I have been looking at some work done by John Quelch and Katherine Jocz at Harvard Business School on Recession Psychology.

They think we should look at our customers in a slightly different way.
We are used to segmenting them into demographics (over 40; middle income; empty nesters) or lifestyle (adventure seekers; going green)

In a recession these segments tend to be less relevant than psychological segmentation
- Which takes into consideration emotional reactions to the downturn

The New Segmentation:

The ‘slam on the brakes’ segment
• Feel most vulnerable and hardest hit financially
• Reduces all types of spending
• Typically lower income consumers
• Anxious higher income if health or income circumstances change
The ‘pained but patient’ segment
• Resilient and optimistic about long term
• Less confident about their ability to maintain their standard of living short term
• Selectively economise in all areas, but less aggressively than ‘slam on the brakes’
• The largest segment including the great majority of households unscathed by unemployment
• A wide range of income levels
The ‘comfortably well off’ segment
• Feel secure
• High end purchasing continues, although less conspicuously
• Top 5% income bracket
• Also, less wealthy but confident of the stability of their finances
The ‘live for the day’ segment
• Carries on as usual
• spending remains largely unchanged
• Extend their timetable for larger purchases
• Typically urban and younger

And of course, each of these segments will allocate its purchases among the following categories:

Essentials
• Necessary for survival or perceived as central to well being
Treats
• Indulgences whose immediate purchase is considered justifiable
Postponables
• Needed or desired items whose purchase can reasonably be put off
Expendables
• Unnecessary or unjustifiable

I have adapted this to look specifically at the travel industry and offer some suggestions
I would argue that travel, certainly the annual holiday, can varyingly fall under all these categories.
The general trend we are seeing is business is down some 20/30% but with a very late booking pattern.
Which suggests some people regarding their holiday as expendable, but most as a treat with the decision to actually spend postponed as late as possible.

I have also looked at how you market to the customer based on both his segment and his attitude to travel as a category – that’s for the next blog

Travelview

This site will be my musings on what is going on in the travel industry.

My first ‘blog’ thought is about marketing travel in a constantly changing environment

Consider the dramatic changes in the travel and leisure marketplace in recent years.

The real revolution of the Internet is that it has incredibly increased the consumer’s knowledge – and driven a quest to gain more from life and their travels. It is changing the way they research their holidays and leisure time.

It is also changing how, where and when they book, thus impacting and changing distribution channels. And as well as the consumer changing, so are travel agents who are fast becoming travel providers competing with tour operators.

Consequently product offerings must be geared to your customer and his changing wants and needs.

And more importantly, your marketing must be focussed on where he is looking. Traditional marketing is in serious decay. Brand loyalty, or what little there was, is disappearing. Marketing must now be targeted at the new marketplace – on-line searching. And it must be measurable.

‘50% of my advertising works, I just don’t know which 50%’ – is dead!

We can now track what works and what doesn’t work. What gives us ROI – and what doesn’t?

You can see the customer journey through your website, assess where you are losing them, and fix it. Marketing is now about getting them into your site, retaining them, and converting them – at reasonable costs. Remember, every day hundreds of thousands of consumers are putting search phrases into the web which your product would match – are you there for them?

But that’s not all. On top of all this change we are in a sustained downturn in the overall economy, with no certainty as to when it will improve.

Wow, so much change!

But what do we think might change as we look forward?

Exactly the same – the consumer, distribution channels, marketing and the economy will all continue to evolve and change rapidly – it is the new way of the world.

Our challenge is that we can only guess at how they will change.

So we need to build business plans which accept an uncertain future caused by an ever changing world and based on:  

• Understanding the consumer
• Addressing product and distribution changes
• Measurable marketing
• An Organisation with a flexible culture and people who embrace change

Are you ready?

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