By Steve Goldberg and Barbara Taylor

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As we ride through the waves of the current recession, there is much speculation about the kind of economic reality that will emerge on the other side of this downturn.  Some forecasts predict that improvement in the economy, employment, income, and spending will be a long, slow process over the next several years.

There is also considerable discussion about consumer behavior and how our spending and saving patterns will change as the economy recovers.  It’s fairly obvious that, as a nation, our general pattern prior to the recession included overspending and the accumulation of unmanageable amounts of debt.  A recent report from Reuters/University of Michigan Consumer Surveys (2009)* reveals a decline of consumer confidence in personal finances, job prospects, and the purchase of housing, vehicles, and “major household durables.”

Still, it’s hard to predict whether the current financial restraints we’re experiencing are sufficient to result in permanent changes in our consumer habits.  Will we go back to our old, shop-till-you-drop ways (if we can get away with it)?  Or, will we adapt to a consensus of “new normal behavior” that reflects a more modest baseline of financial restraint wherein we live within our means?

Which type are you?

A new study by the Decitica Marketing Research Group** examined extensive data on the current attitudes and behaviors of consumers across various categories of gender, income level, and age group. Their analysis suggests that four distinct groups will emerge from the current recession:

Steadfast Frugalists:

  • Committed to self-restraint, engaging in prudence with unequivocal enthusiasm.  They make up about 20% of American consumers, with representation from all income and age groups.
  • 6 in 10 are women.
  • Steadfast frugalists are the most disciplined in their behaviors and are seriously committed to self-restraint.
  • 29% of this segment identified themselves as “tightwads” even before the recession.

Involuntary Penny-Pinchers:

  • About 29% percent of the population, this segment is the most severely affected – financially and emotionally – by the recession.  This group is over-represented by people in their 30’s and 40’s; 6 in 10 are women.
  • This segment has not become thrifty by choice; their new-found frugality has been forced upon them by the recession.  Half of them have not saved any money for emergencies.
  • 38% of this group spent more than they earned last year (meaning, they were not that disciplined to begin with).
  • Their behavior patterns are similar to Steadfast Frugalists except in their aversion to expending effort in money-saving strategies:  only 17% find buying store or generic labels to be satisfying, compared to 59% percent of Steadfast Frugalists.
  • Emotionally they admit to being more scared (77%), stressed (81%), and worried (87%) about the future than other groups.

Pragmatic Spenders:

  • Pragmatic spenders have also curbed their spending but they are less troubled by the recession and have the greatest capacity – both psychologically and financially – to willfully resurrect their past spending patterns.
  • This group comprises 29% percent in the population; 6 in 10 are men; and the majority are in their 60’s.
  • Sufficient income has reduced the effects of the recession on this segment.  Only 28% of Pragmatic Spenders feel the recession has changed what and how they will buy in the future, compared to 55% of Steadfast Frugalists.

Apathetic Materialists:

  • Apathetic Materialists, about 22% in the population, seem the least changed by the recession in their spending habits and future intentions.
  • They have not embraced the new frugality to the same extent as others as they don’t get much satisfaction from such behaviors.  Only about 6% in this group find price comparison to be satisfying in contrast to 85% in the Steadfast Frugalists group.
  • This segment is made up of slightly more men (55%) than women; most are younger consumers (72% are below the age of forty).
  • They are the least driven by price: only 8% admit to being focused on value as compared to 30% of Pragmatic Spenders and 52% of Involuntary Penny-Pinchers.

Questions to consider:

  • Which of the four segments to you identify with?
  • Does your choice of segment change when you think of who you were (your attitudes and behaviors) a year ago?
  • Do you predict a further change in yourself/your choice of segment in the future, e.g. a year from now?
  • The above study found that all four segments confess to getting less pleasure from buying things now as compared with the time before the recession. Is this true for you, too?
  • What else have you learned about yourself and your needs as a result of this current recession?

Sources
*Reuters/University of Michigan. (2009). Surveys of consumers. Ann Arbor, MI
https://customers.reuters.com/community/university/default.aspx

** The four segments are expanded in Decitica’s Marketing to the Post-Recession Consumers study highlights:

http://decitica.com/?p=618&cpage=1

 

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