by Mariel Alison L. Aguinaldo
The recession triggered by the COVID-19 pandemic has caused a shift among consumers. Changes in purchasing behavior have had companies scrambling to retain and recapture their loyal customers.
For Cris Tan, marketing director of e-retailer Zalora Philippines, the first step is to think out of the box and acknowledge that the typical market segmentations may not be applicable during this period. “It’s very important to review or try to understand customer psychographics, [which is] basically their emotional reaction to the economic environment,” she said during a recent webinar.
But where does a marketer start amid all of these changes? Citing findings by the Harvard Business Review, Ms. Tan shared three steps that can you take to put your initiatives on the right track.
1. Identify which category your product falls under.
Different products and services appeal in different ways across segments. Therefore, it’s key to first identify which category yours falls under.
• Essentials are deemed necessary for survival or perceived as central to well-being, such as food and hygienic products.
• Treats are indulgences whose immediate purchase are considered justifiable by the consumer, such as chocolate, ice cream, and more affordable beauty products like lipstick.
• Postponables are desired products and services that can be reasonably put-off for the future, such as salon treatments.
• Expendables are perceived as unnecessary and unjustifiable at this time, such as luxury products.
2. Familiarize yourself with the new market segments.
Now that you know your product category and its characteristics, it’s also vital to understand who your consumers are and how they are behaving during this particular time.
• Slam-on-the-brakes consumers have been hit hardest by the pandemic in terms of finances. While they’re usually from low-income families, anxious higher-income consumers may fall under this segment, especially if health or income circumstances take a turn for the worst.
• The pained-but-patient segment is the largest among the four, composed of consumers who were unscathed by unemployment. While they’re resilient and optimistic in the long-run, they have already started to economize and will migrate further to the slam-on-the-brakes segment as times get tougher.
• The comfortably well-off are consumers who either belong to the top 5% income bracket or are a little less wealthy but are secure in the stability of their finances. They consume almost as much as they did prior to the pandemic, though they may become a little more selective. They’re also more conscious now with conspicuous purchases, understanding the need for sensitivity given the current situation.
• The live-for-today segment is typically young. They’re not very concerned with savings and continue with their usual purchases. Since they prefer to spend on experience rather than items, they’re also more likely to rent rather than to own.
3. Appeal to your consumers through the right points.
With both puzzle pieces in your hands, it’s time to see how your product category can fit together with the different segments.
While essentials may seem relatively stable even during the pandemic, it’s still important to emphasize price particularly for the slam-on-the-brakes and pained-but-patient segments. This can be done through tactics like bundling and offering lower-priced product alternatives. For the comfortably well-off and live-for-today segments, continue raising awareness on your product and—especially for the latter—reminding them that they cannot live without it.
“It will be easy to position [treats] as a sort of reward for customers and as morale reserves, especially during this period,” said Ms. Tan. Consider shrinking sizes for slam-on-the-brakes consumers and offering a rewards or loyalty system for the pained-but-patient. as for the comfortably well-off and live-for-today segments, advertise your product as something that they deserve because of success and an opportunity to seize the moment, respectively.
For postponables, it’s best to get consumers to start investing in them already. Try offering layaway plans and low-cost financing options, such as installment payment plans, for the slam-on-the-brakes and pained-but-patient segments. Communicating savings and quality-of-life benefits may help for comfortably well-off and live-for-today consumers. Across all segments, advanced booking appointments for services can help secure commitment.
Since expendables are mainly frowned upon during this time, enable discrete purchasing for your comfortably well-off and live-for-today segments. And while it may seem silly to continue advertising expendables to slam-on-the-brakes and pained-but-patient consumers, continuous awareness advertising will help them recall your product once the pandemic is over.