consumer behavior ch.7

CHAPTER 7

INDIVIDUAL DETERMINANTS OF CONSUMER BEHAVIRO:

DEMOGRPAHICS, PSYCHOGRAPHICS, AND PERSONALITY

CHAPTER OUTLINE

I.  Demographics are a widely used tool for analyzing and predicting consumer behavior.

A. Demographics are the:

1.          Size

2.          Structure

3.          Distribution of a population

B. Demographic analysis is used in two ways:

1.          Market segment descriptions

2.          Trend analysis

C. Consumer analysts use demographics to:

1.          Predict changes in demand

2.          Predict consumption of specific products and services

D. Demographic analysis provides information for social policy related to macromarketing, the aggregate performance of marketing in society.

E. Demographics can be used to predict industrial demand because industrial demand is derived from consumer demand.

II.  The changing structure of consumer markets requires companies to plan effectively.

A. Planning requires information about the four main components of markets

1.          People with needs

2.          Ability to buy

3.          Willingness to buy

4.          Authority to buy

B. People are the foundation of markets and marketers study people behavior through such techniques as economic demographics and population trends by analyzing:

1.          Births

2.          Deaths

3.          Net migration

C. To determine future populations, we look at:

1.          Birth rate

2.          Fertility rate

3.          Total fertility rate

4.          Natural increases in population

5.          Population momentum

6.          Future fertility scenarios

7.          What causes babies?

8.          Ethnic variations

D. Other questions we explore are:

1.          How long will people live?

2.          How many people will immigrate?

E. From the above we can try to predict most likely population scenarios.

III.  The changing age distribution in the United States affects consumer behavior and effective marketing because various age segments may increase or decline:

A.        Children as consumers may decline.

B.         The rise of teenagers is expected to continue.

C.         Young adults are expected to increase.

D.        Baby boomers and muppies are growing.

E.         The “young-again” market is a rapid growth segment.

F.          The aging population is creating new and profitable market opportunities, but demand new products and new marketing strategies.

IV.  Geodemography is the study of the changing geography of demand

A. Markets can be segmented geographically for analysis into these units:

1.          Cities

2.          Suburbs

3.          Exurbs – areas beyond the suburbs

4.          Metropolitan statistical areas (MSA)

5.          Primary metropolitan statistical areas (PMSA)

6.          Consolidated metropolitan statistical areas (CMSA)

B. Marketers must monitor which states are growing and which are declining.

V.  Economic Resources

A. Economic resources must be monitored and consist of:

1.          Income – money from wages, salaries, internet, and welfare payments

2.          Consumer confidence – what people think will happen in the future

3.          Wealth – a family’s new worth or assets

B. New market segments for marketers to target are:

1.          The upmarket – “supraffluents”

2.          The down market – mid and lower income ranges

3.          The poverty market

VI.  Global Market Opportunities for Marketers are:

A. Slow-growth or no-growth markets

B. Fast-growth markets

VII. Global Market Demographics and Attractiveness

A. The most attractive global markets have:

1.          Growth in population

2.          Growth in economic resources

3.          Natural increases

4.          Increases in life expectancy

B. Consumer behavior factors in developing countries:

1.          High birth rates and strong population growth

2.          Low annual income

3.          Large numbers of babies and children with lower life expectancy

4.          Rural

5.          Dependent on other countries for food and education

6.          Marketers must:

a.           Teach consumers about products and brands

b.          Simulate product trial

c.           Explore opportunities for profit-tourism

C. The Pacific rim provides attractive market opportunities in:

1.          India – excellent infrastructure, education and a growing middle-class

2.          South Korea – outstanding economic growth

3.          Australia – well developed infrastructure and room to grow

4.          China – pent-up demand for 1-2 billion consumers but government is a problem

5.          Japan – highest per capita consumption of any country in the world

D. Latin America

1.          Increasing interest in Central and South America because of NAFT

2.          High population and growth of young consumers

3.          Promising income growth rates

4.          Growing acceptance of American culture

5.          Some substantial market segments with high income

E. Eastern Europe

1.          Recently open for global trade

2.          Preferences similar to western consumers

3.          TV viewing is the most frequent leisure- time activity, making TV advertising viable

4.          Because of limited in-home storage, 85% of Europeans shop every day

F. The European single market – The European Union (EU)

1.          A market larger than the U.S.

2.          A common currency – the euro

3.          Free movement of people, money, and goods across borders

4.          National identity and cultures have not disappeared

5.          Germany is the dominant market force

G. Canada

1.          The world’s largest country geographically

2.          80% of Canadians live within 200 kilometers of the U.S.

3.          High volume distribution circles create efficient supply to Canadian markets

VIII.  The Influence of Individual Differences of Consumer Behavior include:

A. Personality

B. Values

C. Lifestyles

IX. Personality and Consumer Behavior

A. Personality is an individual’s unique psychological makeup, which influences how the person responds to their environment.

B. Consumer analysts rely on three major theories to explain personality:

1.          Psychological theory

a.           The ID

b.          The EGO

c.           The SUPEREGO

2.          Socio-Psychological theory

3.          Trait-Factor theory

C. Predicting buyer behavior

1.          Trait-factor theory has been the primary basis of marketing personality research, but the results are difficult to use.

2.          Personality has only been able to explain about 10% of variance in behavior

3.          This failure has provoked the development of other approaches:

a.           Relating personality to stages of the decision process

b.          Personality data with information about individual’s social and economic conditions

c.           Use values and psychographics

X.  Personal values represent consumer beliefs about life and acceptable behavior, and are influenced by social values and personal values.

A. The Rekeach Value Scale (RVS) is based on the people’s goals and the wars of behaving to obtains goals

B. The Schwartz Value Scale (SVS) is based on the premise that values are trans-situational goals that serve the interest of individuals or groups and express one of ten universal motivations or value types.

C. Values help explain how consumers answer the question, “Is this product for me?”

D. Laddering helps understand how values determine market demand.

XI.  Lifestyle concepts and measurement provide a more contemporary understanding of consumer behavior.

A. Lifestyle describes patterns in which people live and spend time and money, reflecting people’s activities, interests, and opinions (AIO’S) and demographic variables.

B. Psychographics measures lifestyles and:

1.          Provides quantitative measures with large samples

2.          Provides qualitative research techniques for focus groups or in-depth interviews

3.          Psychographics is often interchanged with AIO measures

C. Market segmentation can be enhanced through psychological studies.

1.          In-depth understanding of existing segments

2.          Possibly defining new segments

D. VALS is widely used in lifestyle marketing by classifying consumers by their self-orientation:

1.          Principle oriented

2.          Status oriented

3.          Action oriented

E. VALS2 defines eight lifestyle categories:

1.          Actualizers

2.          Fulfillers

3.          Believers

4.          Achievers

5.          Strivers

6.          Experiencers

7.          Makers

8.          Strugglers

F. The alternative to VALS is the List of VALUES (LOV), and when LOV was used with demographic data, it was a better predictor of consumer behavior than VALS.

G. VALS and other approaches have been successfully used in foreign countries to understand consumer behavior in foreign markets.

H. Multiple measures of individual behavior will continue to provide in-depth understanding of consumer behavior.