Thursday, August 14, 2014 Prepared by Sudhir Pasricha 1
Thursday, August 14, 2014 Prepared by Sudhir Pasricha 2
Learning Objectives: To explore the core concepts and theories of shopper behavior at individual, group and organizational level so that learners may use these as inputs in marketing decision making. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 3 Course Contents Module I Consumer demographics, Consumer life styles. Retailing implications of consumer demographics and lifestyle. Consumer profiles. Lifestyle marketing. Environmental factors and individual factors affecting consumers. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 4 Consumer Buying Behavior Buying behavior of individuals and households that buy products for personal consumption.
Consumer Market All individuals/households who buy products for personal consumption. The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.
Definitions Thursday, August 14, 2014 Prepared by Sudhir Pasricha 5 Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs Market Segmentation Thursday, August 14, 2014 Prepared by Sudhir Pasricha 6 Segmenting Consumer Markets
Geographic - divides the market into different geographical units such as nations, regions, states, counties, or cities
Demographic - refers to the vital & measureable stats of a population. It helps to locate a target market. It divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.
Is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables
Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups Gender segmentation divides the market based on sex (male or female) Income segmentation divides the market into affluent or low-income consumers Education Occupation Copyright 2007 by Prentice Hall Market Segmentation Occupation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Southwest, Mountain States, Alaska, Hawaii Major metropolitan areas, small cities, towns Urban, suburban, exurban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Sex Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, living together, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Professional, blue-collar, white-collar, agricultural, military Thursday, August 14, 2014 Prepared by Sudhir Pasricha 8 Segmenting Consumer Markets..contd. Psychographic - divides buyers into different groups based on social class, lifestyle, or personality traits
Behavioral - divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
Occasion Benefits sought User status Usage rate Loyalty status Benefit Segmentation - The segmentation of the consumers based on what particular benefit of the product appeals to them. Different consumers look for different benefits and the marketer needs to understand each segment and accordingly develop his communication for each group. Benefit segmentation helps to identify each group and accordingly promote the product within that group.
Example : one particular soap offers a variety of benefits, say fragrance (liked by older women), fairness (liked by younger women), freshness (liked by kids), cleanliness (like by men),longer lasting(liked by housewives), etc.
Both Physiological & Socio Cultural Characteristics help to describe how its members think & how they feel Thursday, August 14, 2014 Prepared by Sudhir Pasricha 9 Organisational buying is a multiperson buying activity: A large number of buying situations in organisations (manufacturing, government, hospitals, educational institutions) would involve many persons. These persons may be from different functions (production, purchase, design, maintenance), may have different backgrounds (engineers, MBA, graduates etc.) may have different hierarchical levels within the organisation (Managing Director, General Manager, Material Manager).
Persons in a buying situation, may appear to play different roles over the entire buying decision exercise. A grand conceptualisation of various roles of the different members is the concept of the Buying Centre. The various members of the buying centre may appear to play any of the following roles:
Users like production department person Influencers like Managing Director, Design Engineers or Consultants Deciders like the committee appointed Buyers like the people from the purchase or materials department Gatekeepers like those who can control the flow of information within an organisation Specifiers like consultants or design or production people who may develop the specifications of the product or services needed Organisational Buying Behaviour Thursday, August 14, 2014 Prepared by Sudhir Pasricha 10 A description of a customer or set of customers that includes demographic, geographic, and psychographic characteristics, as well as buying patterns, creditworthiness, and purchase history. Solving almost any sales and marketing challenge starts with knowing who your customer is. Mapping Analytics can help you find out who your best customers are and apply geographic analysis techniques to discover where to find more of them. Customer Profiles Thursday, August 14, 2014 Prepared by Sudhir Pasricha 11 Customer Profile A customer profile uses marketing segmentation to identify key factors and using them to break down the pool of customers to who would likely purchase the product or service. This shows a company where to spend their advertising resources to get the most return on investment. Target Market Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral Importance of target markets Once target markets are identified correctly, specific marketing programs are directed to identified group, or target market. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 12 Example of Customer Profile Head Fones
Customer Profile:
Geographic segmentation: any area, any climate
Demographic segmentation: age 12-26 Males Professional musician
Psychographic segmentation: Likes to listen to music Athletic/exercises Trendy Extreme Sports
Behavioral Listens to personal media device Buys mobile music media Brand conscience
Thursday, August 14, 2014 Prepared by Sudhir Pasricha 13 Consumer Lifestyle and Values It is an indicator as to how people live & spend their time & money. What people do in their spare time is often s good indicator of their lifestyle Lifestyles are shaped partly by whether consumers are money-constrained or time-constrained. Consumers in different countries & cultures may have characteristic lifestyles. Eg Indian women are home focused. Less likely to visit restaurants . More Price Sensitive Lifestyle segmentation is particularly useful in case of product categories where the user s self image is considered as an important factor , such as perfumes , beer, jewelery & other ego-senstive products.
