University of Washington EMBA Program
Regional 20
Marketing Management
“Customer Analysis, Needs/Values”
Instructor: Elizabeth Stearns
Course Structure
The Marketing Framework/Concept
Analysis
5C’s Opportunity Analysis
Marketing Strategy & Customer Strategy
Goal Setting, Segmentation, Targeting, and Positioning
Implementation/Action Plans
Marketing Mix (4 P’s)
Marketing
Research
Marketers Need to know:
• “How buyers respond to the various marketing
stimuli that the organization might use?”
They need to know:
WHO buys?
WHERE do they buy?
HOW do they buy?
WHY do they buy?
WHAT do they buy?
WHEN do they buy?
Two Key Questions:
• Who is the Customer?
• What does the Customer Value?
The Customer: Definition
The Firm
Manufacturer
or
Distributor
Dealer
or
Retailer
End User
or Consumer
Customer:
Any person or organization in the
chain of distribution and decision
whose actions can affect the purchase
of your products and services
Influencers
Parents of Preschoolers
vehix.com:30
&
Toyota Sienna:60
Defining the Customer: Consequences
• Requires an active versus a passive view of customers
• Recognizes that different persons are often involved in
purchase decisions (e.g., specifier, gatekeeper, decision maker,
user, spoiler, champion)
• Firms should go beyond the immediate customer to
unaddressed influencers
• As markets mature, immediate customers may discourage or
block attempts to address customers’ customers and prevent
your understanding of the full value of your offer
Who is Today’s Customer?
Beyond.com
Demographic Environment
Worldwide Population Growth
Population Age Mix
Ethnic Markets
Educational Groups
Household Patterns
Geographical Shifts in Population
Shift from Mass Market to Micromarkets
©2000 Prentice Hall
Changing Demographics ????
Average Life Expectancy
1776
35
Changing Demographics ????
Average Life Expectancy
1776
1876
35
38
Changing Demographics ????
Average Life Expectancy
1776
1876
1996
2001
35
38
75
76.5
Changing Demographics ????
Average Life Expectancy
1776
1876
1996
2001
35
38
75
76.5
2050
90 - 95
Life Stages Tied to Age
Easy for Marketers: Very Linear
0 0 - 18
Education
19 - 60
61 - 75
Work/Family
100
Leisure
Life Stages Not Tied to Age
Now Cyclic: Not so easy for Marketers
0 0 - 16
Education
100
Work/Family
Leisure
A Positive Appeal to Mature Consumers
Bases for Describing Groups
• Demographics/”Firmographics”
–Consumer: language, age, wealth, income, sex,
race, geographic location
–Organization: industry, size, ownership,
profitability, legal entity, growth, geographic
location
Bases for Describing Groups
• Behavior Patterns
–Usage, growth in usage, decision-making unit,
decision-making practices
• Psychographic Characteristics
–Lifestyle, lifecycle, lifestage
• Technographics
–Understanding, usage, integration into
home/work
Sources of Information
The Press
General Business
Industry Specific
Syndicated Services
Demographics/Firmographics
SMRB (Simmons), MRI, NAICS/SIC codes
Behavioral Patterns
SMRB (Simmons), MRI
Psychographics
Claritas/PRIZM, Microvision
Sources of Information
Syndicated Services, con’t
Technographics
Forrester Report
Advertising Spending
Mediamark (Formerly LNA - Leading National Advertisers)
Product Movement
Nielsen, IRI (Scanner Data)
Industry Specific Data
(e.g., Greenwich Associates, The Hartman Group)
Sources of Information
Proprietary Data
Sales Data
Marketing Research
Qualitative (e.g., focus groups, IDI’s, triads,
ethnographies)
Quantitative (e.g., tracking studies, A&U
studies)
The Stearns Group
Psychographics
An Appeal to the Bohemian Mix
Psychographic Targeting
• Psychographics represents a combination of
consumers’ activities, interests and opinions (AIO
items)
• Useful but more difficult to identify and measure
compared to demographic variables
monster.com :30
Use of Psychographics in Marketing Strategy
• Understanding life-style and personality characteristics
are useful to:
1. Identify market segments.
2. Position products and/or services through
advertising.
3. Develop “media” guidelines.
4. Define new product targets.
5. Develop products.
What is VALS?
• VALS is an acronym for Values and Lifestyles, a
program of SRI International. The VALS program
includes a typology of the American consumer (created
by Arnold Mitchell in 1978), a method of measuring
such types in the population, several data bases, a large
number of reports prepared by VALS staff and other
consultants, and the right to access other proprietary
data bases.
What is VALS?
• In addition to promoting the VALS typology, the VALS
program routinely examines general values and lifestyle
trends in the United States, focusing on overall social
change and elucidating implications for the culture as a
whole.
What is the VALS typology?
