Consumer behavior-5th-section

Consumer behavior session 6

Lecture notes are available at:http://Arash-management.blogspot.com

Main reference for this section:

Consumer behavior ( 2006)Roger D. Blackwell

Paul W. Miniard James F. Engel

1Arash

Consumer behavior (CB)

Arash Najmaei

[email protected]@yahoo.com

H/P : 0172116875

2Arash

Demographicslifestyle

and households,

consumption pattern

3Arash

Demographics and life style

1. Definitions2. Influences3. Understanding lifestyle and the impact

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 demo-graphic 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 Behavior

•Consumer analysts use demo-graphic 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.

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

1.Changing Structure of Markets

2.Geographic Factors

3.Economic Resources

4.Global Markets

Market analysis requires information about

people with needsability to buywillingness to buy authority to buy

How many people will there be?

•Birthrate

•natural increase and life expectancy: 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)

How many people will there be?

•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•population momentum: future growth of any population will be influenced by its present age distribution•Migration

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

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 firm’s marketing strategy.

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

Demographic Analysis to Predict Consumer Behavior

Demographics

1. Age Structure of Markets

2. Geographic Factors

3. Economic Resources

4. Global Markets

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.

Demographic Analysis to Predict Consumer Behavior

Demographics

1.Age Structure of Markets

2.Geographic Factors

3.Economic Resources

4.Global Markets

The ability to buy, typically measured by income and wealth

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

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

Demographic Analysis to Predict Consumer Behavior

Demographics

1.Age Structure of Markets

2.Geographic Factors

3.Economic Resources

4.Global Markets

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 highestper capita income?

China and India

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

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

Emerging Markets

Lifestyle: patterns in which people live and spend time and money.

Reflects a person’s activities, interests, and opinions 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

Demographics profile who buys products whereas psychographics focus on why they buy

AIO measures: activities, interests, and opinions of consumers

VALS

• Acronym stands for: Values, Attitudes and life style .a psychological segmentation metric was developed in 1970s to explain American life style and values shaping consumer behavior .

Values and Lifestyle SystemVALS™ 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 individual’s 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 self-expression desire social or physical activity, variety, and risk

VALSTM Lifestyle Segments

VALSTM Types

Innovators: successful, sophisticated, take-charge 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

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

VALSTM Types

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

Households and Consumption patterns

1. Overview2. Household as consumers3. Impact of households to the market4. Factors of consumptions

family and household influences

• Many products are purchased by a family unit

• Individual’s buying decisions may be heavily influenced by other family members

• How families make purchase decisions depends on the roles of the various members in the purchase, consumption, and influence of products

• Family: a group of two or more persons related by blood, marriage, or adoption who reside together

• Nuclear family: immediate group of father, mother, and child(ren) living together

• Extended family: nuclear family, plus other relatives such as grandparents, uncles and aunts, cousins, and parents-in-law

• Family of orientation: family into which one is born

• Family of procreation: family established by marriage

• Some families are extending these definitions to include pets

Pets Are Family Members Too

© A

P/ W

ide

Wo

r ld P

hot

os

Do you agree?

• Household: all persons, both related and unrelated, who occupy a housing unit.

Nonfamily households include:

1. Elderly persons living with nonfamily members

2. Persons of the opposite sex sharing living quarters

3. Friends living together

4. Same-sex couples

Families and HouseholdsFamilies are the largest single category of households

Rapid rise in the number of nontraditional families and non-family households

Any of these types of households may or may not include children

Buying behavior is best described by the term consumer unit (CU) or minimal household unit (MHU)

Families and Households

Marketers monitor these variables to predict changes in demand for specific products and categories

Age of head of household

Marital status

Presence of children

Employment status

Structural variables affecting families and households:

Families and Households

Cohesion: emotional bonding between family members

Adaptability: ability of a family to change its power structure, role relationships, and relationship rules in response to situational and developmental stress

Communication: facilitating dimension, critical to movement on the other two dimensions

Sociological variables affecting families and households:

Families Celebrations and Gift Giving

Gift giving and family holidays are increasing in importance

Traditional holiday spending and promotions have shifted to other holidays throughout the year

Physical movement of large gifts have become difficult leading to increase sales of gift certificates, gift cards, and Internet gift purchases

Appeal to Different Ways Market Segments Celebrate Holidays

Appeal to Different Ways Market Segments Celebrate Holidays

Who Determines What the Family Buys?