Thursday, August 14, 2014 Prepared by Sudhir Pasricha 14 Consumer Lifestyle and Values A lifestyle is a persons pattern/style of living in the world as expressed in AIO - Activities, Interests and Opinions. Lifestyle Analysis provides broad view of consumers as it segments market s on the basis of AIO Analysis: Activities - How they spend their time Interests - Importance of things in their surroundings Opinions Their Beliefs on broad issues & themselves
Thursday, August 14, 2014 Prepared by Sudhir Pasricha 15 AIO Inventories Consumer Behavior and AIO studies envisage a wide variety of variables and measures the major dimensions of Lifestyle Marketing shown below :
Activities Interests Opinions Demographics
Work Family Themselves Age
Hobbies Home Social Education
Social events Job Politics Income
Vacation Community Business Occupation
Entertainment Recreation Economics Family size
Club member Fashion Education Geography
Community Food Products City size
Shopping Media Future Lifecycle
Sports Achievements Culture Dwelling
Source : Joseph T. Plummer--The Concept and Application of Lifestyle Dimensions, Journal of Marketing Thursday, August 14, 2014 Prepared by Sudhir Pasricha 16 VALS (Values & Lifestyle) Framework
Stanford Research Institute (SRI) developed a popular Approach to psychographics segmentation called VALS (Values & Lifestyle) puts less emphasis on Activities & Interest and more on Psychological drivers to consumer behavior.
VALS has two dimensions : Primary Motivations Types of goals the individual will pursue & Pattern of attitudes & activities that help individuals reinforce , Sustain or modify their social image. This is a fundamental human Need
Resources Reflects the ability of individuals to pursue their dominant motivations that include the full range of physical, Psychological, demographic & material means such as self confidence, Interpersonal skill, intelligence, eagerness to buy, money , position & education, etc. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 17 Self Orientation of People :
Ideals (principle)- Individuals are guided in their choices by their beliefs & principles & not by feelings, desires & events.
Achievement Individuals are heavily influenced by actions, Approvals & opinion of others
Based on the concepts of basic motivations & resources, the Typology breaks consumers into eight groups. The eight sub-divisions that these major self orientations have been divided into also differ in terms of their resources.
Resources - physical, psychological, and demographical factors that become enabling variables in consumer's choice making behavior. The VALS 2 typology draws heavily on Maslow's need hierarchy and tries to explain the lifestyle orientation of the various segments based on the values sought by each of them in their life. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 18 Innovators are successful, sophisticated, active, "take-charge" people with high self-esteem and abundant resources. Are interested in growth and seek to develop, explore, and express themselves in a variety of ways to have an effect to make a change.
Image is important to Innovators, not as evidence of status or power, but as an expression of taste, independence, and character. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges.
Have a wide range of interests, are concerned with social issues, and are open to change. Lives are characterized by richness and diversity. Possessions and recreation reflect a cultivated taste for the finer things in life. Lives are characterized by richness and diversity. Possessions and recreation reflect a cultivated taste for the finer things in life. Thinkers (Motivated By Ideals : High Resources) are mature, satisfied, comfortable, reflective people who value order, knowledge. and responsibility. Most are well educated, and in (or recently retired from) professional occupations.
Are well-informed about world and national events and are alert to opportunities to broaden their knowledge. Content with their careers. families. and station in life, their leisure activities tend to center on their Home.
