CONSUMER BEHAVIOR & MARKET SEGMENTATION

1. CONSUMER BEHAVIOR & MARKET SEGMENTATION Patricia Carson, Prashant misra, Lara Murgale, Robert Mullenberg, Carole White Dr. Clayson: Marketing Management December 2, 2013

2. “Attitude is the link between perception and behavior” Behavior Perception Attitude

3. Consumer Behavior in a Nutshell

4. The Purchase Decision

5. 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?

6. Market Segmentation in a Nutshell • What is Segmentation? • Why Segment? • Types of Segmentation • Geographic • Demographic • Psychographic • Behavioral • Segments must be • Large enough • Identifiable • Reachable

7. France – Consumer Behavior & Market Segmentation • Population - Age & birth rate • Ethnicity – Immigration & Religion • Education • Households • Lifestyle and Health – Work & Habits

8. 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).

9. India – Consumer Behavior • Environment of the consumer • Geographic influences • Influence of occupation • Place of purchase • Creative use of products http://India and Washing Machines

10. India – Consumer Market Structure • The Rich • The Consuming Class • The Climbers • The Aspirants • The Destitutes

11. India - The Purchase DecisionKFC example

12. Personality • Who are you? • Big5 • VALS

13. Personality • Is ‘personality profiling’ valuable to a marketing strategy? • How do we gather ‘personality’ data about the masses? • Or specific target markets?

14. Population ‘Personalities’ • Demographic data: Applied Geographic Solutions Inc. • Experian: Mosaics

15. School and Church Plot: 10-mile radius Legend Trinity School 292 Trinity Church 588

17. J34 Aging in Place

18. J34 Aging in Place

19. E20 No Place Like Home

20. E20 No Place Like Home

21. E20 No Place Like Home

23. 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

24. 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

25. 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

26. 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

27. 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

28. 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.

31. 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

32. Age Group

33. 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

35. 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

37. 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.

38. Conclusion Perception Attitude Behavior