JM602 Consumer Behaviour

1. JM602Consumer Behaviour Lecture 13 � Household structure and consumption behaviour

3. Material in these slides Primarily drawn from: Neal, Quester and Hawkins (2005). Consumer behaviour: Implications for marketing strategy (4th ed). McGraw-Hill Irwin: Queensland

4. Gender Roles Ascribed roles�an attribute over which the individual has little or no control Achievement roles�based on performance criteria over which the individual has some degree of control Traditional versus modern orientation One aspect of Australasian society that has undergone dramatic change in the past 20 years is the role of women, and this has been reflected in the way marketers have altered their strategies to take account of these changes. It is now more common to see advertising that appeals to women in their many roles both in the workforce and in the home. There are less assumptions made that the males and females perform certain ascribed roles. Companies are recognising that women play a far more important role in household decision making as well as as individual purchasers. (See page 394.) One aspect of Australasian society that has undergone dramatic change in the past 20 years is the role of women, and this has been reflected in the way marketers have altered their strategies to take account of these changes. It is now more common to see advertising that appeals to women in their many roles both in the workforce and in the home. There are less assumptions made that the males and females perform certain ascribed roles. Companies are recognising that women play a far more important role in household decision making as well as as individual purchasers. (See page 394.)

5. Marketing Strategy and Gender Roles Market segmentation: Not as homogenous as it once was Product strategy: Products are losing their traditional gender stereotyping Marketing communications: To appeal to different groups within the women�s and men�s markets Retail strategy: Changing to accommodate the male shopper Subcultures all have implications for marketing strategies. For example, although a subculture can often be identified on the basis of race, nationality, or religion, other subcultures can exist on the basis of age, geographic location, gender and social class. The segmentation methods, the product strategy, how marketers communicate with these groups, and the retail strategy, are all dependent on knowing exact details about these target markets. (See pages 396�397.) Subcultures all have implications for marketing strategies. For example, although a subculture can often be identified on the basis of race, nationality, or religion, other subcultures can exist on the basis of age, geographic location, gender and social class. The segmentation methods, the product strategy, how marketers communicate with these groups, and the retail strategy, are all dependent on knowing exact details about these target markets. (See pages 396�397.)

6. The Nature of Lifestyle Lifestyle is the expression of the individual�s situation, life experiences, values, attitudes and expectations It is defined simply as how the individual lives �Lifestyle� has been used interchangeably with the term �psychographics� Lifestyle, a major factor influencing the consumer decision-making process, can be defined simply as how the individual lives. Lifestyle is a function of inherent individual characteristics that have been shaped through social interaction as the individual moves through his or her life cycle. Psychographics is the primary tool by means of which lifestyle can be operationalised by marketing managers. This involves describing the psychological make-up or lifestyle of consumers by assessing such lifestyle dimensions as activities, interests, opinions, values and demographics. Lifestyle, a major factor influencing the consumer decision-making process, can be defined simply as how the individual lives. Lifestyle is a function of inherent individual characteristics that have been shaped through social interaction as the individual moves through his or her life cycle. Psychographics is the primary tool by means of which lifestyle can be operationalised by marketing managers. This involves describing the psychological make-up or lifestyle of consumers by assessing such lifestyle dimensions as activities, interests, opinions, values and demographics.

7. Determinants of Lifestyle As noted in the earlier lectures, lifestyle is determined by a number of factors. Many of these are inter-related. To reiterate, lifestyle is a major factor influencing the consumer decision-making process, and can be defined simply as how the individual lives. How we live�our activities, interests and opinions�has an impact on our behaviour. These factors directly affect our purchases and consumption patterns. (See page 398.)As noted in the earlier lectures, lifestyle is determined by a number of factors. Many of these are inter-related. To reiterate, lifestyle is a major factor influencing the consumer decision-making process, and can be defined simply as how the individual lives. How we live�our activities, interests and opinions�has an impact on our behaviour. These factors directly affect our purchases and consumption patterns. (See page 398.)

8. Lifestyle and the Consumption Process This is basically recapping previous discussion from Chapter 1. See pages 398�399 for details.This is basically recapping previous discussion from Chapter 1. See pages 398�399 for details.

