BB Chapter Twelve : Demographics

Chapter Twelve:Chapter Twelve:

Australasian (or own) society: Demographics and lifestyles

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Chapter 12Australasian society: Demographics

and lifestyles

• Use of demographic factors• Anticipating demographic shifts• How population segments can influence behaviour

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• Changing gender roles in society• Lifestyle and how it is measured• Psychographics and its applications • Using lifestyle and psychographics for market

segmentation

KEY NOTE

• This chapter is written purely from an Australian perspective

• You can avoid most the details since we are in Singapore

• But what is important is that you understand how

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• But what is important is that you understand how marketers track and analyze the marketing implications of demographic changes in society-and respond accordingly

• I have omitted including much of the data and charts in Chapter 12 and decide to focus on the key issues only

Australasian society: Demographics and lifestyles (cont.)

Some specific questions are:• Which demographic factors help marketers

describe and understand the market segments?

• What is the importance of anticipating demographic

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What is the importance of anticipating demographicshifts in society to develop marketing strategies?

• What are some impacts of changing roles (such as gender roles) on society and consumption?

Demographics and Social StratificationDemographics and Social Stratification

DemographicsDemographics

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Population Population & &

SizeSizeOccupationOccupation EducationEducation IncomeIncome AgeAge

Ads appealing to baby-boomer market

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Ads appealing to

the baby-boomermarket

Note: luxury is

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Note: luxury is highlighted

Australasian (or any other)society: Demographics and lifestyles (cont.)

• What is the nature of lifestyle and how is it measured?

• What is the meaning of psychographics, andhow is it used to understand consumer lifestyle

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how is it used to understand consumer lifestyleand consumption behaviour?

• How are lifestyle and psychographics used in market segmentation to develop marketingstrategies?

Changing societal factors affecting marketing strategy

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Demographics (overview)

• Population size• Age structure• Population distribution

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• Income• Occupation• Education

Projected Australian age structure for 2051

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Source: ABS file 3222.0

Check the Department of Statistics Singapore and find out our OWN demographic profile)

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http://www.singstat.gov.sg/stats/themes/people/demo.html

Demographics

• Population distribution– Changes attributed to internal

migration e.g. baby-boomers moving to Queensland and coastal

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moving to Queensland and coastal regions to retire

• Actual vs self-perceived age

Actual vs self-perceived age

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Demographics (cont.)

• Income / actual incomes• Disposable incomes / buying power• Occupations• Regional influences

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• Regional influences– e.g. industry shutdowns etc.– e.g. city vs country– e.g. internal migration


Demographics

��IncomeIncome

�A household’s income level combined with its accumulated wealth determines its purchasing power.

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accumulated wealth determines its purchasing power.

�Income enables purchases but does not generally cause or explain them. Occupation and education directly influence preferences for products, media, and activities; income provides the means to acquire them.


Demographics

��Income (cont.)Income (cont.)

�Therefore, income is generally more effective as a segmentation variable when used in conjunction with other

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segmentation variable when used in conjunction with other demographic variables.

�How wealthy one feels may be as important as actual income for some purchases.

��Subjective discretionary income (SDI)Subjective discretionary income (SDI) is an estimate by the consumer of how much money he/she has available to spend on nonessentials. SDI adds considerable predictive power to actual total family income (TFI).


Demographics

��OccupationOccupation

�Occupation is probably the most widely applied single cue we use to initially evaluate and define

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single cue we use to initially evaluate and define individuals we meet.

�One’s occupation provides status and income.

�The type of work one does and the types of individuals one works with over time also directly influence one's values, lifestyle, and all aspects of the consumption process.


Occupational Influences on Consumption

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Demographics (cont.)

Education• Increase during the 90s:

about 30% more now with university degrees

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degrees• Huge increase in training: less

‘unskilled’

Changing levels of education

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Demographics

��EducationEducation

�Approximately 85% of Americans have a high school degree, and 27% have completed college.

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degree, and 27% have completed college.

�Education is increasingly critical for a “family wage” job.

�Traditional high-paying manufacturing jobs that required relatively little education are rapidly disappearing.


Demographics

��Education (cont.)Education (cont.)

�High-paying jobs in the manufacturing and service sectors today require technical skills, abstract

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sectors today require technical skills, abstract reasoning, and the ability to read and learn new skills rapidly.

�Since individuals tend to have spouses with similar education levels, these differences are magnified with spousal income is considered.


Education Level Influences on Consumption

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Ethnicity and country of origin of Australasians

• Ethnic markets

• Country of origin markets

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• Country of origin markets

Specific population segments

Population segments share distinguishing patterns of behaviour.

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Age subcultures

• Mature market• Youth market

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– Generation X– Generation Y


Demographics

��AgeAge

�Proper age positioning is critical for many products. Our age shapes the media we e, where we shop, how

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Our age shapes the media we e, where we shop, how we use products, and how we think and feel about marketing activities.

