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Demographics, Psychographics and
Personality
CHAPTER 7
Analysing and predicting consumer behaviour
Demographics
Personality
Personal Values
Lifestyles
Analysing and predicting consumer behaviour
Demographics is the size, structure, and distribution of a population
Marketers use demographic analysis as market segment descriptors and in trend analysis
Consumer analysts use demographic trends to predict changes in demand for and consumption of specific products and services
Demographic analysis provides information for social policy
Demographic analysis to predict consumer behaviour
Consumer analysts use demographic trends to predict changes in demand for and consumption of specific products and services Demographic analysis provides information for social policy
Industrial demand is ultimately derived from consumer demand
Demographic and industrial demand
Analysis of demographic trends is important for industrial and business-to-business marketing
In an industrial firm, you must understand not only the customers’ minds, but also the minds of the customers’ customers
Demographics– Changing structure of markets– Geographic factors– Economic resources– Global markets
Changing structure of consumer markets
Market analysis requires information about– people with needs– ability to buy– willingness to buy– authority to buy
– birthrate– natural increase– fertility rate– total fertility rate– population momentum
How many people will there be?
Changing structure of consumer markets
Birthrate: number of live births per 1000 population in a given year
Natural increase: surplus of births over death in a given period
Fertility rate: number of live births per 1000 women of childbearing age (15 to 44 years)
Population momentum: future growth of any population will be influenced by its present age distribution
Changing structure of consumer markets
Factors affecting birthrates:– age distribution of population– family structure– social attitudes toward family/children– technology
Increasing life expectancy
Immigration represents about 30% of annual growth in United States
Children as consumersProjected increase in number of young children between 2000 and 2010
The importance of children as consumers increases even more, with the higher proportion of first-order babies generating higher demand for quality products and services
Most parents do most of the buying
Children often involved in family purchasing decisions
Children often have their own ability to buy
Australian population projections
Generation YBorn in the 1980s and early 1990s with 72 million members
Greater need for peer acceptance, which often guides product and brand choice
More likely to switch brands quicker than other segments
Teens like the social aspects of shopping with friends
Appealing to Generation Y
Generation X (young adults)Segment of 25- to 34-year-olds is declining but will have a slight increase with the inclusion of older Gen-Y consumers
Need to buy products to set up households and for young children
With many needs and greater financial restraints, they often shop at value-oriented retailers
Baby Boomers (or Muppies)This group (45 to 64 years) is projected to grow to 19 million by 2010
Good market for luxury travel, spas, health clubs, cosmetics, salons, diet plans foods and health foods
Group represents the greatest share of the work force, the greatest share of income, and the greatest share of voting power and political influence
Young-again market
Also referred to as mature market, seniors, and elderly
These segments are expected to grow substantially
Despite advanced chronologic age, many in this segment feel, think and buy young
Cognitive age: the age one perceives one’s self to be– Cognitive age is measured in terms of how people feel and act, express interests, and perceive their looks– Can be used with chronologic age to better target segments, create more effective content, and select the most efficient media channels
Macromarketing to an ageing population
The ageing populations of the United States, Japan, Canada and Europe will have enormous effects on macromarketing and social policy
Younger consumers may have considerably less financial resources at their disposal due to future contributions to Social Security and Medicare
One solution to this problem includes increasing the age at which benefits begin, thus changing the age at which people and organisations expect to retire
Quasi-retirement is another option where more experienced workers fill in for younger workers during vacations, sabbaticals, training or maternity leaves
Changing geography of demandGeodemography refers to where people live, how they earn and spend their money, and other socioeconomic factors
The study of demand related to geographic areas assumes that people who live in proximity to one another also share similar consumption patterns and preferences
Cities are the most important unit of analysis in most marketing plans
Changing geography of demand
Metropolitan statistical area (MSA): a free-standing metropolitan area surrounded by non-metropolitan counties and not closely related to other metropolitan areas
Primary MSA (PMSA): metropolitan area closely related to another city
Consolidated MSA (CMSA): a grouping of closely related PMSAs
Economic resources
The ability to buy, typically measured by income and wealth– Income: money from wages and salaries as well as interest and welfare payments– Wealth: a measure of a family’s net worth or assets in things such as bank accounts, stocks, and a home, minus its liabilities such as home mortgage and credit card balances
Economic resourcesWhat consumers think will happen in the future (consumer confidence) heavily influences consumption
Influences whether consumers will increase their debt or defer spending to pay off debt
Measures of consumer confidence are important in making decisions about inventory levels, staffing or promotional budgets
Net worth influences willingness to spend but not necessarily ability to spend, because much wealth is not liquid and cannot be spent easily
How much people accumulate over the years is more a function of how much they save rather than how much they earn
Targeting the up-market
The superaffluent represent the top quintile of consumers in terms of income
– Households often consists of two income earners who place a high value on time
– They value extra services provided by some retailers
– Saving money is as important as spending it for many individuals in this group
– Shop discount stores, use coupons, and wait for sales
– More print oriented in communications
– Simple ads that promote image
– Credibility of source selling product
– Product reviews influence this group
Targeting the down-marketThroughout the world, the majority of consumers are low income
– Retailers such as Wal*Mart have found success by providing good products at reasonable prices
– Closeout stores offer brand name products at deep discounts to at all income-level consumers
– Dollar stores are one of the fastest growing retail categories
– Provide good products at reasonable prices
– Maintaining attractive stores
– Offering stylish and up-to-date products– Have friendly employees that treat customers with respect
Global market analysisThe most attractive markets are countries that are growing both in population and in economic resources
Which countries will grow the most in the future?