9. Continuum for Lifestyle Measurements There are various methods of categorising lifestyle. Because of the detailed information required, the market research necessary to gather this information is usually time-consuming and expensive. However, specific information can make the connection between consumption patterns and lifestyle groups. (See page 400.)There are various methods of categorising lifestyle. Because of the detailed information required, the market research necessary to gather this information is usually time-consuming and expensive. However, specific information can make the connection between consumption patterns and lifestyle groups. (See page 400.)

10. Several Components of AIO Questionnaires See page 400 for details.See page 400 for details.

11. VALS Lifestyle System The VALS system has identified eight groups: innovators, thinkers, believers, achievers, strivers, experiencers, makers and survivors. The derivation of these groups is based on two dimensions. The first is principle motivation: ideals-oriented consumers are those guided by their basic beliefs and values, achievement-oriented consumers are those influenced by the actions, approval and opinions of others, and self-expression-oriented consumers are those who seek social or physical activity, variety and risks. The second dimension is the physical, mental and material resources the individual needs for pursuing his or her dominant motivation. (See pages 401�402.)The VALS system has identified eight groups: innovators, thinkers, believers, achievers, strivers, experiencers, makers and survivors. The derivation of these groups is based on two dimensions. The first is principle motivation: ideals-oriented consumers are those guided by their basic beliefs and values, achievement-oriented consumers are those influenced by the actions, approval and opinions of others, and self-expression-oriented consumers are those who seek social or physical activity, variety and risks. The second dimension is the physical, mental and material resources the individual needs for pursuing his or her dominant motivation. (See pages 401�402.)

12. VALS Survey Try it for yourself! � �http://www.sric-bi.com/VALS/ presurvey.shtml � � � This web site will give you the opportunity to experience the type of survey that is used to determine an individual�s VALS grouping. This web site will give you the opportunity to experience the type of survey that is used to determine an individual�s VALS grouping.

13. Roy Morgan Research�s Values Segment System: the Segments Young optimism (7%) Socially aware (11%) Something better (9%) Visible achievement (15%) Look at me (14%) Conventional family life (10%) Traditional family life (18%) Real conservatism (5%) A fairer deal (7%) Basic needs (4%) See Exhibit 12.10, page 406, for details.See Exhibit 12.10, page 406, for details.

14. Lifestyles and Marketing Strategy See page 408 for discussion.See page 408 for discussion.

15. Lifestyles and Marketing Strategy (cont.) See page 408 for discussion.See page 408 for discussion.

17. Household Structure andConsumption Behaviour What is the nature of Australian households? What are the stages in the household life cycle? Do households purchase-related decision making? What is the link between household and consumer socialisation? What are trends relating to household consumption? In this lecture we discuss the nature of Australian households, cover the stages in the household life cycle and discuss the importance of households in the purchasing decisions of many consumers. Much of this consumer behaviour is learnt through the influence of other household members and we will cover the trends we are likely to experience in the future.In this lecture we discuss the nature of Australian households, cover the stages in the household life cycle and discuss the importance of households in the purchasing decisions of many consumers. Much of this consumer behaviour is learnt through the influence of other household members and we will cover the trends we are likely to experience in the future.

18. Types of Households Household designates a variety of distinct social groups Family household two or more related persons, who live and eat in private residential accommodation Non-family household householders who either live alone or with others to whom they are not related The household is the basic purchasing and consuming unit in Australasian society and is, therefore, of great importance to the marketing managers for most products. Family households are also the primary mechanism whereby cultural and social-class values and behaviour patterns are passed on to the next generation. The family household consists of two or more related persons living together in a dwelling unit. Non-family households are dwelling units occupied by one or more unrelated individuals. (See page 421.) The household is the basic purchasing and consuming unit in Australasian society and is, therefore, of great importance to the marketing managers for most products. Family households are also the primary mechanism whereby cultural and social-class values and behaviour patterns are passed on to the next generation. The family household consists of two or more related persons living together in a dwelling unit. Non-family households are dwelling units occupied by one or more unrelated individuals. (See page 421.)