Instrumental roles: financial, performance, and other functions performed by group members (also known as functional or economic roles)

Expressive roles: involve supporting other family members in the decision-making process and expressing the family’s aesthetic or emotional needs including upholding family norms

Role Behavior Individual roles in family purchases

Initiator/gatekeeper: initiator of family thinking about buying products and gathering information to aid decisions

Influencer: individual whose opinions are sought concerning criteria and which products or brands most likely to fit those criteria

Decider: person with the financial authority or power to choose how the family’s money will be spent on which products and brands

Role Behavior Individual roles in family purchases

Buyer: person who acts as the purchasing agent by visiting the store, calling suppliers, writing checks, bringing products into the home and so on

User: person or persons who use the product

Role Behavior Different family members will assume different roles depending on the situation and product.

Children may be influencers and users for items (such as cereals and toys) while parents may be the decider and the buyer.

Role Behavior

Spousal roles in buying decisions

Autonomic: an equal number of decisions is made by each spouse, but each decision is individually made by one spouse or the other

Husband dominant: the husband or male head-of-household makes a majority of the decisions.

Wife dominant: the wife or female head-of-household makes a majority of the decisions

Joint: most decisions made with equal involvement by both spouses

Family Life Cycles

Family life cycle (FLC) : the process of families passing through a series of stages that change them over time.

The concept may need to be changed to household life cycle or consumer life cycle to reflect changes in society

Young Singles

Newly Married Couples

Full Nest I, II, III

Married, No Kids

Older Singles

Empty Nest I, II

Solitary Survivor

Retired Solitary Survivor

Life StageActivities and

Behaviors

FLC affects demand for many products

Descriptions of life stages can be combined with additional information about consumer markets to analyze consumer's needs, identify niches, and develop consumer-specific marketing plans.

Individuals may repeat family stages if their family situations change or they may be in stages different from most people their age.

FLC helps explain how families change over time and can identify core target markets when modified with market data.

The FLC is an important predictor of family or household spending

In the last decade, consumers have changed their household spending from “things” to “services”

Changing Roles of WomenFemale consumers now outnumber male consumers as women tend to liver longer than men do.

Women represent a greater proportion in the population, improved purchasing ability, and assume greater importance in the workplace.

Female employment is increasing around the world

Employment outside the home increases income and family buying power, but it may also increase expenditures for specific items such as child care, clothing, food away from home, and gasoline

Working Families Want Fashion

Changing Roles of Women

As roles outside the home increase, women have less leisure time

Marketers have developed time-saving products to appeal to women, including convenience foods

Marketers have also developed products to help women enjoy the leisure time they do have

Women and Time

Relaxation or Self-Indulgence

Personal Care Products for Men

Children and Household Consumer Behavior

Children change dramatically how the family functions, in terms of relationships, employment, and purchases.

Children reduce parents’ participation in the labor force, change how families spend their money and reduce the amount of time and money available for leisure.

Children exert direct influence over parental spending when they request specific products and brands

They exert indirect influence when parents buy products and brands that they know children prefer without being asked or told to make a specific purchase

Children and Household Consumer Behavior

1. Childhood Socialization

2. Children learn their consumer behaviors through socialization

3. Children learn shopping behaviors from shopping with parents

4. Co-shopping explain to their children why they buy certain products over others, thereby, teaching their children how to shop

Summary…..