John Quelch’s article for Harvard Business Review this month (How to Market in a Downturn) features his research into patterns of consumer and corporate behaviour in a recession; focusing strategies that either propel or undermine performance.

Quelch argues that in a recession, traditional segmentation approaches can be dangerous, and that you should segement psychologically based on consumers’ likely emotional reactions to your offer(s) in the current climate. He goes on to outline how you should consciously emphasise different aspects of your proposition depending on those reactions.

He frequently emphasises that marketers should frequently examine their core customers’ changing needs in a recession, calling on marketers to “put customer needs under a microscope”. He also stresses that your core, loyal customers are “the primary, enduring source of cashflow and organic growth” saying that marketing to these isn’t optional – it’s a “good cost”. Many B2B marketers feel the same way, and this is certainly a major factor in the increase in account-based and industry-focused marketing programmes that we are currently undertaking on behalf of our clients. 

I believe there are some very strong parallels bewteen Quelch’s 4 psychological segments for consumers and similar segments in B2B based on company, heritage and industry, (taking into account the psychology of the decision-making unit too.) He outlines 4 consumer segments which I think it’s useful for B2B marketers to consider in their own strategic planning, so have repurposed for B2B below:

-Slam-on-the-brakes: your most vulnerable and hardest-financially-hit customers

-Pained-but-Patient: customers who are resilient in the long term but are pessimistic about short-term prospects for recovery and are therefore “making do and mending” and keeping their purse strings tight (the largest group)

-Comfortably-well-off: secure about their ability to ride out the recession, now and in the future, perhaps counter-cyclical industries

-Live-for-today: carry on as usual, probably more inexperienced or younger companies with fewer responsibilities, or those challengers in conter-cyclical industries vying for market share.

Once your customers have been segmented, you can take a look at your offers. Quelch suggests (despite which segment customers fall into) all of them mentally sort products into 4 main categories: essentials, treats, postponables and expendables. Again, it’s my belief that B2B marketers could get a great deal of strategic value from examining their own products in this way, and then adjusting the propositions to target each segment in the most appropriate way. i.e. a company exhibiting “slam on the brakes” behaviour will not respond well to an “expendable” offer. However, a “pained-but-patient” company may well buy certain products or services as a more affordable alternative to replacing something more expensive.

A final few points to emphasise – Quelch maintains throughout the piece that it’s a focus on existing customers that will see companies through the downturn. He stresses frequently that you need to research them, speak to them, understand their future needs, and how the downturn will ultimately change their behaviour, in order to maintain good cashflow, market share and ultimately organic growth. Before reaching for the marketing cost sledgehammer, instead consider a scalpel. In this environment, marketers must spend to reach their client base, bolster trust, reinforce core values and influence choices. Get it right, and you’ll protect the business through the downturn, and have great market intelligence and client relationships to be ahead of the crowd in the recovery.