Consumers in the US have shaken out into four distinct purchasing and attitudinal groups based upon how they have internalized the current recession and how they plan to spend after the economy improves, according to a new study from Decitica.
The four groups, Steadfast Frugalists, Involuntary Penny-Pinchers, Pragmatic Spenders and Apathetic Materialists were derived by analyzing the frequency, satisfaction and the self-efficacy associated with a variety of spending, purchase and consumption behaviors.
Details about each group are listed below.
1. Steadfast Frugalists
Steadfast Frugalists are committed to self-restraint, engaging in prudence with unequivocal enthusiasm. They make up about one-fifth o American consumers, representing all income and age groups. Decitica said that marketers will find this group to be the most challenging, as they are the least brand loyal and most likely to discount marketing messages.
One in eight (80%) of Steadfast Frugalists say the new behaviors they have adopted during the current recession will likely stay with them for a long time. This is in contrast to only 24% of Apathetic Materialists who feel this way.
2. Involuntary Penny-Pinchers
Involuntary Penny-Pinchers comprise about 29% of the population and have been severely affected by the recession. This group primarily includes households with less than $50K in annual in income, with more women than men.
This segment has been forced to embrace thrift in new ways. Though their actual behaviors currently do not differ widely from those of Steadfast Frugalists, they greatly dislike? spending time on money-saving strategies. Only 17%? percent find buying store brands or generic labels to be satisfying, compared with 59% of Steadfast Frugalists.
The recession also has taken a heavy emotional toll on Involuntary Penny-Pinchers, the study found. Members of this group admit to being more scared (77%), stressed (81%) and worried (87%) about the future than other groups.
3. Pragmatic Spenders
This group comprises 29% of US consumers.Fortunately, income has blunted 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 with 55% of Steadfast Frugalists.
Decitica said that Pragmatic Spenders are the most attractive group for marketers because of their higher spending power. And though it is true that they have curbed their spending, they are the most capable -? both psychologically and financially – to spend at pre-recession levels when they are able.
4. Apathetic Materialists
Apathetic Materialists, who are the least changed by the recession of all the groups, have not embraced the new frugality to the same extent as others and get minimal satisfaction from such behaviors. Only about 6% in this group find price comparison to be satisfying, compared with 85% in the Steadfast Frugalists camp.
The Apathetic Materialists segment has more men (55%) than women, and more younger consumers (72% below age 40). They are the least driven by price: only 8% admit to being very focused on value compared with 30% of Pragmatic Spenders and 52% of Involuntary Penny-Pinchers.
Need for a New Lens
The study was undertaken to get a better picture of consumers’ recession experiences and how they have affected purchasing behavior and attitudes – in both the short and long term. “This research decisively shows that marketers need a fresh lens through which to view consumers in the post-recession world, said Val Srinivas, principal at Decitica, stated, “Marketing strategies that ignore the diversity of consumers’ recession experiences won’t have the desired potency.”
About the survey: Decitica engaged OTX Research to conduct the online survey between August 5-12, 2009 among a sample of 1,055 individuals spanning various income and age groups. The consumer segmentation approach is based on the premise that the best way to predict future behavior is to analyze how intensely a particular activity is already being practiced, how much satisfaction is derived from an activity, and how confident someone is in practicing desired behaviors. The study gathered extensive data on the frequency and satisfaction with twenty nine different purchase and consumption activities and the self-efficacy associated with various spending and saving strategies.