In a recent interview, John Quelch, professor and author of the Harvard Business Review article "How to Market in a Downturn", has talked about a very interesting psychographics of consumers in the time of a financial crisis. He sees a few emerging segments of consumer’s psychology while making important financial decisions in the ‘downturn of the century’:

• Slam brake-ers - Stopping all buy decisions and cutting down on costs severely
• Pained but patient - Badly affected but are hopeful of a medium term recovery
• Live for today-ers - Not much affected since they didn’t have a lot of savings
• Comfortably well - Well cushioned from any financial impact, showing a moderate restrain

These segments have different behavioral traits when it comes to taking buy decisions. He goes on to outline a few important traits, outlined for the ‘Pained but patient’ segment,

• Essential: Essential livelihood commodities, that one can not do without. Here one important shift is visible from branded labels or niche products (e.g. organic produce) to private labels and generic goods
• Treat: The periodic indulgence that the consumers have to get a sense of satisfaction is becoming less frequent
• Postponable: Many durable purchases are being postponed or being upgraded rather than a outright purchase
• Expendable: Some expenses like vacationing are being dropped from the agenda or significantly minimized

It is interesting to see the impact of these segments and behaviors when it comes to consuming technology and related products or services. Are people consuming fewer services, e.g. changing service tariff plans, lowering renewal frequencies or postponing upgrades? Are these consumers exploring new ways of product consumption, e.g. going from licensed to ‘open source’, from ‘owned’ licenses to ’shared’ seats?

Do these behavior traits extend to the online purchases of general goods & services as well. How will people’s information behavior change? In a recent Economist article, ‘From buy, buy to bye-bye‘ a few trends in social information behavior have been highlighted,

A second shift in consumer psychology has been prompted by fallout of a wave of financial scandals leading to a deep distrust of big business institutions. This will also accelerate the use of social media, such as blogs and social-networking sites, by consumers looking for intelligence on firms and their products. As trust in brands is eroded, people will place more value on recommendations from friends and peers. Social media make it harder for brands to pull the wool over consumers’ eyes, but they also offer canny companies a powerful new channel through which to promote their wares and test new products and pricing strategies.

In these changing times, how should the persuasive strategies of  ‘Customer Experience’ change. Do the language of persuasion that held good in relatively better times, still talk to the ‘consumers in a crisis’. Will the brands need to talk differently? Does ‘Hope’ or ‘Optimism’ add a useful dimension in the psychometric framework of today’s consumer behavior. We need to find these answers fairly soon.

 Listen to this HBR Ideacast:  "How to Market in a Downturn."

Copyright 2009 Harvard Business School Publishing