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BSAD 112 DEMOGRAPHICS AND SEGMENTATION 1
Demographics
Demographic variables Social stratification
– in the U.S.– in other cultures
Measurement of social class
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 2
Definition
Demographics: the description of a population in terms its size, distribution, and structure
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 3
Issues in Demographics
Population– size: number of
individuals– distribution
across a geographic region
rural, urban, or suburban
– Structure age economic stratification occupational distribution status/social class
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 4
Demographics helps
Understand current markets--demand for products explained in terms of personal characteristics
Predict future markets
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 5
Population
U.S.– growing, fueled by
immigration rather than birthrates (implications)
– shifting (away from Midwest toward South, Southwest)
– highly mobile
Germany– declining (large incentives
given to have children)– traditionally static
(immobile) but more mobile now due to
unification of East and West Germany
opportunities with EC
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 6
Age
“Graying” countries– Germany, Japan, U.S.
High birthrate areas– Africa, parts of Asia, Latin
America
Age group vs. demand for products (refer to section on subculture)
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 7
Other Demographic Variables
Occupation Education Income Ethnic group (refer to
section on subculture) Religious groups Geographic region
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 8
Social Class
In the U.S.– often denied– not clearly defined but– clear differences in
individual status income power/privilege
In India– traditionally defined by
rigid caste (now officially outlawed but still in practice)
– movement traditionally not permitted
In Britain– class differences not
legally spelled out, but accepted by tradition
– class “consciousness”– some upward
movement possible
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 9
Implications for Marketing Strategy
– “At level’’--accurately portray class standing
Positioning strategies– Upward Pull (opportunity
to enjoy pleasures of higher class)
– Appeal to newly wealthy (ability to enjoy better things in life now)
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 10
Measuring Social Status--not an easy task
Single item measures– education– occupation/licensure– income
Multi-item indices– e.g., U.S. Census: occupation,
income, education
Other issues--e.g., club memberships, family relationships
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 11
SEGMENTATION Bases for segmentation Determining which segments exist Choosing segments to serve Serving chosen segments
– positioning– promotion – product features
Segmentation in direct marketing Segmentation exercise
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 12
Requirements for Segment Viability
Group identity (similarity within, differences between, segments)
Systematic behaviors Marketing mix efficiency
potential
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 13
Three “Levels” of Segmentation
Personal characteristics– lifestyle– personality
Benefits sought– attributes– results
Behavior– approach to purchase– variety seeking/loyalty
Note: Some of theseapproaches overlap.It is not essential to bedogmatic in distinguishing.
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 14
Level 1: Personal Characteristics
Demographics– age, sex, ethnic group– geographic region– education, occupation, social class
Media exposure Lifestyle/Psychographics
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 15
Lifestyles and Psychographics: Examples
Activities, Interests, and Opinions (AIO)
VALS, VALS2 Residence based
(e.g., PRIZM)
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 16
The PRIZM System
60 consumer measures within zip code area
36,000 zip code areas Statistical methods used to
find areas containing relatively consumers ---> 60 segments
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 17
Level 2
Benefits Sought
Based on– differences in arbitrary tastes
(e.g., cola vs. non-cola drink)– ideal point– tradeoffs (e.g., taste vs.
calories)– usage situation (e.g., coffee
for camping (instant) vs. higher quality for home brewing)
A consumer insearch of benefits.
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 18
Level 3
Behavior Attitude Extent of usage Shopping approach
– price elasticity– deal-proneness– brand loyalty– sources of influence on brand choice:
advertising sales person store assortment
What do you meanyou won’t give mea discount? Then I’llgo to the competitors!
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 19
Means of Segmentation in Direct Marketing
Income Past purchases Ethnic surnames Credit history Hobbies/interests
(magazine subscription lists)
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 20
Sources of Info for Direct Marketing Segmentation
Phone books--often contain both names and addresses; yellow pages
State registrations (vehicle, driver’s licenses)
Past purchases (from company or outside)
Professional and school directories
Magazine subscription lists Credit rating bureaus
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 21
Advanced Segmentation Techniques in Direct Marketing
“Merge-Purge”– merge: add lists together; add
purchased lists to own customer list– purge: sort of duplicates
special software allows for standardization of addresses (“phonetic” matching possible)
BSAD 112 DEMOGRAPHICS AND SEGMENTATION 22
Sources of List Value
Recency Frequency of
purchase Value of past
purchases Geography (zip code
as surrogate for lifestyle)
Gender identifiability