Classification of CoVid Customers
A friend shared a link to a McKinsey article about Consumer Shifts post-CoVid and what caught my attention was the classification of the respondents to the survey used for their article.
They divided the market into five different segments which invent a totally new way of looking at customers in the lockdown period. Hopefully, we will be out of the restrictions forced by the virus, but the segmentation has thrown up an innovative way to focus on target customers.
McKinsey classifies them as:
Affluent & Unaffected
Uprooted & Unemployed
Financially secure but anxious
Out trying to make ends meet
Disconnected & Retired
I agree that this segmentation may be valid only in the CoVid period but I feel that their behavior may continue even post CoVid. Hence, understanding where they were slotted in the pandemic period is a predictor of their attitude post-pandemic.
I quote here verbatim the classification from the McKinsey report.
Affluent and unaffected: These consumers express general optimism about the future (~20 percent higher than the overall US consumer population), skew male (60 percent), and make more than $100,000 a year. They tend to be able to stay at home during the pandemic crisis, allowing them to shop more online. This group is slightly less price-sensitive than other cohorts due to greater job stability.
Uprooted and underemployed: These consumers are feeling a major impact on both their finances and health due to job insecurity. They are cautious about how they spend money, with low optimism about future economic conditions. Not surprisingly, this group is trading down to essentials and value, swapping out brands, and shopping online when possible.
Financially secure but anxious: This population is largely 65 years old and older and is generally pessimistic about economic conditions after COVID-19, which has had a major impact on their habits. This group has expressed the greatest need for hygiene transparency, with above-average concerns on safety and well-being and concerns about the ability to get necessary supplies.
Out trying to make ends meet: These consumers are being cautious about how they spend money and feel that their jobs and job security have been heavily impacted by COVID-19. This group has a significant representation from minority groups and rural populations. They are less likely to be able to stay at home (hence their lower likelihood to be part of the homebody economy), but they are strongly moving toward shopping for essentials and value.
Disconnected and retired: This category denotes those who are retired, over 65, and have a lower income level than the financially-secure-but-anxious segment. They are broadly optimistic about economic conditions after COVID-19 and are less likely to display any of the next-normal characteristics. Predominantly from Southern and suburban areas of the country, this group has not exhibited significant changes in shopping behavior.
The research was conducted in the US which might also be true for many other countries. In UAE too, we may have similar segmentation in varying degrees.
As a company, we are looking at each segment and see how our service appeals to these markets. We plan to bring about modification or innovations that can address a majority of these markets.
Do you agree with these segments? Do you have a differing opinion? Your comments will help me and others who will read this post