Which countries have the highestper capita income?
Global market analysisLow income countries offer an advantage to firms looking to buy products from the lowest-cost source
There are pockets ofconsumers who areable to buy products, even in the poorest countries
Emerging marketsMarketing programs should focus on creating brand awareness (because competitors will follow) and stimulating product trial
Marketers may have to teach consumers about products taken for granted (deodorant)
Products may have to be adapted to local values
Consumer behaviour in the Pacific Rim
South Asia
India
China
Australia
Japan
Consumer behaviour in Latin America
Some of the most attractive markets include Brazil, Venezuela, Colombia, Argentina and Chile
Most countries have high population growth rates, moderately high incomes close proximity
Intermarket segmentation provides a basis to identify segments that can afford certain items
Consumer behaviour in Eastern Europe
The attractiveness of Eastern European markets lies in their similar preferences to Western consumers
Hungary and Poland have received much attention from global marketers
Marketers have launched a myriad of successful brands
Consumer behaviour in the EU
The EU is a market larger than the United States
Extremely low population growth makes customer retention extremely important for marketers
Products and people move across borders easily
Efficiencies include logistics, financial arrangements, and marketing economies of scale
Marketers can approach Europe as a single market, but national identity still exists among consumers
Analysing and predicting consumer behaviour
Demographics
Personality
Personal values
Lifestyles
PersonalityPersonality: consistent responses to environmental stimuli; an individual’s unique psychological makeup, which consistently influences how the person responds to his or her environment
How does personality influence consumer behaviour?– Psychoanalytic Theory– Sociopsychological Theory– Trait-Factor Theory
Predicting buyer behaviourResearch typically attempts to find relationships between personality variables and consumer behaviours
Research tried to predict brand and store preference based on personality but with poor results
Personality is just one variable in the consumer decision making process
Analysing and predicting consumer behaviour
Demographics
Personality
Personal values
Lifestyles
Personal values
Values represent consumer beliefs about life and acceptable behaviour
Unlike attitudes, values transcend situations or events and are more enduring because they are more central in the personality structure
Represent three universal requirements:biological needs, requisites of coordinated social interaction, and demands for group survival and functioning
Values express the goals that motivate people and the appropriate ways to attain those goals
Personal valuesSocial values define ‘normal’ behaviour for a society or group
Personal values define ‘normal’ behaviour for an individual
Personal values reflect the choices an individual makes from the variety of social values or social systems to which they are exposed
Individuals pick and choose which social values to emphasise
Exemplary valuesValue type
Power Authority, wealth
Achievement Successful, capable
Hedonism Pleasure, enjoying life
Stimulation Daring, exciting life
Self-direction Creativity, curious
Universalism Social justice, equality
Benevolence Helpful, honest
Tradition Humble, devout
Conformity Politeness, obedient
Security Social order, clean
Values and consumer decision process
Personal values help explain how we answer the question, ‘Is this product for me?’
While important in the need recognition stage, values also affect consumers in determining evaluative criteria
Values influence the effectiveness of communications programs and are enduring motivations
Identifying which product attribute appeals to which value-based segment can guide alternative advertising and marketing strategies
Rokeach value scale (RVS)
Values are concerned with goals and ways of behaving to obtain them
Values are enduring beliefs that specific modes of conduct or end states of existence are personally or socially preferable to opposing modes of conduct or end states or existence
Rokeach value scale (RVS)
RVS asks people to rank the importance of a series of goals and ways of behaving which can be analysed by whatever variable might be of interest in consumer analysis
Consumer analysts are using values as a criterion for segmenting the population into homogeneous groups
Rokeach value scale (RVS)
Schwartz value scale (SVS)
Designed to measure a comprehensive set of values thought to be held by nearly everyone
Values are trans-situational goals that serve the interest of individuals or groups and express one of ten universal motivations or value types
The ten values and four higher-order value domains represent a continuum of related motivations
Analysing and predicting consumer behaviour
Demographics
Personality
Personal values
Lifestyles
Lifestyle conceptsLifestyle: patterns in which people live and spend time and money
Reflects a person’s activities, interests, and opinions (AIO) as well as demographic variables
Since lifestyles change readily, marketers must keep research methods and marketing strategies current
Psychographics: an operational technique to measure lifestyles; it provides quantitative measures and can be used with the large samples needed for definition of market segments
Can also be used in qualitative research techniques such as focus groups or in-depth interviews
Lifestyle conceptsDemographics profile who buys products whereas psychographics focus on why they buy
AIO measures: activities, interests and opinions of consumers
Market segmentationDevelop a deeper understanding of a segment or define segments
Use Likert scale to answer various AIO statements
Gain understanding of core customers lifestyles better and develop packaging and communication strategies that position products to their various lifestyle attributes