Although their incomes allow them many choices, thinkers & are conservative, practical consumers: are concerned about functionality, value, and durability in the products they buy. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 19 Believers (motivated by ideals : low resources) are conservative, conventional people with concrete beliefs and strong attachments to traditional institutions: family, church, community, and the nation.
Many Believers possess moral codes that are deeply rooted and literally interpreted.
Follow established routines, organized in large part around their families and the social or religious organizations to which they belong. As consumers, they are conservative and predictable, favoring American products and established brands.
Education, income and energy are modest but sufficient to meet their needs. Achievers (Motivated by Achievement; High Resources) are successful career and work-oriented people who like to-and generally keep control of their lives. Value structure. predictability, and stability of over risk, intimacy, and self-discovery. They are deeply committed to their work and their families. Work provides them with a sense of duty, material rewards, and prestige.
Social lives reflect this focus and are structured around family, church, and business. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. Image is important to them. As consumers, they favor established products and services that demonstrate their success to their peers. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 20 Strivers (motivated by achievement ; low resources) seek motivation, self-definition, and approval from the world around them. Striving to find a secure place in life. Unsure of themselves and low on economic, social, and psychological resources. Strivers are deeply concerned about the opinions and approval of others. Money defines success for Strivers, who don't hate enough of it and often feel that life has given them a raw deal. Strivers arc easily bored and impulsive Many of them seek to be stylish. They emulate those who have more impresses e possessions, but what they wish to obtain is generally beyond their reach Experiencers (Motivated by self expression: high resources) are young, vital, enthusiastic, impulsive, and rebellious. Seek variety and excitement, savoring the new, the offbeat, and the risky. Still in the process of formulating life values and patterns of behavior, they quickly become enthusiastic about new possibilities but are equally quick to cool.
Are politically uncommitted, uninformed, and highly ambivalent about what they believe. Experiencers combine an abstract disdain for conformity and authority with an outsiders awe of others' wealth, prestige, and power.
Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend much of their income on clothing, fast food, music, movies, and video. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 21 Survivors lives are constricted. Chronically poor, ill-educated. Ion-skilled, without strong social bonds, aging, and concerned about their health they arc often despairing and passive. Because they are so limited, they show no evidence of a strong self orientation, but are focused on meeting the urgent needs of the present moment.
Chief concerns are for security and safety. Strugglers are cautious consumers. They represent a very modest market for most, products and services but are loyal to favorite brands Makers (motivated by self expression: low resources) are practical people who have constructive skills and value self-sufficiency. Live in a traditional context of family, practical work, and physical recreation, and have little interest in what lies outside that context.
Experience the work by working on it-building a house, raising children, fixing a car, or canning vegetables-and have sufficient skill, income, and energy to carry out their projects successfully.
Are politically conservative, suspicious of new ideas, respectful of government authority and organized labor. but resentful of government intrusion on individual rights.
Are unimpressed by material possessions other than those with a practical or functional purpose (e.g. tools, pickup trucks, or fishing equipment). Thursday, August 14, 2014 Prepared by Sudhir Pasricha 22 Decision Making Process The first step is when the consumer becomes aware of the fact that he has a problem.
The problem maybe that he has run out of toothpaste or that he needs new sofa for the drawing room or that he needs to engage the services of an accountant to help him with his tax planning.
Problem recognition thus occurs when the consumer recognizes that he has an unfulfilled need.
