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Understanding Consumer Segments Before we get into specific tactics, it is important to understand that economic hardship affects various consumer segments differently. During the Great Recession, the Harvard Business Review published an article to help businesses and marketers better understand recession psychology. They identified four types of consumers:


Slam-on-the-brakes consumers feel the most vulnerable and the hardest hit financially. They reduce all types of spending by eliminating, postponing, decreasing, or substituting purchases.


Pained-but-patient consumers tend to be resilient and optimistic about the long term but economize all areas in the short term.


Comfortably well-off consumers feel secure about their ability to ride out economic trends. They consume at near-prerecession levels, though they tend to be a little more selective about their purchases.


Live-for-today consumers carry on as usual and for the most part remain unconcerned about savings. They respond to downturns mainly by extending their timetables for making major purchases and tend to be younger and more urban.


Understanding Your Product or Service’s Consumption Category Regardless of which group consumers belong to, they will prioritize consumption by sorting these into four categories: • Essentials are necessary for survival or perceived as central to well-being.


• Treats are an indulgence whose immediate purchase is considered justifiable.


• Postponables are needed or desired items whose purchase can be reasonably put off.


• Expendables are perceived as unnecessary or unjustifiable. All consumers consider food, shelter, and


clothing to be essentials, and most would put transportation and medical care in that category. If you sell a product or service in the Essentials category, the recession may not have a significant impact on your business. After Essentials, Treats is the next most


recession-proof category. All but Live-for- today consumers, who continue purchasing at prerecession levels, will reduce their treat consumption during uncertain financial times, with most consumers continuing to buy some of their favorite items throughout down periods. Slam-on-the-brakes and pained-but- patient consumers may switch to lower-cost alternatives or volume discounts to find savings on treats, so if you are able to offer either of these, you’ll be in good favor with these two consumer groups.


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