19. Influence of Household Consumption on Marketing Strategy See page 421.See page 421.

20. Changes in Household Structure(the average size of household and family units) See page 422 for discussion.See page 422 for discussion.

21. Household Life Cycle Young (under 35) Single I young married full nest I single parent I Middle-aged (35�64) Single II delayed full nest II full nest II single parent II empty nest I Older (over 64) single III empty nest II The household life cycle is the classification of the household into the stages through which it passes over time. Households, family and non-family, change over time at relatively predictable intervals based largely on demographic (and thus readily measurable) variables. The household life cycle is therefore a very valuable marketing tool, because its stages provide marketers with segments that face similar consumption problems. The demographic variables most frequently used to define household life cycle are age and marital status of the head of the household, and the presence and age of children. Using these variables, specific stages can be determined and described. One common form of the life cycle lists the following stages: young single, young married, full nest I, single parent I, middle-aged single, empty nest I, full nest II, single parent II, empty nest II, and older single. (See pages 423�424.) The household life cycle is the classification of the household into the stages through which it passes over time. Households, family and non-family, change over time at relatively predictable intervals based largely on demographic (and thus readily measurable) variables. The household life cycle is therefore a very valuable marketing tool, because its stages provide marketers with segments that face similar consumption problems. The demographic variables most frequently used to define household life cycle are age and marital status of the head of the household, and the presence and age of children. Using these variables, specific stages can be determined and described. One common form of the life cycle lists the following stages: young single, young married, full nest I, single parent I, middle-aged single, empty nest I, full nest II, single parent II, empty nest II, and older single. (See pages 423�424.)

22. Stages in the Household Life Cycle The table shows the groups with children at home. (See page 424.)The table shows the groups with children at home. (See page 424.)

23. Young Single Stage Two subgroups Living at home Independent Some interesting recent trends are the large number of young singles in their 20s still living at home with parents. Some of them are still studying, however, a considerable number have chosen to stay in the family home. Changes in government policies, for example the study benefits rules, have had a direct effect on these decisions. The other group are the �independents� who quite frequently choose to share accommodation with other young singles. (See page 425 for discussion.)Some interesting recent trends are the large number of young singles in their 20s still living at home with parents. Some of them are still studying, however, a considerable number have chosen to stay in the family home. Changes in government policies, for example the study benefits rules, have had a direct effect on these decisions. The other group are the �independents� who quite frequently choose to share accommodation with other young singles. (See page 425 for discussion.)

24. Young Married: No Children Stage High level of disposable income Often DINKs We know that the rate of child-birth is in a steady decline. This group of young married couples (with no children) is steadily increasing. This group quite frequently have both individuals in the workforce and 2 incomes�thus, double income and no children�the result often being a high disposable income in the household. (See page 425.)We know that the rate of child-birth is in a steady decline. This group of young married couples (with no children) is steadily increasing. This group quite frequently have both individuals in the workforce and 2 incomes�thus, double income and no children�the result often being a high disposable income in the household. (See page 425.)

25. Full Nest I: Young Married with Children Stage One partner stops working About 61% keep dual income A significant change can occur in this group when one partner stops working because of child-birth and child raising. Spending patterns undertake dramatic changes as a result. A substantial change in the goods and services consumed is apparent. (See page 425.)A significant change can occur in this group when one partner stops working because of child-birth and child raising. Spending patterns undertake dramatic changes as a result. A substantial change in the goods and services consumed is apparent. (See page 425.)

26. Single Parent I: Young Solo Parent Stage One in three marriages end in divorce A high proportion of divorced males remarry (64.2% of males in 1988 compared to 26.1% of females) Latest figures: http://www.abs.gov.au/Ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/c500a32ee2774a8cca25699f0005d61b!OpenDocument With the high number of divorces, the number of single income households is also increasing. Although incomes may be shared by the maintenance payments overseen by the taxation department, nevertheless the number of single-income households has steadily increased. The divorce rate gives some indication of household type, however, a significant number remarry and thus a number of households return to double income status. Marketers can gauge these trends by reviewing the gradual changes in statistics, such as those provided by the ABS. (See page 426.)With the high number of divorces, the number of single income households is also increasing. Although incomes may be shared by the maintenance payments overseen by the taxation department, nevertheless the number of single-income households has steadily increased. The divorce rate gives some indication of household type, however, a significant number remarry and thus a number of households return to double income status. Marketers can gauge these trends by reviewing the gradual changes in statistics, such as those provided by the ABS. (See page 426.)

