CONSUMER BEHAVIOR & MARKET SEGMENTATION PATRICIA CARSON, PRASHANT MISRA, LARA MURGALE, ROBERT...

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”

AttitudePerception Behavior

Consumer Behavior in a Nutshell

Actions

Social Processes

Mental Proces

ses

Influences

Perception/Sensation

Cognition

Affect

Beliefs

Social

Reference Levels

Cultural

Social

Personal

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 & Long-term 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 DecisionKFC example

The need was hung

er and the immediat

e satisfaction of hung

er throu

gh fast food

Search by consumer

s  throu

gh the

Internal

factors

and external

factors of Information

Comparing the food

joints-Mc

Donald,

Wimpy’s and

KFC., Ration

al choice

, attribu

te 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 satisfi

ed with the

quality and

taste of

food NEGAT

IVE FEEDBACK so

me 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 10 mi%

Cong % Sch %

J34 Aging in Place 6.1 9.1 3.3

C11 Aging of Aquarius 6.1 6.8 3.3

I31 Blue Collar Comfort 6.0 10.9 12.7

L42 Rooted Flower Power 6.0 5.7 5.5

E20 No Place Like Home 5.8 12.3 9.8

O51 Digital Dependents 5.1 4.3 6.5

M45 Diapers and Debit Cards

4.5 3.4 6.9

B09 Family Fun-tastic 3.6 6.0 9.1

A02 Platinum Prosperity 3.5 3.6 2.2

Total 46.7 62.1 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 post-retirement, 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