CHAPTER 7

Demographics, Psychographics, and Personality

Analyzing and Predicting Consumer Behavior

Demographics Personality Personal Values Lifestyles

Analyzing and Predicting Consumer Behavior

Demographics is the size, structure, and distribution of a population

Analyzing and Predicting Consumer Behavior

Demographics is the size, structure, and distribution of a population Marketers use demographic analysis as market segment descriptors and in trend analysis

Demographic Analysis to Predict Consumer Behavior

Consumer analysts use demographic trends to predict changes in demand for and consumption of specific products and services

Demographic Analysis to Predict Consumer Behavior

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 and Social Policy

Demographics used in analyzing policy questions related to the aggregate performance of marketing in society (macromarketing)

Demographic Analysis to Predict Consumer Behavior

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

Demographic Analysis to Predict Consumer Behavior

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

Changing Structure of Consumer Markets

How many people will there be? birthrate natural increase fertility rate total fertility rate population momentum

Changing Structure of Consumer Markets

Birthrate: number of live births per 1,000 population in a given year Natural increase: surplus of births over death in a given period Fertility rate: number of live births per 1,000 women of childbearing age (15 to 44 years)

Changing Structure of Consumer Markets

Total fertility rate: average number of children that would be born alive to a woman during her lifetime if she were to pass through all of her childbearing years conforming to age-specific fertility rates of a given year

Changing Structure of Consumer Markets

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

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

U.S. Population Projections

Changing U.S. Age Distribution

Changes in age distribution affects the types of products and services that will be bought and consumed in the future

Cohort analysis is fundamental to understanding changing consumer markets

A cohort is any group of individuals linked as a group in some way

Changing U.S. Age Distribution

The key to cohort analysis is examining the influences that are shared by most people in a specific group

Ultimately, these influences affect consumer decision processes and the types of products, brands, and retailers consumers prefer when responding to a firms marketing strategy

Children As Consumers
Projected increase in number of young children between 2000 and 2010

Children As Consumers
Projected increase in number of young children between 2000 and 2010 The importance of children as consumers increases even more, with the higher proportion of firstorder babies generating higher demand for quality products and services

Children As Consumers
Most parents do most of the buying Children often involved in family purchasing decisions Children often have their own ability to buy

Generation Y
Born 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 by 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 workforce, 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

Young Again Market

Cognitive age: the age one perceives ones 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

Young Again Market

Important segmentation variables for this group include health, activity level, discretionary time, engagement in society, and gender Communicating with this segment often requires alteration of traditional messages and materials - larger type and bright colors - newspapers and AM radio - sensitive to revealing their age

Macromarketing to an Aging Population

The aging 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

Macromarketing to an Aging Population

One solution to this problem includes increasing the age at which benefits begin, thus changing the age at which people and organizations expect to retire Quasi-retirement is another option where more experienced workers fill in for younger workers during vacations, sabbaticals, training, or maternity leaves

Demographic Analysis to Predict Consumer Behavior

Demographics Age Structure of Markets Geographic Factors Economic Resources Global Markets

Demographic Analysis to Predict Consumer Behavior

Demographics Age Structure of Markets Geographic Factors Economic Resources Global Markets

Changing Geography of Demand

Geodemography, refers to where people live, how they earn and spend their money, and other socioeconomic factors

Changing Geography of Demand

Geodemography, 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

Changing Geography of Demand

The greatest gains in population are expected in California, Texas and Florida These states are considered prime candidates for new stores compared to other states where populations may be declining Growth rate may be deceptive unless the size of the population is also taken into account Geographic variables affect many components of a firms marketing strategy

Demographic Analysis to Predict Consumer Behavior

Demographics Age Structure of Markets Geographic Factors Economic Resources Global Markets

Economic Resources

The ability to buy, typically measured by income and wealth

Economic Resources

Income: money from wages and salaries as well as interest and welfare payments

Economic Resources

What 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

Economic Resources

Income: money from wages and salaries as well as interest and welfare payments

Wealth: a measure of a familys 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 Resources

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

Targeting the Up Market

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 Market

Throughout 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

Targeting the Down Market

Provide good products at reasonable prices Maintaining attractive stores Offering stylish and up-to-date products Have friendly employees that treat customers with respect

Demographic Analysis to Predict Consumer Behavior

Demographics Age Structure of Markets Geographic Factors Economic Resources Global Markets

Global Market Analysis

The most attractive markets are countries that are growing both in population and in economic resources

Global Market Analysis

The most attractive markets are countries that are growing both in population and in economic resources

Which countries will grow the most in the future?

Global Market Analysis

The 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 highest per capita income?

Global Market Analysis

Low income countries offer an advantage to firms looking to buy products from the lowest-cost source

There are pockets of consumers who are able to buy products, even in the poorest countries

Emerging Markets

Marketing 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 Behavior in the Pacific Rim

Consumer Behavior in the Pacific Rim

South Asia India China Australia Japan

Consumer Behavior in Latin America

Consumer Behavior 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 Behavior in Eastern Europe

Consumer Behavior 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 Behavior in The EU

Consumer Behavior 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

Consumer Behavior in The EU

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

Analyzing and Predicting Consumer Behavior

Demographics Personality Personal Values Lifestyles

Personality
Personality:
consistent responses to environmental stimuli an individuals unique psychological makeup, which consistently influences how the person responds to his or her environment

Personality
Personality: How does personality influence consumer behavior?
Psychoanalytic Theory Sociopsychological Theory Trait-Factor Theory