27. Middle-Aged Single II Stage Small group of the population High disposable income Travel often A small but significant number of individuals are classed as �singles�. Many of these are �professionals� and thus have above-average incomes. This group has a high disposable income and seeks semi-luxury spending on items such as frequent travel and personal services. The result is an increase in demand for these products. A small but significant number of individuals are classed as �singles�. Many of these are �professionals� and thus have above-average incomes. This group has a high disposable income and seeks semi-luxury spending on items such as frequent travel and personal services. The result is an increase in demand for these products.

28. Delayed Full Nest I: Older Married with Young Children Stage Many have delayed having children until their thirties They have a high income and have acquired more capital and possessions They outspend all groups on childcare, mortgage repayments, home and garden maintenance, and household furnishings High non-child spending e.g. food, alcohol, entertainment and savings See page 427 for discussion.See page 427 for discussion.

29. Full Nest II: Middle-Aged Married, with Children at Home Stage Older children Heavy consumer of lessons and clothing Need larger homes In some ways this group provides a contrast to the empty-nesters. This group quite frequently has a high income, however, their disposable income after necessary spending on the requirements of their teenage children is often low by comparison. (See page 427.)In some ways this group provides a contrast to the empty-nesters. This group quite frequently has a high income, however, their disposable income after necessary spending on the requirements of their teenage children is often low by comparison. (See page 427.)

30. Single Parent II: Middle-Aged Single with Children at Home Stage Financially burdened group Older children take on significant household responsibilities Typically female (5 times male number) As a result of divorce or the decision to raise children as a single parent there are a number of middle-aged single parents. As the older children in these households take on responsibilities for household purchasing, they are consumers that deserve the consideration of many marketers of household goods and services. (See page 428.)As a result of divorce or the decision to raise children as a single parent there are a number of middle-aged single parents. As the older children in these households take on responsibilities for household purchasing, they are consumers that deserve the consideration of many marketers of household goods and services. (See page 428.)

31. Empty Nest I: Middle-Aged Married with No Children Stage Typically dual income Time poor, cash rich Spend on dining out, holidays, services Another group that is time poor and cash rich is the empty nesters. Freed of the expense of raising children, this group finds extra cash for services, investments, travel and similar products and services. (See page 428.)Another group that is time poor and cash rich is the empty nesters. Freed of the expense of raising children, this group finds extra cash for services, investments, travel and similar products and services. (See page 428.)

32. Empty Nest II: Older Married Couple Stage Either still working or fully retired Financial situation in decline Although this group have a steady decline in income, they are frequently asset-rich and have specific purchasing requirements. (See page 428.)Although this group have a steady decline in income, they are frequently asset-rich and have specific purchasing requirements. (See page 428.)

33. Older Single III Stage Typically female Growing segment as baby boomers age This group are typically female and females as a group have a longer life-expectancy than males. Their requirements are for services and investments, and they seek security in their household environments.This group are typically female and females as a group have a longer life-expectancy than males. Their requirements are for services and investments, and they seek security in their household environments.

34. A Product Targeted at the Older Single Market See page 428 for discussion.See page 428 for discussion.

35. Household Life Cycle and Social Class A useful segmentation is household life cycle and social class People from different social classes have similar problems but seek varying solutions See page 429. There is more detail on social class in Chapter 15.See page 429. There is more detail on social class in Chapter 15.

36. Household Life Cycle/Social Stratification Matrix Because of the foregoing discussion, we can see that a matrix to analyse the market segments can be displayed in this format. Groups that have been exposed to various occupation categories tend to reflect this in their spending choices. (See pages 429�430.)Because of the foregoing discussion, we can see that a matrix to analyse the market segments can be displayed in this format. Groups that have been exposed to various occupation categories tend to reflect this in their spending choices. (See pages 429�430.)

