While the economic downturn is affecting everyone, not all consumers are responding in the same way. In this two-part report from The Nielsen Company, we'll look at how some marketers are finding opportunities in these tough times. (Part Two will appear in this Friday's edition of TGR's Dispatch.)

With the country's economy in the midst of a long-term recession, the behavior of American consumers is changing, notes Howard Shimmel, Nielsen's senior vice president, client insights, and the author of the report. The consumer confidence index reached an all-time low at the end of 2008, and spending is dropping rapidly. Although the downturn is seemingly affecting everyone, consumers actually respond in ways that vary significantly. And while almost everybody is cutting back, there are many different methods to trim costs. Looking at these differences can create opportunities for manufacturers and advertisers, even during a prolonged recession.

All Consumers are Not Alike
In order to analyze how the economic downturn is affecting consumers differently, Nielsen created a segmentation that divided households into groups based on their behavior and reaction to the decline. The recession analysis groups consumers into eight segments. The segments range from the "Recession Indifferent" -- those who do not alter their purchasing habits at all -- to the "Panic Stricken," those who take drastic action to greatly reduce living expenses and cut back in all departments to do whatever it takes to save money.
The remainder six consumer groups are classified by their saving methods and are categorized as:

Recession Insensitive -- only slightly affected by the downturn and will cut back on spending for luxuries such as entertainment and dining out.

Switch to Private Label -- tend to be younger, larger households known as "young, bustling families" and often represent plain, rural living. They buy generic brands or store labels.

Light Coupons & Sales -- typically represent older and smaller households who take advantage of light coupons and sales.

Stock-up & Save -- generally older couples who live in a comfortable affluent situation and are know as "empty nesters." This group remains loyal to name brands, but depends on coupons and sales to stock up while they can.

Switch Stores for Best Deal -- consumers who typically live in cosmopolitan centers and will switch stores looking for the best deal.

Brand Disloyal/Promo Sensitive -- these consumers will switch from name brands to generics or brands on sale looking for the best deal.

More Than Just Income Level
Income alone does not have a direct correlation with the economic impact segmentation. More than half (57 percent) of the "Stock Up & Save" consumers earn over $50,000 per year, compared to only 47 percent of the those in the "Recession Insensitive" group. Likewise, a higher percentage of people with lower incomes are in the "Switch to Private Label" group than in the "Panic Stricken" segment. Other characteristics such as household size, age and location are also factors in consumers' ability to tolerate a recession. Which is why trying to reach "Recession Indifferent" consumers with an advertisement by targeting higher incomes is probably not efficient.

With the consumer landscape divided between consumers who seem to be minimally impacted by the recession and those who are extremely impacted, it's vital for advertisers to effectively reach those consumers who will continue to spend through these tough times.
Stay Tuned for Part Two on Friday, May 1…