In our last blog post, I wrote about what areas of marketing your business should focus on during these uncertain times as well as shifts in consumer behaviour and values. This article explores customer segmentation further during an economic downturn.
At the height of the COVID-19 pandemic, we adjusted to the home being the central hub of our lives, our humble homes transitioned into schools, offices, gyms, entertainment hubs and some customers took up online shopping habits. We were juggling multiple demands, our work life and home life merged into one. Being at home allowed time to reconnect, reassess and plan.
Eroding customer confidence, due to the economic climate means that customers mindsets have shifted resulting in ultimately a behavioural shift. During this pandemic, Australian consumers’ financial positions have shifted, meaning that it is now time to re-prioritise.
Professors John Quelch and Katherine Jocz from Harvard Business School have taken the legwork out of identifying customer groups during a recession, here is a quick overview of the different segments they identified:
Consumers facing extreme financial hardship that will immediately eliminate, postpone, decrease or substitute purchasing.
Majority of consumers fall into this category. They are lacking confidence in the short-term but remain optimistic about long-term recovery. If their situation worsens, they may migrate to the first segment.
3. Comfortably well-off
Consumers feel secure and have confidence that they will comfortably make it through the downturn.
Younger consumers that carry on as usual and love experience purchases as opposed to products, they are comfortably employed.
Fear of job loss, not being able to pay the bills and feed our families is top of mind for Australians. If we refer to Maslow’s hierarchy of needs, most consumers will now be focusing on the base of the pyramid.
Our stricter priorities and reduced spending mean that organisations need to adapt their offering to align with consumers evolving needs. As parts of the country slowly reopen, assessing key messaging and your product mix should be carefully executed with each of the customer segments in mind. While marketing departments are limited in how much change they can drive - you still need to be an advocate for customers to ensure you are delivering value and retaining your customer base.
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