Demographics, Psychographics, and Personality

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 demo-graphic trends to predict changes in demand for and consumption of specific products and services

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

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 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

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 firm’s 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 first-order 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 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

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

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 firm’s marketing strategy

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 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 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

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

Demographics, Psychographics, and Personality