�Age carries with it culturally defined behavioral and attitudinal norms, which affect our self-concepts and lifestyles.


Age Influences on Consumption18-24 25-34 35-44 45-54 55-64 65+

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Understanding GenerationsUnderstanding Generations

A Generation Generation or age cohort age cohort is a group of persons who have experienced a common social, political, historical, and economic

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political, historical, and economic environment.

Cohort analysisCohort analysis is the process of describing and explaining the attitudes, values and behaviors of an age group as well as predicting its future attitudes, values, and behaviors.

��PrePre--DepressionDepression

��DepressionDepression

��Baby BoomBaby Boom


Mature MarketMature Market

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��Baby BoomBaby Boom

��Generation XGeneration X

��Generation YGeneration Y

��MillennialsMillennials


How to Target the Mature Market

One approach to segmenting older consumers is gerontographicgerontographic ss , based on the theory that people change their outlook on life when they experience major life events such as becoming a grandparent, retiring,

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life events such as becoming a grandparent, retiring, losing a spouse, or developing chronic health conditions.

Those experiencing similar events are likely to have similar outlooks on life, and given similar economic resources, similar lifestyles.


How to Target the Mature Market

Gerontographics has identified the following four segments of the mature market:

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- Healthy IndulgersHealthy Indulgers (7 million, rapidly growing)- Ailing OutgoersAiling Outgoers (18 million)- Health HermitsHealth Hermits (20 million)- Frail Recluses (18 million)


�Compared to prior generations, Boomers are:

�Higher income, higher education

�More tech savvy

Baby Boom Generation: A Closer LookBaby Boom Generation: A Closer Look

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�More tech savvy

�Defining retirement differently

�Boomers also are:

�Strong market for “anti-aging” products, travel, and financial services

�Often alienated by overly “youth oriented” appeals in ads


�Beyond the stereotype:

�Stereotype – Xers as disenfranchised youth

�Reality 1 – Xers are more highly educated than previous generations

Generation Xers: A Closer LookGeneration Xers: A Closer Look

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generations

�Reality 2 – Xer women are more highly educated than Xer men

�Reality 3 – Xers are getting married, having families and facing the time pressures associated with these events

�Reality 4 – Reaching Xers requires special attention to media, particularly online


Generation Y, Generation Y, oror echo boom generation, account for 71 million Americans. They are the children of the original baby boomers and were born between 1977 and 1994.

Gen Y is characterized by a strong sense of independence and autonomy.

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independence and autonomy.

They are assertive, self-reliant, emotionally and intellectually expressive, innovative, and curious.

It is a multiracial generation, with African American and Hispanic teenagers often being the style leaders.


�Interesting Facts About Gen Y:

�Really Two Sub-Markets: Twenty-somethings and Teens

�Expected to have the highest education of previous generations with incomes to follow

Generation Yers: A Closer LookGeneration Yers: A Closer Look

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generations with incomes to follow

�Very tech savvy with media options including Internet, cell phones, and video games

�A strong market for automobiles with brands like Toyota creating edgy and affordable models such as the Scion to target them

Gender roles

• Ascribed roles —an attribute over which the individual has little or no control

• Achievement roles —based on

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• Achievement roles —based on performance criteria over which the individual has some degree of control

• Traditional versus modern orientation

Marketing strategy and gender roles

1. Market segmentation2. Product strategy3. Marketing communications

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4. Retail strategy

The Nature of LifestyleThe Nature of Lifestyle

Lifestyle Lifestyle is basically how a person lives. It is how one enacts his or her self-concept.

Influences all aspects of

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Influences all aspects of one’s consumption behavior.

Is determined by the person’s past experiences, innate characteristics, and current situation.

The nature of lifestyle

• Lifestyle is the expression of the individual’s situation, life experiences, values, attitudes and expectations

• It is defined simply as how the individual

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• It is defined simply as how the individual lives

• ‘Lifestyle’ has been used interchangeably with the term ‘psychographics’


Measurement of LifestyleMeasurement of Lifestyle

Attempts to develop quantitative measures of lifestyle were initially referred to as psychographicspsychographics . Measures includeMeasures include:

Attitudes Evaluative statements about other people, places, ideas, products, etc.

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Values Widely held beliefs about what is acceptable or desirable

Activities and Interests

Nonoccupational behaviors to which consumers devote time and effort, such as hobbies, sports, public service, and church

Demographics Age, education, income, occupation, family structure, ethnic background

Media patterns The specific media the consumer utilize

Usage rates Measurements of consumption within a specified product category; often consumers are categorized as heavy, medium, light, or nonusers


General versus Specific Lifestyle SchemesGeneral versus Specific Lifestyle Schemes

Lifestyle measurements can be constructed with varying degrees of specificity.

