CONSUMER BEHAVIOR & MARKET SEGMENTATION PATRICIA CARSON, PRASHANT MISRA, LARA MURGALE, ROBERT MULLENBERG, CAROLE WHITE DR. CLAYSON: MARKETING MANAGEMENT DECEMBER 2, 2013 “Attitude is the link between perception and behavior” Perception Attitude Behavior Consumer Behavior in a Nutshell Influences Reference Levels Perception/Sensation Cultural Cognition Social Affect Personal Beliefs Social Psychological Buyer The Purchase Decision Other Factors Risk: Performance, Financial, Physical, Social & Ego Behavioral Learning: Repeat Pleasure; Environment & Experience Rule Cognitive Learning: Sensory, Short-term & Longterm Memory Attitudes: Learned predispositions Social Groups: Which ones really matter for which products? Personality: What is it? Market Segmentation in a Nutshell What is Segmentation? Why Segment? Types of Segmentation Geographic Demographic Psychographic Behavioral Segments must be Large enough Identifiable Reachable France – Consumer Behavior & Market Segmentation Population - Age & birth rate Ethnicity – Immigration & Religion Education Households Lifestyle and Health – Work & Habits France - Risk, Learning, Attitude, Personality & Social Group & Behavior Price has been an essential element in the buying process; Quality is becoming more and more important for the consumer; Buying equals pleasure; The French consumer is impulsive; Domestic Products are preferred (Food). India – Consumer Behavior Environment of the consumer Geographic influences Influence of occupation Place of purchase Creative use of products http://India and Washing Machines India – Consumer Market Structure The Rich The Consuming Class The Climbers The Aspirants The Destitutes India - The Purchase Decision KFC example The need was hunger and the immediate satisfaction of hunger through fast food Search by consumers through the Internal factors and external factors of Information Comparing the food joints-Mc Donald, Wimpy’s and KFC., Rational choice, attribute choice, KFC attribute choice theory The decision of buying a product at KFC was backed by many factors(as known by consumer survey like social surroundings, physical surroundings and antecedent states. like some consumers were satisfied with the quality and taste of food NEGATIVE FEEDBACK some found the food as oily and bland. Personality Who are you? Big5 VALS Personality Is ‘personality profiling’ valuable to a marketing strategy? How do we gather ‘personality’ data about the masses? Or specific target markets? Population ‘Personalities’ Demographic data: Applied Geographic Solutions Inc. Experian: Mosaics School and Church Plot: 10-mile radius Legend Trinity School 292 Trinity Church 588 Mosaic Types J34 Aging in Place C11 Aging of Aquarius I31 Blue Collar Comfort L42 Rooted Flower Power E20 No Place Like Home O51 Digital Dependents M45 Diapers and Debit Cards B09 Family Fun-tastic A02 Platinum Prosperity Total 10 mi% Cong % Sch % 6.1 6.1 6.0 6.0 5.8 5.1 4.5 3.6 3.5 46.7 9.1 6.8 10.9 5.7 12.3 4.3 3.4 6.0 3.6 62.1 3.3 3.3 12.7 5.5 9.8 6.5 6.9 9.1 2.2 59.3 J34 Aging in Place J34 Aging in Place E20 No Place Like Home E20 No Place Like Home E20 No Place Like Home Franco Modigliani Franco Modigliani Italian economist naturalized American, a professor at the MIT Sloan School of Management and MIT Department of Economics who won the Nobel Memorial Prize in Economics in 1985 the life-cycle theory individuals build up a store of wealth during their younger working lives to consume during their own old age. proved useful in study of demographics based on age Predicting pension plans Predicting consumption Life-Cycle Hypothesis consumption is patterned by the stage of life consumption patterns change during different stages of their lives individuals plan their consumption and savings behavior Individual want to maintain stable lifestyles so work to build assets during working lives use assets during retirement years Life-Cycle Hypothesis Most believe that this working generation will aim for a level of consumption in their post-retirement years larger than the consumption enjoyed by the currently retired individuals belonging to a less affluent generation. Most believe that to support this future level of consumption postretirement, the working individuals will have to save on a higher scale higher than the current retired generation achieved Life-Cycle Hypothesis However, Consumer behavior researchers find that Elderly do not “dissave” or spend as quickly as expected from the life-cycle model There are several reasons: precautionary saving because cautious about unpredictable expenses and worried about living longer worried that ill-health will result in assistance and nursing expenses leaving bequests to their children Leaving bequests to charity Finding Common Ground Dates Vary by Author 1927-1942: Silent Generation 1946-1964: Baby Boomers 1965-1983: Gen X or the Busters 1984-2002: Gen Y or the Millennials 2003-Current: Gen Z or the Digital Generation Source: Connecting Across Generations Controversy Among Researchers More important than age group is where the individual is in their life cycle rather than their generational cohorts For example, if a family is having children or helping to raise grandchildren, their spending patterns and housing choices are driven by need and activity rather than age group category Generalizations have a “kernel of truth,” however like astrology can always find some characteristics that fit and some that do not. In general in the US, the population is becoming “larger, older, and more diverse” as cited by Marketing: the Core, p. 61. Age Group Generation Y: 1984-2002 AKA “millennials” and “baby boomet” Defined by communication technologies. 80 million Generation Y in US. Peer-oriented Instant Gratification Events, leaders, trends of its time Facing higher costs for education Not used to negative feedback themselves Raised by Boomers. Interested in Environmental Sustainability. Want work/life balance Multi-taskers Age Group Age Group Generation X: 1965-1983 AKA “Baby Bust” Also unimpressed with authority 40 Million in US Tolerant of all peoples Drug problems. Self-absorbed, Clothes and fashion labels are important Late to marry, quick to divorce, single parents, short on loyalty, relative values, self-reliant, Struggling to buy Suspicious, cautious, skeptical Computer oriented. Define self by skill set, not firm membership Age Group Baby Boomers: 1946-1964 “Me” generation. 80 million Boomers in US. Defined by “rock and roll” music, free love, “non-violent” protests First TV generation Poor marital skills and were first divorced generation Shaped by AIDs epidemic and began support for gay citizens Individual rights of members of minority and gender groups championed Optimistic Team-oriented Age Group Silent Generation: 1927-1945 Born in the great Depression of 1929 or children of parents who lived through the Depression Married for life. One firm for life. Labor Unions World War II, Korean and Viet Nam Wars Well behaved in school: complaints from teachers regarding chewing gum and passing notes. Big Band/Swing music Believe in sacrificing for next generation, disciplined, cautious spenders. Conclusion Perception Attitude Behavior