while the live-for-today segment just goes with the flow, more likely to adjust timelines for major purchases rather than change habits.
How these different segments categorize a product or service also changes, all consumers tend to prioritize essential purchases in favor of those considered expendable, the main difference between the segments being what they consider expendable.
When hard times befall any economy, consumers of every stripe are forced to examine each purchase more carefully and determine if now is the right time for a less-essential product or service. Marketers must change their copy and verbiage to target the concerns of consumers who may feel that now is not a good time to invest in their product.