Many have proclaimed a "new age of frugality," and marketers are adjusting their projections to deal with the new reality. The smart marketers are adjusting their tactics, too.
A recent survey by consulting giant Booz & Co. polled more than 2,000 American consumers and verified that they really have tightened their belts. They reduced their spending in a wide variety of categories.
Here's where budgets have been slashed: The top 10 were food away from home, electronics, clothing and media/entertainment (each more than 50 percent); home improvements and alcohol (both more than 40 percent); and pets/toys/hobbies, financial products and services, tobacco and nonalcoholic beverages (each more than 30 percent).
Also, 65 percent of consumers now believe that saving is more important than spending, and most will sacrifice convenience for price. They're happy to use coupons to secure good prices.
The Bureau of Economic Analysis reported a 3.9 percent savings rate in the fourth quarter of 2009 compared with 1.5 percent just two years earlier. Americans are definitely saving more.
Booz consultants identified several distinct consumer segments, including:
Shoppers 2.0. They are heavy users of technology and the Internet. They buy online, are frequent coupon users and have less brand loyalty than many others.
Deal Hunters. This group is the most price-sensitive. Like the Shoppers 2.0 group, they are heavy coupon users, and they exhibit little brand loyalty. They are more likely to use the Internet to compare prices but are less likely to buy online.
Channel Surfers. Good deals trump convenience for this group.
Loyalists. They're unlikely to change brands or leave their preferred retail channel. This segment does, however, use online research and buys online if its favorite brands are available.
Big brands adjustMany brands have already reacted to consumers' new habits by adjusting their product offerings, promotions and pricing. Drugstore chain CVS installed coupon kiosks for members of its loyalty program. CVS Extra Care cardholders can get up to five coupons at the point of sale based on past buying habits.
High-end restaurant chain Morton's has added a $5 entree of three mini-burgers available at the bar. Whole Foods, in a bid to combat its image of high prices, developed a customized magazine for shoppers, the Whole Deal , to distribute coupons. The result: coupon redemption is up 325 percent compared with two years ago.
Today, you not only have to segment customers by age, gender and income, but also need to focus on how they shop. After learning "how," you can adjust your marketing plans for maximum impact.
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