Ordinarily, you'd be sleeping in the doghouse for slacking on Valentine's Day gifts, but this year, many couples are opting to take it easy for the holiday due to the shaky economic situation. A recent survey by the National Retail Federation and BIGresearch states that Americans are expected to spend an average of 16.7 percent less on Valentine's Day gifts and merchandise this year than they did in 2008. The survey also notes that total Valentine's Day spending by U.S. shoppers 18 and older is expected to be $14.7 billion, a 13.5-percent decrease from the amount spent in 2008.
Valentine's Day is usually an exciting time for retail, especially in certain specific markets such as jewelry, women's apparel, gourmet food, and travel. But when personal budgets are tight, Valentine's Day might seem like a more frivolous holiday, especially as consumers recover from Christmas and Hannukah and prepare for tax season. In fact, the luxury goods market has seen a hit for the first time in years. The seventh edition of Bain & Company's Luxury Goods Worldwide Market Study predicts as much as a 7-percent decline in global luxury sales for 2009.
Some couples will simply opt to save money rather than buy gifts. Others will still buy, but the gifts may not be as extravagant as they would have been in previous years. This is the largest percent of the gift buying population, and the ones who will be looking for more cost effective and creative ways to celebrate the holiday. Then, of course, there is the small percentage of people who are wealthy enough to be mostly unaffected by the recession and will continue to clean out the jewelry cases at Bulgari for their sweethearts. Each of these groups must be reached out to in different ways, with different messaging, and via different channels -- but you've got to find them first.
This is where behavioral audience segments come in.
When creating audience segments, marketers need to combine analysis of their target audience with a bit of creative thinking. Who are you trying to reach and what might they be interested in? Creating segments for holiday marketing involves going even broader to anticipate the gift buying possibilities of a variety of interest groups.
For instance, what do people typically buy for their sweethearts this time of year? Valentine's Day shopping segments include jewelry shoppers, but can be split into high-end, mid-range, and engagement ring shoppers. They can also include groups buying flowers, planning special dinners, planning vacations, and those more creative types who are making something for their loved ones.
Determining which users are placed in which audience segments relies on sophisticated analysis of behavioral data, often combined with other data such as demographics, geography, and even search in some cases. This wealth of data is sliced and diced to determine the interests and needs of the consumer on the most granular level possible. These segments can determine where the user is in the sales cycle (researching, browsing, in-market, price comparison, ready to buy, etc.), who they are shopping for, and what they are interested in, all the while letting marketers reach out to them with corresponding information and offers. During holiday gift buying, this is especially important as the consumer sales cycle is shortened, and to maximize their returns during this time, marketers need to be as exact with their messaging as possible.
The person who is picking up the greeting card and grocery store carnations on the way home from work is not the same person planning a weekend getaway to Aspen and will not respond to the same messaging. So why should Tiffany waste money delivering an ad to the person planning the vacation? Why should Travelocity spend precious dollars to show ads for discount romantic destinations to a guy looking at engagement rings?
In an economic downturn, each dollar is precious and each marketing line item is scrutinized. So wouldn't marketers do better to ensure that they are spending money to message to the customer most likely to actually make a purchase and provide some much-valued ROI?
This is a principle that can be applied to marketing for any holiday, not just Valentine's Day, especially during the next couple years (to make a hopeful estimate) while the global economy struggles. Gift buying holidays tends to offer up a broad variety of options for consumers. Valentine's Day gifts tend to be more centered on jewelry, travel, women's apparel, etc., but it doesn't mean marketers should rule out gift categories such as electronics, home goods, and others.
Other gift buying holidays cast an even wider net across consumer options. In one family, Dad gets a tie; in another, he gets a new gas grill; in another, he gets a snowmobile. Gift options are endless, and in turn, marketers need to be able to pinpoint -- in as much detail as possible -- who is shopping for what.
Taking care of this on the front end with behavioral segments helps cut down wasteful spending of an already limited budget, and ensures better ROI overall. An economic downturn doesn't mean we can't celebrate holidays; it just means that we -- consumers and marketers -- have to do it more wisely. Just ask my wife.
Jeff Hirsch is president and CEO of Revenue Science.