• A theoretical blend of Maslow’s hierarchy of human
needs and Riesman’s concept of social character (in The
Lonely Crowd), the VALS typology places people’s
self-images, aspirations and values within an economic
and social context. The result was a dynamic typology
with four main categories: Need Driven, OuterDirected, Inner-Directed and Integrated. Each of these
segments is further divided into subgroups, comprising
nine types in all.
Maslow’s Hierarchy of Needs
Self-Actualization
Esteem
Social
Safety
Physiological
Double Hierarchy
• Together these groups constitute the double hierarchy, a
conceptual model which looks like this:
Outer
Directed
Integrated
Socially
Conscious
Achievers
Experiential
Emulators
I-Am-Me
Need
Driven
Inner Directed
Zone of the double hierarchy
Belongers
Traditional, Outer Directed
Sustainers
Survivors
Contemporary, Inner Directed
VALS 2 Groupings
The Stearns Group
VALS 2
• Consumer
segmentation system
based on lifestyle
characteristics
• Established in 1978;
updated to VALS 2 in
1989
• Based on: selforientation
(horizontal axis) and
resources (vertical
axis)
VALS2
• Eight categories are identified based on a
combination of demographic and lifestyle factors
such as age, income, education, level of selfconfidence, health, and interest in consumer
issues
• Two-dimensional format
VALS2
Three self-orientations
(horizontal dimension)
1. Principle-oriented: guided by their views of how the world
should be
2. Status-oriented: guided by the actions and opinions of others
3. Action-oriented: guided by a desire for social or physical
activity, variety, and risk taking
“Never kissed a Frog….”
Geodemographic Targeting
People who reside in similar areas,
such as neighborhoods or postal ZIPcode zones, also share demographic
and lifestyle similarities
Geodemographic Targeting
• Companies which have developed
geodemographic services
–
–
–
–
Donnelly Marketing (Cluster Plus)
Claritas (PRIZM – VALS basis)
CACI (ACORN)
National Decision Systems (Vision)
Claritas PRIZM & MicroVision
• “Find yourself, print it, and comment!”
• Also, find your company (NAICS).
• Hand in (hardcopy) by 10/10!
MicroVision 2003 New Face
MicroVision Segment 41: Close-Knit Families
•Demographics: Low income young adults, age 18-34, with a large number of children, seven or more
people
•Lifestyle & Retail: Dine at midscale Mexican restaurants, attend movies 2-3 times a month, purchase
doll toys, and had transmission service done in past year
•Communications & Technology: Have an unlisted phone number, have speed dialing telephone
feature, and own a paging device
•Financial: Have Allstate property/casualty insurance, Acquired a home equity line of credit last year,
and have a loan for furniture, appliances or electronics
•Media: Watch COPS (primetime) and the Simpsons (syndication), listen to contemporary hits radio,
and read Parent's magazine
•Geography: Urban areas, primarily concentrated in the Southwest
MicroVision Segment 15: Great Beginnings
Demographics: Slightly higher than average income
singles, one to four people
Lifestyle & Retail: Dine at fast food Asian and
Mexican restaurants, shop at 7-Eleven, and lease
their car
Communications & Technology: Own a paging
device, use the internet at home for more than five
hours per week, and use the home PC to do work
from the office
Financial: Obtain account balance through
automated response phone system, purchase goods
and services with ATM/debit card, and have an
auto loan from a credit union
Media: Watch Friends & the MTV Music Video
Awards, read Glamour magazine, and listen to
contemporary hits radio format
Geography: Suburban and urban areas,
concentrated along the two coasts, especially in
Boston, Miami, California and Seattle
MicroVision Segment 8: Movers And Shakers
Demographics: High income households containing singles and couples, age 35-49, with no
children, one to two people
Lifestyle & Retail: Eat at casual dining restaurants, bakeries and bagel shops, shop at Pier 1
Imports, play tennis and jog
Communications & Technology: Own a PC for on-line and internet services, like conferencing
and accessing e-mail
Financial: Hold an American Express credit card, own an umbrella insurance policy, and use
full service brokerage services
Media: Listen to National Public Radio, read Golf Digest, Newsweek, and Car & Driver
magazines
Geography: Suburban areas in North Carolina, Ohio, Texas and Florida
What Does the Customer Value?
“Average American Consumer Quiz”—
2000 DDB Needham
Percentage of
Consumers Agreeing
Statement
A nationally advertised brand is usually better than a
generic brand.
I went fishing at least once in the past year.
I am a homebody.
The government should exercise more control over what
is shown on television.
Information from advertising helps me make better
buying decisions.
I like to pay cash for everything I buy.
The working world is no place for a woman.
I am interested in spices and seasonings.
The father should be the boss in the house.
You have to use disinfectants to get things really clean.
Women
Men
Customer Values
Psychological
Functional
Economic
Customer Values
Psychological
reliability
availability
ease of use
efficacy
efficiency
safety
Functional
status
self-assurance
peace of mind
perceived risk
of changing suppliers
price
discounts
credit terms
Economic
Frank Horner
Example of Proprietary Research for Coffee!
