PROFILE THE MARKET

1. SEGMENTATION

Segment: An identifiable group of individuals, families, businesses, or organizations, sharing
one or more characteristics or needs in an otherwise homogeneous market. Market
segments may respond in a predictable manner to a marketing or promotional offer.

The marketing concept calls for understanding customers and satisfying their needs better
than the competition. But different customers have different needs, and it rarely is possible
to satisfy all customers by treating them alike.

Mass marketing refers to treatment of the market as a homogenous group and offering the
same marketing mix to all customers. Mass marketing allows economies of scale to be
realized through mass production, mass distribution, and mass communication. The
drawback of mass marketing is that customer needs and preferences differ and the same
offering is unlikely to be viewed as optimal by all customers. If firms ignored the differing
customer needs, another firm likely would enter the market with a product that serves a
specific group, and the incumbant firms would lose those customers.

Target marketing on the other hand recognizes the diversity of customers and does not try
to please all of them with the same offering. The first step in target marketing is to identify
different market segments and their needs.

1) Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be evaluated
against the following criteria:

Identifiable: the differentiating attributes of the segments must be measurable so
that they can be identified.

Accessible: the segments must be reachable through communication and distribution
channels.

Substantial: the segments should be sufficiently large to justify the resources
required to target them.

Unique needs: to justify separate offerings, the segments must respond differently to
the different marketing mixes.

Durable: the segments should be relatively stable to minimize the cost of frequent
changes.

A good market segmentation will result in segment members that are internally
homogenous and externally heterogeneous; that is, as similar as possible within the
segment, and as different as possible between segments.

2) Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.
Geographic
Demographic
Psychographic
Behavioralistic

Geographic Segmentation
The following are some examples of geographic variables often used in segmentation.
Region: by continent, country, state, or even neighborhood
Size of metropolitan area: segmented according to size of population
Population density: often classified as urban, suburban, or rural
Climate: according to weather patterns common to certain geographic regions

Demographic Segmentation
Some demographic segmentation variables include:
Age
Gender
Family size
Family lifecycle
Generation: baby-boomers, Generation X, etc. Income
Occupation
Education
Ethnicity
Nationality
Religion
Social class

Many of these variables have standard categories for their values. For example, family
lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No
Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several
stages, for example, full-nest I, II, or III depending on the age of the children.

Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle. Activities,
interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some
psychographic variables include:
Activities
Interests
Opinions
Attitudes
Values

Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products. Some
behavioralistic variables include:
Benefits sought
Usage rate
Brand loyalty
User status: potential, first-time, regular, etc.
Readiness to buy
Occasions: holidays and events that stimulate purchases

Behavioral segmentation has the advantage of using variables that are closely related to the
product itself. It is a fairly direct starting point for market segmentation.

3) Bases for Segmentation in Industrial Markets

In contrast to consumers, industrial customers tend to be fewer in number and purchase
larger quantities. They evaluate offerings in more detail, and the decision process usually
involves more than one person. These characteristics apply to organizations such as
manufacturers and service providers, as well as resellers, governments, and institutions.
Many of the consumer market segmentation variables can be applied to industrial markets.
Industrial markets might be segmented on characteristics such as:
Location
Company type
Behavioral characteristics

Location
In industrial markets, customer location may be important in some cases. Shipping costs may
be a purchase factor for vendor selection for products having a high bulk to value ratio, so
distance from the vendor may be critical. In some industries firms tend to cluster together
geographically and therefore may have similar needs within a region.

Company Type
Business customers can be classified according to type as follows:
Company size
Industry
Decision making unit
Purchase Criteria

Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation.
Such behavioral characteristics may include:
Usage rate
Buying status: potential, first-time, regular, etc.
Purchase procedure: sealed bids, negotiations, etc.

4) Roy Morgan Values Segment

Socially aware
Whether they're saving the world or purchasing the latest innovative product, Socially Aware
individuals like to be well informed before they make a decision. Not surprisingly, they're
across all the smartest and in-depth news media and hold passionate opinions about society.

Visible Achievement
Leaders in their field but confident enough not to show off about it, this Segment works hard
to provide their family with the best in life. Although generally high- income earners, they
dont spend money for the sake of it and like to be sure theyre getting the best deal.

Young Optimism
Theyre young but they think long-term. They may still be at university, but theyre planning
to head overseas to advance their career. New experiences and personal fulfilment are
important to them. Theyre the Young Optimism Segment and they like to play as hard as
they work.