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1. Marketers can study the generallifestyle patterns of a population.

2. Firms can conduct very specific lifestyle studies focused on aspects of individual or household lifestyles most relevant to their product or service.

Determinants of lifestyle

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Continuum for lifestyle measurements

Lifestyle measurements can be constructed with varying degrees of specificity.

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Several components of AIO questionnaires

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Three specific lifestyle Three specific lifestyle examplesexamples ::

1.1. Luxury Sports CarsLuxury Sports Cars

2.2. ShoppingShopping

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2.2. ShoppingShopping

3.3. TechnologyTechnology


Lifestyle Schemes: Lifestyle Schemes: Luxury Sports CarsLuxury Sports Cars

Porsche examined the lifestyles of its buyers.

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Key demographics (e.g., high education and income) were similar across buyers.

However, their lifestyles and motivations were quite different.


PorschePorsche Consumer SegmentsConsumer Segments

Top Guns (27%) Ambitious and driven, this group values power and control and expects to be noticed.

Elitists (24%) These old-family-money “blue-bloods” don’t see a car as an extension of their personality. Cars are

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car as an extension of their personality. Cars are cars no matter what the price tag.

Proud Patrons 23%) This group purchases a car to satisfy themselves, not to impress others. A car is a reward for their hard work.

Bon Vivants (17%) These thrill seekers and “jet-setters” see cars as enhancing their already existing lives.

Fantasists (9%) This group uses their car as an escape, not as a means to impress others. In fact, they feel a bit of guilt for owning a Porsche.


Lifestyle SchemesLifestyle Schemes

ShoppingShopping

Hedonic shopping motives underlying consumer shopping patterns include*

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patterns include*

1. Adventure - fun2. Gratification reward/stress reduction3. Role - shop for others4. Value - good deal5. Social - bonding6. Idea - trends

*Discussed in Chapter 10

Five shopping lifestyle segments emerged based on these motives.

The Nature of LifestyleThe Nature of LifestyleFive Shopping LifestyleFive Shopping Lifestyle SegmentsSegments

Minimalists (12%)

Primarily motivated by value; least motivated by fun and adventure; low in appreciation for retail aesthetics, low in innovativeness, do not tend to be browsers-- middle-aged, with 57% being men

Gatherers (15%)

Primarily motivated by keeping up with trends and joy of shopping for others; least motivated by value; low in appreciation of retail aesthetics, low in innovativeness, moderate browsers-- mix of younger and older shoppers, with 70% being male

Providers Primarily motivated by enjoyment of shopping for others and value;

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Providers (23%)

Primarily motivated by enjoyment of shopping for others and value; not motivated by fun and adventure; moderate in appreciation of retail aesthetics, low in innovativeness, moderate browsers-- oldest group, with 83% being female

Enthusiasts (27%)

Highly motivated by all hedonic aspects including fun and adventure; highest in appreciation of retail aesthetics, most innovative, spend the most time browsing-- youngest group, with 90% being female

Traditionalists (23%)

Mmoderately motivated by all hedonic aspects, gratification high on the list; moderate in appreciation of retail aesthetics, highly innovative, moderate browsers-- mix of younger and older shoppers, with 58% being female


Lifestyle SchemesLifestyle SchemesTechnologyTechnology

How technology is utilized by consumers is of critical importance to marketers.

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Numerous technology and Internet lifestyle profiles exist, including

• Pew Internet User Types• Ebates.com Dot-shoppers• TDS Shopper Clusters: Onliners Group

Forrester Research created Technographics, a segmentation scheme that examines lifestyle segments relating to technology, online access, online shopping, instant messaging, etc.


TechnographicsTechnographics

Sidelined Sidelined CitizensCitizens

29%29%

TechnoTechno--Strivers Strivers

5%5%

Fast Fast Forwards Forwards

10%10%

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Media Media Junkies Junkies

6%6%

Gadget Gadget GrabbersGrabbers

7%7%

Mouse Mouse Potatoes Potatoes

9%9% Traditionalists Traditionalists 10%10%

Digital Digital Hopefuls Hopefuls

6%6%

New Age New Age Nurturers Nurturers

8%8%

Handshakers Handshakers 7%7%

Technology Technology SegmentsSegments

The VALSThe VALS TMTM SystemSystem

Underlying Differences Across VALSUnderlying Differences Across VALS TMTM Motivational TypesMotivational Types

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VALS Lifestyle System

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The 8 psychographic segments of VALS

1. Innovators

2. Thinkers and Believers: ideals motivated

3. Achievers and Strivers: achievement

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motivated

4. Experiencers and Makers: self-expression

motivated

5. Survivors

Shortcomings of VALS

• Measures of individuals - some decisions are by households

• Few individuals have ‘pure’ primary motivations, a secondary motivation may be very influential

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• VALS may not be useful for products that are evenly spread over all VALS types as it is for ego-involved purchases, e.g. laundry detergent


Ideals MotivationIdeals Motivation

Consumers who are guided in their choices by

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guided in their choices by their beliefs and principles rather than by feelings or desire for social approval.