• Research can be valuable in two stages of creative
development: as a developmental tool, and as an
evaluative tool.
• It can also be useful in understanding the prospect and
their choices of media
• “A Case for Brand Loyalty”
Understand Your Customers
•
•
•
•
•
Their Demand for Your Product or Service
Their Changes over Time
Their “Growth” Needs
Their Technology/Personal Service Conundrum
Their Available Choices for Solutions
Their Value to You!
The Value-Delivery Process
(a) Traditional physical process sequence
Make the product
Design Procure
product
Make
Sell the product
Price
Sell
Advertise/ Distribute Service
promote
(b) Value creation & delivery sequence
Choose the Value
Strategic marketing
©2000 Prentice Hall
Provide the
Value
Communicate the Value
Tactical marketing
Designing Offers for Customers
Product
Delivery
Technical
Innovation
Services
Sales
Relationship
Brand
Equity
Value
Price
Time
Effort
Risk
Cost
Offer
Satisfaction =
Performance minus Expectations
Thank You!
“Average American Consumer Quiz”—
2000 DDB Needham
Percentage of
Consumers Agreeing
Statement
A nationally advertised brand is usually better than a
generic brand.
I went fishing at least once in the past year.
I am a homebody.
The government should exercise more control over what
is shown on television.
Information from advertising helps me make better
buying decisions.
I like to pay cash for everything I buy.
The working world is no place for a woman.
I am interested in spices and seasonings.
The father should be the boss in the house.
You have to use disinfectants to get things really clean.
Women
Men
33%
39%
39%
72%
58%
76%
41%
39%
79%
63%
66%
8%
78%
39%
64%
70%
15%
61%
60%
51%
Consumer Buying Process
Problem
recognition
Information
search
Evaluation of
alternatives
Purchase
decision
Postpurchase
behavior
©2000 Prentice Hall
Model of Buying Behavior
Marketing
stimuli
Other
stimuli
Buyer’s
characteristics
Buyer’s decision
process
Product
Price
Place
Promotion
Economic
Technological
Political
Cultural
Cultural
Social
Personal
Psychological
Problem recognition
Information search
Evaluation
Decision
Postpurchase
behavior
Buyer’s decisions
Product choice
Brand choice
Dealer choice
Purchase timing
Purchase amount
©2000 Prentice Hall
Sources of Information
The Press
General Business
Industry Specific
Syndicated Services
Demographics/Firmographics
SMRB (Simmons), MRI, NAICS/SIC codes
Behavioral Patterns
SMRB (Simmons), MRI
Psychographics
Prizm/Claritas
Sources of Information
Syndicated Services, con’t
Technographics
Forrester Report
Advertising Spending
LNA (Leading National Advertisers)
Product Movement
Nielsen, IRI (Scanner Data)
Industry Specific Data
(e.g., Greenwich Associates, The Hartman Group)
Sources of Information
Proprietary Data
Sales Data
Marketing Research
Qualitative (e.g., focus groups, IDI’s, triads,
ethnographies)
Quantitative (e.g., tracking studies, A&U
studies)
The Stearns Group
Fulfillers
Mature, home oriented, well
educated professionals
High incomes
Value-oriented
Open to new ideas
The Stearns Group
An Appeal to Fulfillers
Achievers
Work oriented
Successful
High job satisfaction
Respect authority, and favor the
status quo
Demonstrate success through
their purchase
The Stearns Group
Experiencers
Main component of actionoriented segment
Youngest in VALS2, median age
is 25 years
Active in both physical and social
activities
Favor new products
The Stearns Group
An Appeal to Experiencers
Believers
Family and community oriented
people
Modest means
Brand loyal
Favor American-made products
The Stearns Group
Strivers
Lower-income people
Values similar to achievers
Style is important in lifestyle.
The Stearns Group
Makers
Main component of actionoriented segment along with
experiencers
Self-sufficient group
Practical with little interest in most
material possessions
The Stearns Group
Actualizers
Posses both high income and
self-esteem
Indulge in a variety of selforientations
The Stearns Group
Strugglers
Have few resources
Do not fit into the regular VALS2
categories
Brand loyal to the extent possible
The Stearns Group
Four Types of Buying Behavior
High
Involvement
Low
Involvement
Significant
differences
between
brands
Complex
Buying
Behavior
VarietySeeking
Behavior
Few
differences
between
brands
DissonanceReducing Buying
Behavior
Habitual
Buying
Behavior
©2000 Prentice Hall
Other profiling tools/methods used to better understand
the individual consumer are:
• VALS, VALS 2
• Demographics
• Geographics
Geodemography
• Personal Experiences
• Socioeconomic Descriptors
• Media Exposure Patterns
• Product Benefits Desired (values)
• Purchase Behavior (Brand Attitudes, Intentions)
Claritas PRIZM
• Potential rating index by zip marketers
• Delineated the 500,000 + U.S. neighborhoods into 40
clusters with descriptive names that characterize
these regions