FAMILY /GROUP INFLUENCES AND SEGMENTATION

1. FAMILY /GROUP INFLUENCESAND SEGMENTATION • Family influences • Group influences • Segmentation • Methods • Tradeoffs • Segmentation in direct marketing

2. FAMILY INFLUENCES • Types of Households • Family • Traditional • Nuclear • Extended • Blended • Traditional non-family • Usually temporary (e.g., college and pre-marriage roommates) • Non-traditional • Non-married heterosexual • Gay/lesbian

3. The Family Life Cycle • Individuals and couples typically move through stages • Today’s world is complicated

4. Potential Family Life Cycle Stages YOUNG COUPLE YOUNG SINGLE EMPTY NEST I/II FULL NEST I/II/III SINGLE PARENT OLDER SINGLE BLENDED

5. Income tends to increase with time But children/ obligations add cost Divorce increases costs may change income distribution marriage Product demand due to singles with low expenses new couples divorced families children empty nesters --> more income Economic/Marketing Implications of Household Cycles

6. Roles/influence Information gatherers/holders Influencers Decision makers Purchasers Users Values--desired end states Strategies of Influence Constructive Bargaining Reasoning (sincere) Manipulative Impression management Authority Emotion Borderline Information gathering Household Decision Making

7. Definition • Group: two or more individuals who share a set of norms, values, or beliefs and have certain implicitly or explicitly defined relationships to one another such that their behaviors are interdependent.

8. Definition • Reference group: a group whose presumed perspectives or values are being used by an individual as the basis for his or her current behavior. You must own at least three encyclopedias to belong to our group!

9. Types of reference groups: aspirational (“Mean Joe Greene”) associative (colleagues) dissociative (“Cadillac--It’s not your father’s car!”) Degree of importance: primary secondary Reference Groups

10. Types of Reference Group Influence • Informational • Normative • Identification How can you be a cool person if you are not on the ‘Net?

11. Communication About Products • Word-of-Mouth • product info • rumors • Communicators • Opinion Leaders (considered experts) • Market Mavens--status from knowledge • “Purchase-Pals”

12. SEGMENTATION • Bases for segmentation • Determining which segments exist • Choosing segments to serve • Serving chosen segments • positioning • promotion • product features • Segmentation in direct marketing

13. Requirements for Segment Viability • Group identity (similarity within, differences between, segments) • Systematic behaviors • Marketing mix efficiency potential

14. Three “Levels” of Segmentation • Personal characteristics • lifestyle • personality • Benefits sought • attributes • results • Behavior • approach to purchase • variety seeking/loyalty Note: Some of these approaches overlap. It is not essential to be dogmatic in distinguishing.

15. Level 1:Personal Characteristics • Demographics • age, sex, ethnic group • geographic region • education, occupation, social class • Media exposure • Lifestyle/Psychographics

16. Lifestyles and Psychographics: Examples • VALS, VALS2 • Residence based (e.g., PRIZM)

17. The Needy Survivors Sustainers Outer-Directed Goal Orientation Belongers Emulators Achievers I Am Me Inner-Directed Goal Consumption Experiential Socially Conscious Integrated VALS2 Segments

18. VALS Japan • Exploration • Self-expression • Achievement • Tradition • Realists

19. 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

20. Level 2Benefits 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 in search of benefits.

21. Level 3Behavior • 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 mean you won’t give me a discount? Then I’ll go to the competitors!

22. Means of Segmentation in Direct Marketing • Income • Past purchases • Ethnic surnames • Credit history • Hobbies/interests (magazine subscription lists)

23. 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

24. 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)

25. Sources of List Value • Recency • Frequency of purchase • Value of past purchases • Geography (zip code as surrogate for lifestyle) • Gender identifiability