37. Targeting Communications at �Influencers� and �Information Gatherers� Decision making within a household can be influenced by a number of individuals who each have separate roles. The individual roles can be targeted by marketers and their specific marketing requirements built into the respective marketing mix for the product category. (See page 431.)Decision making within a household can be influenced by a number of individuals who each have separate roles. The individual roles can be targeted by marketers and their specific marketing requirements built into the respective marketing mix for the product category. (See page 431.)

38. Household Decision Making Five distinct roles: Information gatherer Influencer Decision maker Purchaser User See page 430 for discussion.See page 430 for discussion.

39. Family-Member Influence at Various Stages of the Decision-Making Process See page 432.See page 432.

40. Determinants of Household Purchases Different members at different stages of decision process Different attributes are considered by each member �direct involvement� represents only one part of the purchasing picture Who participates and when is a function of the product category and individual/household characteristics Household purchase processes change as households change. An important aspect of this is that the attributes under consideration, even by individuals, change as the household changes. These changes need consideration in the marketing mix. Quite often specific purchases are made by individuals in the household who are not the users of the product and who may have varying degrees of purchase (and product) involvement. Purchases could be made by individuals who require substantial assistance as they are not familiar with the product category: marketers need to cater for these consumers as a target group. As the purchaser is quite frequently not the user of the product, likely conflicts are resolved in different ways: for example, a car or a house must meet the requirements of many individuals and thus marketers can anticipate these situations and provide ready-made solutions for these likely conflicts. (See page 432.)Household purchase processes change as households change. An important aspect of this is that the attributes under consideration, even by individuals, change as the household changes. These changes need consideration in the marketing mix. Quite often specific purchases are made by individuals in the household who are not the users of the product and who may have varying degrees of purchase (and product) involvement. Purchases could be made by individuals who require substantial assistance as they are not familiar with the product category: marketers need to cater for these consumers as a target group. As the purchaser is quite frequently not the user of the product, likely conflicts are resolved in different ways: for example, a car or a house must meet the requirements of many individuals and thus marketers can anticipate these situations and provide ready-made solutions for these likely conflicts. (See page 432.)

41. Managerial Framework for Evaluating the Household Decision-Making Process See page 434.See page 434.

42. Household Trends Over the Next 25 Years Single households to double Average household size down* 2.6 (1996) 2.2 (2021) Families without children more than �with children� by 2016 One-parent families up by 30% to 66% Information from the Australian Bureau of Statistics indicates that single households will double in the next 25 years: this has important ramifications for a large range of household requirements. The concept of the �family� household is likely to change to a dominance of households without children. The number of one-parent families is set to double. (See page 437ff.)Information from the Australian Bureau of Statistics indicates that single households will double in the next 25 years: this has important ramifications for a large range of household requirements. The concept of the �family� household is likely to change to a dominance of households without children. The number of one-parent families is set to double. (See page 437ff.)

43. The Importance of the Family Pet: Ownership in 1998 See pages 437�438 for discussion.See pages 437�438 for discussion.

44. Computers and Video Games in Households Large number of household have Internet access Opinion of being �online� and video games is now more favourably accepted by experts See page 439 for discussion.See page 439 for discussion.

45. Implications� As marketers you will need to consider� will these trends continue? what will be the ramifications for the product/service market under your management? When is the �household� the decision-maker � as opposed to �individuals� Marketing managers must analyse the household decision process separately for each product category within each target market. Household member involvement in the decision process varies according to the involvement with the specific product, as well as the stage in the decision process. What is the overall effect of the role specialisation within household groups? Which household members are most likely to be directly involved in a purchase decision? Marketing managers must analyse the household decision process separately for each product category within each target market. Household member involvement in the decision process varies according to the involvement with the specific product, as well as the stage in the decision process. What is the overall effect of the role specialisation within household groups? Which household members are most likely to be directly involved in a purchase decision?

46. Next Lecture� Group Influence and Communication