The desire to fulfill this need triggers off the other steps of information; search and evaluation and finally result in the purchase process. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 23 What Makes Retail Shoppers Tick ? Retail Shoppers Life-Styles Demographics Environmental Factors Retailer Actions Shopping Attitudes and Behavior Needs and Desires Retail Implications Thursday, August 14, 2014 Prepared by Sudhir Pasricha 24 Retail Implications of Consumer Demographics Because of changing life-styles, more husband and wives shop together. More men are doing non traditional work around the house Component life-styles consumers are less predictable Such as cleaning, shopping, babysitting Consumer sophistication and confidence more knowledgeable shoppers who are more cosmopolitan (more aware of trends) Poverty of time people are time-pressed because of work, commuting, family responsibilities and etc Thursday, August 14, 2014 Prepared by Sudhir Pasricha 25 Lifestyle Marketing Lifestyle marketing is a process of establishing relationships between products offered in the market and targeted lifestyle groups. It involves segmenting the market on the basis of lifestyle dimensions, positioning the product in a way that appeals to the activities, interests and opinions of the targeted market and undertaking specific promotional campaigns which exploit lifestyle appeals to enhance the market value of the offered product. A consumer's lifestyle is seen as the sum of his interactions with his environment. Lifestyle studies are a component of the broader behavioral concept called psychographics." Thursday, August 14, 2014 Prepared by Sudhir Pasricha 26 Lifestyle Marketing Demographics, Psychographics and Lifestyle
Demographic variables help marketers "locate" their target market and psychographic variables provide the marketer with more insight about the segment. Psychographics is, in common parlance for lifestyle analysis. In its most widely practiced form, a psychographic study consists of list of statements designed to capture relevant aspects of a consumer, like personality, hinting motives, interests, attitudes, beliefs and values. The demographic and psychographic lifestyle approaches are highly complimentary and work best together. People hailing from the same sub-culture, social class and even occupation follow quite different lifestyles. The lifestyle analysis adds a great amount of understanding to a typical demographic description.
E.g., A person buying a new designer shirt may be 34 years old, married and living in a 3 bedroom house and having 2 children. The lifestyle analysis would help marketers to paint a more human portrait to their target market. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 27 Lifestyle Marketing - Examples For instance the "young, upwardly mobile" lifestyle group cutting across sub-cultures, social class, occupation etc. is now being increasingly used by Indian marketers as their market group.
This finds its expression in advertising appeals "He loves the feel of the city... The skyscrapers... The crowds... The pretty faces... And the heady feeling of being successful... Above all the freedom of being himself." So says the advertisement for Pantaloons cotton trousers from Manz Wear.
Another advertisements for men's innerwear from Bhilwara loudly announces "for the man who plays many roles-here comes the very best in wear unders via the grand fashion avenues of Paris...Champs Elise". The behavioral differences between prospects that do not show up in demographic figures come alive in lifestyle patterns.
Lifestyle, analysis leads to more comprehensive and penetrating profiles of how consumers think and act than may be available from other approaches. Thursday, August 14, 2014 Prepared by Sudhir Pasricha 28 CHARACTERISTICS OF LIFESTYLE Feldman and Theilbar describe lifestyle by the following characteristics:
1 Lifestyle is a group phenomenon A person's lifestyle bears the influence of his/her participation in social groups and of his/her relationships with others. Two clerks in the same office may exhibit different lifestyles.
2 Lifestyle pervades various aspects of life An individual's lifestyle may result in certain consistency of behaviour. Knowing a person's conduct in one aspect of life may enable us to predict how he/she may behave in other areas.
3 Lifestyle implies a central life interest For every individual there are many central life interests like family, work, leisure, sexual exploits, religion, politics etc. that may fashion his interaction with the environment.
4 Lifestyles vary according to sociologically relevant variables The rate of social change in a society has a great deal to do with variations in lifestyles. So do age, sex, religion, ethnicity and social class. The increase in the number of double income families and that of working women have resulted in completely different lifestyles in the 1980's in India Thursday, August 14, 2014 Prepared by Sudhir Pasricha 29 Hierarchy of Influences on Lifestyle ENVIORNMENTAL & INDIVIDUAL FACTORS AFFECTING CONSUMER INFLUENCES ON LIFESTYLE Thursday, August 14, 2014 Prepared by Sudhir Pasricha 30 APPROACHES TO STUDY LIFESTYLE The study of lifestyle is interdisciplinary. It draws on a variety of disciplines such as anthropology, psychology, sociology and economics. Marketing uses this free approach for segmenting, targeting and positioning which forms the core of marketing strategy.
Because lifestyle refers to the way in which people live and spend money, consumers psychographic profiles are derived by measuring different aspects of consumer behaviour such as: 1 Products and services consumed 2 Activities, interests and opinions 3 Value systems 4 Personality traits and self-conception 5 Attitude towards various product classes Thursday, August 14, 2014 Prepared by Sudhir Pasricha 31 END OF MODULE - 1