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Amity Business SchoolModule I

Consumer demographics

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Amity Business School

Demographics is the size, structure, and distribution of apopulation.

Marketers use demographic analysis as market segment

descriptors and in trend analysis.

Consumer analysts use demo-graphic trends to predictchanges in demand for and consumption of specific productsand services.

Demographic analysis provides information for social policy.

Industrial demand is ultimately derived from consumer

demand.

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Demographic Analysis to PredictConsumer Behavior

1. Changing Structure of Markets

2. Geographic Factors

3. Economic Resources

4. Global Markets

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American Generations

Generation or Age cohort is a group of persons who haveexperienced a common social, political, historical and economicenvironment.

Cohort analysis is the process of describing and explaining theattitudes, values and behavior of an age group as well as predictingits future attitudes, values and behaviors.

1. Pre-depression Generation: Born before 1930s. > 25 mnAmericans. Conservative, concerned

with financial and personal security.

2. Depression Generation: 1930-45. 35 mn Americans.Rock n Roll culture, major consumer of

recreational vehicles, second homes, new cars, travel services andrecreational adult education.

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Baby Boom Generation

1946-1964 80 mn Americans. Prosperity between 1950s-60s. Vietnam war, Recreational drugs, Sexual revolution, rapid growth of

divorce, cold war, Rock n Roll, Beatles. 35-50 age group will account for over 70 % of household population

growth between 1985-2000. Buying power will almost double or more by 2000. Av. Income is 50% higher than that of comparable families in 1950. Self-centered, Individualistic, economically optimistic, skeptical,

suspicious of authority, focused on present status, High educationlevel, high income group, dual career house holds, Time poverty. Age range in 2005 is 41-59. Enjoying lavishing their retirement phase.

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Baby Busters or Generation X or After Boomers orFlyers

1965 1976. Smaller generation 45 mn. Achieved adulthood indifficult times.Dual career household, 40% spent at least some time in singleparenting before age of 16.

Divorce at rampant speed, stress in kids, Reduced expectations,regional conflicts, AIDS epidemic.More college goers less degree achievers, more internet usage. In2005, they are 29-40 year old. Materialistic, Impatient.

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Generation Y: Mid 1977 1994. Next baby boom generation

[Echo-boom] 71 mn Americans. Tweens and teens(11 to 18) & Young adults. Dual income group, good employmentopportunity, Divorce, AIDS, visible homelessness, drug abuse,gang violence and economic uncertainity. Clinton Levinsky

scandal, collapse of Soviet and autonomy union, Global terrorism.Strong sense of independence, assertivr, self-reliant, emotionallyand intellectually expressive, innovative and curious, theyunderstand market hype. Internet savy, major market forautomobiles. Multi-ethnic generation. Successful brands Ford,Cover girl Enchanted You prom collection.

Millennial generation : Born after 1994. 38 mn in 2005.(Generation Next) Saving as well as consumption is on

higher side.

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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

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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 healthfoods

Group represents the greatest share of theworkforce, the greatest share of income, and thegreatest share of voting power, and politicalinfluence

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Geodemography, refers to where people live, howthey earn and spend their money, and othersocioeconomic factors.

The study of demand related to geographic areasassumes that people who live in proximity to oneanother also share similar consumption patterns andpreferences

Cities are the most important unit of analysis in mostmarketing plans

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NCAER Classification

Consumer Income Level % Popu. % Popu.Category (2001-02) (2009-10)

Deprived 10,00,000 0.4 1.7Very Rich >100,00,000 .010 .063

Survey done on 187.71 mn households in 2001-02.

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Kotak wealth and CRISIL Research found thatthere are 62,000 ultra high net worth home arein 2010-11. Their minimum net worth is Rs.25crore.

In 2015-16, it will be trippled i.e. 2,19,000homes.

Currently, total net worth of these individuals

is 45 trillion and it will be Rs 235 trillion in2015-16. Quintessentially Life style is a UK based club

for luxury members only in 2010.

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One personswhacky fancy

is anothers business.

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PsychographicSegmentation

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syc ograp c ana ys s

Life style + Personality

Lifestyle are consumers modes of living as reflected in their attitudes, interest and opinions.

Personality is defined as patterns of individual behavior thatare consistent and enduring.

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Life-Style and PsychographicAnalysis

Life-style refers to how people live,how they spend their money, andhow they allocate their time

Life-style and personality aredifferent, yet are closely related

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The distinction between personalityand life-style:Personality refers to the internally based

dispositions of the person. In contrast,life-style refers to the externalmanifestations of how a person lives.

Psychographics is the quantitativeinvestigation of consumers life -styles,personality, and demographiccharacteristics.

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Amity Business SchoolLifestyle and Consumption Process

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AIO statements identify consumeractivities, interests, and opinions

Activity questions ask consumers to

indicate what they do, what they buy, andhow they spend their time. Interest questions focus on what the

consumers preferences and priorities are. Opinion questions ask for consumers

views and feelings on such things asworld, local, moral, economic, and social

affairs.

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Activities Interest Opinions Work Family personal relations Hobbies home social issues

Social event job politics Vacation Community business Entertainment Recreation economics Club membership Fashion education

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SRI (Stanford Research Institute) developed twopsychographic inventories in 1978 and revised in

1989.

VALS is based upon motivational and

developmental psychological theoriesparticularly Maslows hierarchy ofneeds theory.

VALS 2 was developed specifically tomeasure consumer buying patterns.