They purchase functionality and reliability


Achievement MotivationAchievement Motivation

Consumers who strive for

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a clear social position and are strongly influenced by the actions, approval, and opinions of others.

They purchase status symbols.


SelfSelf--Expression Expression MotivationMotivation

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Action-oriented consumers who strive to express their individuality through their choices.

They purchase experiences.


VALSVALSTMTM SegmentsSegments

Innovators Innovators are successful, sophisticated, active, take-charge people with high self-esteems and abundant resources.

They are motivated by a blend of ideals, achievement, and self-

InnovatorsInnovators

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They are motivated by a blend of ideals, achievement, and self-expression. Image is important as an expression of their taste, independence, and character.

They often see brands and products as extensions of their personalities.

They have a wide range of interests, are concerned with social issues, and are the most receptive to new products, ideas, and technologies.



Thinkers Thinkers are mature, satisfied, comfortable, reflective people who value order, knowledge, and responsibility.

Most are well-educated and are in or near retirement from

Thinkers: Thinkers: Ideals MotivatedIdeals Motivated

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Most are well-educated and are in or near retirement from professional occupations.

They plan their purchases and are cautious concerning big-ticket items, looking for functionality, value, and durability in products.


VALSVALSTMTM SegmentsSegmentsBelievers: Believers: Ideals MotivatedIdeals Motivated

BelieversBelievers are conservative, conventional people with concrete beliefs based on traditional, established codes: family, church, community, and the nation.

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community, and the nation.

They are conservative, predictable and highly loyal consumers.

They favor American products and established brands, and are averse to change.



Achievers Achievers are successful career- and work-oriented people who like to, and generally do, feel in control of their lives.

Achievers: Achievers: Achievement MotivatedAchievement Motivated

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They value consensus, predictability, and stability over risk.

Image is important to them, favoring established, prestige products and services that demonstrate success to their peers.


VALSVALSTMTM SegmentsSegmentsStrivers: Strivers: Achievement MotivatedAchievement Motivated

StriversStrivers are style conscious and trendy.

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They have limited education and tend to have narrow interest.

Money defines success for them, favoring stylish products that emulate the purchases of people with greater material wealth.



Experiencers Experiencers are young, vital, enthusiastic, impulsive, and rebellious.

Experiencers: SelfExperiencers: Self--Expression MotivatedExpression Motivated

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They seek variety and excitement and savoring the new, the offbeat, and the risky.

They are avid consumers and spend much of their income on clothing, fast food, music, movies and videos and technology.



Makers: SelfMakers: Self--Expression MotivatedExpression Motivated

MakersMakers are practical people who have constructive skills and value self-sufficiency.

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They live within a traditional context of family, practical work, and physical recreation.

They buy tools, pickup trucks, washing machines, fishing equipment, etc.



Survivors’ Survivors’ lives are constricted. They live simply on limited incomes but are relatively satisfied.

SurvivorsSurvivors

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Frequently elderly and concerned about their health, they are not active in the market place and show no evidence of a strong primary motivation.

They represent a modest market, are cautious consumers who look for low prices, buying familiar, trusted products.

VALS Survey

Try it for yourself!

http://www.sric-bi.com/VALS/

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presurvey.shtml

Roy Morgan Research’s Values Segment System: the Segments

• Young optimism (8%)• Socially aware (14%)• Something better (7%)• Visible achievement (18%)• Look at me (11%)• Look at me (11%)• Conventional family life (10%)• Traditional family life (20%)• Real conservatism (5%)• A fairer deal (4%)• Basic needs (3%)

Geo-demographic lifestyle analysis

• Analysis focusing on the demographics of geographical areas

• based on the belief that lifestyle and therefore consumption are largely driven by demographic factorsfactors

• Based on research that shows that neighbours have shared patterns of consumer behaviour towards goods, services, media and promotions.

• An example is Mosaic Australia

International LifestylesInternational Lifestyles

� Marketing is increasingly a global activity.

� Marketers can develop cross-cultural strategies around those discernible lifestyle segments that cut across cultures.

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� Although language and other differences would exist, individuals pursuing similar lifestyles in different cultures should be responsive to similar product features and communication themes.

� Large international advertising agencies and marketing research firms, such as Roper Starch Worldwide, are leading the way.

International LifestylesInternational Lifestyles

Global Lifestyle Segments Identified by Roper Starc h WorldwideGlobal Lifestyle Segments Identified by Roper Starc h Worldwide

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BB Chapter Twelve : Demographics

Business

society lifestyle

andactivities income

australasian society

households income level

education increase

market segments

magnified withspousal

little education