My theory is that in this point of the current economy quite a few people will be looking at replacing what they consume with lower cost alternatives. A lot of them will do it by turning more and more often to the Internet (think Google) to see if they can:
- find their preferred brands cheaper online,
- find cheaper replacement brands that have most of the qualities of their preferred brands (i.e. organic, environmentally friendly, tastes as good, etc.).
This is why I think that for certain online retailers (small or large) the current economic crisis is a golden opportunity. All they have to do is:
- Concentrate online marketing efforts on their lower cost items,
- Optimize for search engines the sites on which they sell these products.
I was reading recently an article in the April issue of the Harvard Business Review (HBR) called "How to Market in a Downturn". Basically HBR divided consumers into 4 types:
- Slam-on-the-Brakes
- Pained-but-Patient
- Comfortably-Well-Off
- Live-for-Today
The HBR also created 4 categories of products that people buy:
- Essentials
- Treats
- Postponables
- Expendables
The article displayed a very nice chart describing how each consumer type is changing their spending habits for each of the 4 product categories. What the graph told me was that the majority of people will keep spending money on at least 2 of the categories, but they will become more aware of value and will be willing to buy alternative brands for less money. I would think that most people form the chart will fall within the first two types, and there will be also a not-so large number of people in the third type that will act the same way. The media is repetitively crying out "recession" and "economic crisis", which has probably created such a subconscious scare in most people that some are probably looking for cheaper alternatives just because they think they should.
If you sell products online that are within the Essential or Treats categories you should market your lowest priced ones on the Internet as much as you can.
Also, I would like to share with you my own experience from yesterday, which makes me a great example of what I have said so far. I realized it after the experience.
We love espresso and drink quite a bit of it at home. We usually buy Intelligentsia espresso beans from the local coffee shop or the grocery store. It costs $14/lb. My partner was mentioning that maybe we should look for a less costly alternative (even though we can afford the $14/lb).
Naturally, what I did was to turn to the Internet for information. Subconsciously, I followed exactly the model described in the article. First, i wanted to find Intelligentsia coffee online for less than $14. Unfortunately no one sells it for less than $14/lb, not even on the Intelligentsia site.
Next, I went to Google and searched on "best espresso beans" hoping to find some brands that people said were well tasting and well priced. There were quite a few sites that showed in Google, almost weren't what i was looking for. They were businesses, which had horrible websites but, as they showed, good SEO.
I picked one from California that was selling Organic espresso roast for $8/lb (www.espressocoffeebeans.com). The site was horrible and not trustworthy but the keywords/buzzwords (organic, well tasting, different roasts) were there, so I decided to try their coffee anyway. The site lacked usability and I got confused during the clumsy checkout process, and they were not using SSL to encrypt pages, so anyone could get my personal information. Anyway, I ended up not buying because of the security issue.
The conclusion - I realized that I was one of the consumers out there who was becoming more conscious of what i was buying and open to changing the shoppng habits. This led me to do research via search engines, such as Google. Only if that espresso beans site had as good of check-out Usability as it did Search Engine Optimization, they would have gotten another new client.
Given the current economy, I think more and more people are looking for less expensive alternatives to what they are currently using, and they turn more and more towards the internet for these products. I believe that businesses may benefit a lot by putting effort in marketing their lowest priced products on the Internet and by doing a good job in optimizing their web pages for search engines.