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Values and Lifestyle SystemVALS suggests that consumer buy products and services and seek experiencesthat fulfill their characteristic preference and give shape, substance, and satisfactionto their lives

An individuals primary motivation determines what in particular about the self orthe world governs his or her activities

Primary motivations include ideals, achievement and self-expression.

Consumers who are primarily motivated by ideals are guided by knowledge andprinciples

Consumers primarily motivated by achievement look for products or services to

demonstrate their success to their peersConsumers primarily motivated by self-expression desire social or physical activity,variety, and risk

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STRUGGLERS

FULFILLEDS

BELIEVERS

ACHIEVERS EXPERIENCERS

STRIVERS MAKERS

High ResourcesEducation, Self-confidence &

Energy LevelAction OrientedStatus OrientedPrinciple Oriented

ACTUALIZERS

VALS

Low ResourcesEducation, Self-confidence &

Energy Level

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Innovators (Actualizers): successful, sophisticated,take-charge consumers with many resources and highself-esteem. Image is important

Thinkers (Fulfields): satisfied, mature, comfortable,practical people who look for durability, value, andfunctionality in products

Achievers: motivated by the desire for achievement,

career-oriented, and prefer prestige brands that signalsuccess. Social lives revolve around family, place ofworship, and work

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Experiencers: young, enthusiastic, impulsive,and like risk taking, variety, and excitement. Likenew and off-beat products and activities

Believers: conservative, conventional, and

motivated by ideals, with beliefs based on codesof church, community, family, and nation. Buyproven brands from home country and aregenerally loyal consumers

Strivers: concerned about approval andopinions of others and seek self-definition,security, and image of success. Emulate those

they want to be like, but lack resources.

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Size of VALS Segment as Percent ofU.S. Population

VALS TM SEGMENTPERCENT OFPOPULATION

Actualizer10.511.7%

StrugglerMakerExperiencerStriver

AchieverBelieverFulfilled

9.512.012.911.8

14.717.0

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The VALS 2 Inventory Goal of VALS 2 is to identify specific relationships

between consumer attitudes and purchase behavior. Three self-identify orientations: principle oriented

people, status oriented people, and action orientedpeople. Three resource orientations: financial,

psychological, and material. Based upon totalnumber of resources, people could be categorizedbased upon their level of resources.

VALS 2 used by corporations to understand the basisfor consumer lifestyles, which is useful fordeveloping promotional strategy and even where toplace retail stores such as The Sharper Im age .

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The List of Values (LOV) Scale

The list of values (LOV) scale wasdeveloped to correct some of theproblems of VALS.

Goal is to assess the dominant valuesof a person (i.e., it does not use AIOstatements).

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Nine values are assessed by theLOV scale Sense of belonging

Being well-respected

Security

Fun and enjoyment Warm

relationships withothers

Self-fulfillment Excitement Sense of

accomplishment

Self-respect

fl f l

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Increase in disposableincome.

Increase in health andfitness consciousness.

More Self-indulgentLifestyle.

More Home orientedlifestyle.

Time is moneyapproach.

Growing Consumer selfawareness.

More frugal andvalue oriented .

Increasinginvolvement of

internet in affectinglifestyles.

Factors influencing Life style

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Yankelovichs Monitor Mindbase Up & Comers (16%) Aspiring Achievers (8%) Realists (12%) New Traditionalists (14%) Family centered (14%) Individualistic (6%) Renaissance Masters (13%) Maintainers (17%)

Geo Demographic Analysis

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Geo-Demographic Analysis

PRIZM : Given by Claritas. Driven by demographics,consumption and media usage data. GM , Hertz, etc. 62 lifestyle clusters, 12 broad social groups

Fur & Station Wagons (New Money) Pools & Patios (Children of Fur & Station

Wagons) Young Suburbia (Young families of largest clusters

from coast to coast. Relative affluence and highwhite-collared employment.)

Blue Chip Blues (Socially less ranked from Youngsuburbia)

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Blue Collar Nursery (Married with kids, highemployment, well paid and very stable)

Middle America ( Centre of socio-economicscale and is close to the US average as age,

ethnicity, household consumption) Emergent Minorities (80% Black, below

average education & white collaredemployment)

Shotguns & Pickups (outlying areas and ruralcommunities, large families, high schooleducation, many are outdoor outdoorsmen.)

International Lifestyles

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International Lifestyles

Global Scan : Based on the Survey of 15000 consumersin 14 countries. Developed by BSBW (BackerSpielvogel Bates Worldwide).

They combined life style and purchasing data. Strivers (26%) Achievers (22%) Pressured (13%) Adapters (18%) Traditionals ( 16%)

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Limitation Psychographic inventories often result

in clever descriptions of a target market

that can result in stereotypes. It can result in managers disparaging

the target group.

It can cause managers to view thetarget market as more homogeneousthan it really is.

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Managerial Implications Position and differentiate product based

upon the dominant personality orpsychographic characteristic of the target

market. Scan the environment to identify thedominant cultural values of the targetmarket.

Use market research to identify thepersonality, self-concept and psychographiccharacteristics that distinguish the targetmarket.

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Develop promotions to be consistent withthe dominant personality characteristics oftarget market. Create products that fulfillthe motivational needs of target e.g., lowrisk products for the low need for arousalgroup.

Use personality and psycholographics toidentify segments of consumers to target,such as one-price auto dealers for lowbargain prone.

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