Personality
Psychoanalytic theory
Human personality system consists of the id, ego, and superego The dynamic interaction of these results in unconscious motivations that are manifested in observed human behavior Personality is derived from conflict between the desire to satisfy physical needs and the needs to be a contributing member of society

Personality
Psychoanalytic theory
Personality is a result of more than just subconscious drives Some advertising is influenced by psychoanalytic approach

Personality
Sociopsychological Theory
Recognizes interdependence of the individual and societyindividual strives to meet needs of society and society helps individual attain personal goals Social variables (rather than biological instinct) are most important in shaping personality Behavioral motivation is directed to meet those needs

Personality
Sociopsychological Theory
Person may buy a product that symbolizes an unattainable or unacceptable goalthe acquisition fulfills some subconscious forbidden desire

Personality
Trait-Factor Theory
Quantitative approach to personality Personality made up of traits: any distinguishable, relatively enduring way in which one individual differs from another Understanding consumer traits can be useful in marketing planning

Personality
Trait-Factor Theory
Assumes that traits are common to many individuals and vary in absolute amounts among individuals Traits are relatively stable and exert fairly universal effects on behavior regardless of the environmental situation Traits can be inferred from the measurement of behavioral indicators

Personality
Trait-Factor Theory
Trait theory is most useful to marketing strategists in developing brand personalitythe personality consumers interpret from a specific brand Brands may be characterized as oldfashioned, modern, fun, provocative, masculine, or glamorous

Predicting Buyer Behavior

Research typically attempts to find relationships between personality variables and consumer behaviors

Predicting Buyer Behavior

Research typically attempts to find relationships between personality variables and consumer behaviors Research tried to predict brand and store preference based on personality but with poor results

Predicting Buyer Behavior

Research typically attempts to find relationships between personality variables and consumer behaviors 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

Analyzing and Predicting Consumer Behavior

Demographics Personality Personal Values Lifestyles

Personal Values
Values:
Represent consumer beliefs about life and acceptable behavior Unlike attitudes, values transcend situations or events and are more enduring because they are more central in the personality structure

Personal Values
Values:
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 Values
Social values define normal behavior for a society or group Personal values define normal behavior 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 emphasize

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 analyzed 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 higherorder value domains represent a continuum of related motivations

Structural Relation of Motivational Value Types

Value Type Exemplary Values

Value Type Exemplary Values

Authority, wealth Successful, capable Pleasure, enjoying life Daring, exciting life Creativity, curious Social justice, equality Helpful, honest Humble, devout Politeness, obedient Social order, clean

Power

Achievement

Hedonism

Stimulation

Self-direction

Universalism

Benevolence

Tradition

Conformity

Security

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

Values and Consumer Decision Process

Laddering: in-depth probing directed toward uncovering higher-level meanings at both the benefit (attribute) level and the value level It seeks linkages between product attributes, personal outcomes, and values that serve to structure components of the cognitive network in a consumers mind

Values and Consumer Decision Process

Identifying which product attribute appeals to which value-based segment can guide alternative advertising and marketing strategies

Analyzing and Predicting Consumer Behavior

Demographics Personality Personal Values Lifestyles

Lifestyle Concepts
Lifestyle: patterns in which people live and spend time and money Reflects a persons activities, interests, and opinions as well as demographic variables

Lifestyle Concepts
Lifestyle: patterns in which people live and spend time and money Reflects a persons activities, interests, and opinions (AIO) as well as demographic variables Since lifestyles change readily, marketers must keep research methods and marketing strategies current

Lifestyle Concepts
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 Concepts
Demographics profile who buys products whereas psychographics focus on why they buy AIO measures: activities, interests, and opinions of consumers

AIO Categories of Lifestyle Studies

Market Segmentation
Develop 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

Values and Lifestyle System

VALS suggests that consumer buy
products and services and seek experiences that fulfill their characteristic preference and give shape, substance, and satisfaction to their lives An individuals primary motivation determines what in particular about the self or the world governs his or her activities Primary motivations include ideals, achievement and self-expression

Values And Lifestyle System

Consumers who are primarily motivated by ideals are guided by knowledge and principles Consumers primarily motivated by achievement look for products or services to demonstrate their success to their peers Consumers primarily motivated by selfexpression desire social or physical activity, variety, and risk

VALSTM Lifestyle Segments

VALSTM Types

Innovators: successful, sophisticated, takecharge consumers with many resources and high self-esteem. Image is important

Thinkers: satisfied, mature, comfortable, practical people who look for durability, value, and functionality in products

Achievers: motivated by the desire for achievement, career-oriented, and prefer prestige brands that signal success. Social lives revolve around family, place of worship, and work

VALSTM Types

Experiencers: young, enthusiastic, impulsive, and like risk taking, variety, and excitement. Like new and off-beat products and activities

Like Thinkers: conservative, conventional, and motivated by ideals, with beliefs based on codes of church, community, family, and nation. Buy proven brands from home country and are generally loyal consumers

Strivers: concerned about approval and opinions of others and seek self-definition, security, and image of success. Emulate those they want to be like, but lack resources

VALSTM Types

Like Experiencers: express themselves and experience the world by working on it. Practical people who are self-sufficient, live within a traditional context, and prefer value to luxury

Survivors: live narrowly focused lives with few resources and represent a modest market for most products. They are cautious consumers and seek safety and security

Global Lifestyles
Increased globalization requires that marketing strategy be increasingly planned on a global basis VALSTM and other approaches are being used to identify lifestyle segments across country borders and segment international markets