Real Conservatism
Strong believers in sound investments and quality products, the Real Conservatism Segment
will always opt for the well-established over the new-fangled. Longing for a world where
order and tradition reign, this Segment is loyal to friends, loved ones and brands they can
trust.

Look at me
Money is for spending not saving according to this Values Segment* especially on music,
fast food and socialising. All about the here and now, Look At Me individuals are usually
teenagers who like to live large and loud. Peer-group acceptance is important to them and
theyre very image conscious.

Conventional family life
Solid family values and a responsible attitude characterise people in the Conventional Family
Life Segment. Because much of their income goes towards their kids, mortgage and home
improvements, this Segment is always on the look-out for products that offer value for
money and reliability.

Traditional family life
With time on their hands and grandkids to indulge, this Segment is keen to enjoy a happy,
healthy retirement. Traditional family values are important to them, as are sensible
consumer choices. Not comfortable with change, they opt for familiarity and trustworthiness
when spending their hard-earned dollars.

A fairer deal
Finding an escape, if only temporary, from their problems is a priority for people in the
Fairer Deal Segment. Generally low-income earners, they feel they've got a rough deal out of
life and tend to channel their frustration through loud motorbikes, hotted-up cars, beer and
TV.

Something better
Competitive, ambitious and possibly in debt, Something Better people want the world to see
them as winners. Their consumer decisions are strongly influenced by this desire, and they
are always seeking something bigger and better: whether it be a house or car, handbag or a
favourite restaurant.

Basic needs
A focus on just getting by from day to day characterises the people in this Segment,
generally retirees and pensioners. Avid consumers of free media, they enjoy feeling like
theyre part of the world around them, even if their disposable income is not large.


2. IDENTIFY THE TARGET AUDIENCE

TARGET MARKET SELECTION

Target marketing tailors a marketing mix for one or more segments identified by market
segmentation. Target marketing contrasts with mass marketing, which offers a single
product to the entire market
Two important factors to consider when selecting a target market segment are the
attractiveness of the segment and the fit between the segment and the firm's objectives,
resources, and capabilities.

Attractiveness of a Market Segment

The following are some examples of aspects that should be considered when evaluating the
attractiveness of a market segment:
Size of the segment (number of customers and/or number of units) Growth rate of
the segment
Competition in the segment
Brand loyalty of existing customers in the segment
Attainable market share given promotional budget and competitors' expenditures
Required market share to break even
Sales potential for the firm in the segment
Expected profit margins in the segment

Market research and analysis is instrumental in obtaining this information. For example,
buyer intentions, salesforce estimates, test marketing, and statistical demand analysis are
useful for determining sales potential. The impact of applicable micro-environmental and
macro-environmental variables on the market segment should be considered.

Note that larger segments are not necessarily the most profitable to target since they likely
will have more competition. It may be more profitable to serve one or more smaller
segments that have little competition. On the other hand, if the firm can develop a
competitive advantage, for example, via patent protection, it may find it profitable to pursue
a larger market segment.

Suitability of Market Segments to the Firm

Market segments also should be evaluated according to how they fit the firm's objectives,
resources, and capabilities. Some aspects of fit include:
Whether the firm can offer superior value to the customers in the segment
The impact of serving the segment on the firm's image
Access to distribution channels required to serve the segment
The firm's resources vs. capital investment required to serve the segment

The better the firm's fit to a market segment, and the more attractive the market segment,
the greater the profit potential to the firm.

Target Market Strategies
There are several different target-market strategies that may be followed. Targeting
strategies usually can be categorized as one of the following:
Single-segment strategy - also known as a concentrated strategy. One market segment
(not the entire market) is served with one marketing mix. A single- segment approach
often is the strategy of choice for smaller companies with limited resources.
Selective specialization- this is a multiple-segment strategy, also known as a
differentiated strategy. Different marketing mixes are offered to different segments.
The product itself may or may not be different - in many cases only the promotional
message or distribution channels vary.
Product specialization- the firm specializes in a particular product and tailors it to
different market segments.
Market specialization- the firm specializes in serving a particular market segment and
offers that segment an array of different products.
Full market coverage - the firm attempts to serve the entire market. This coverage can
be achieved by means of either a mass market strategy in which a single
undifferentiated marketing mix is offered to the entire market, or by a differentiated
strategy in which a separate marketing mix is offered to each segment.

A firm that is seeking to enter a market and grow should first target the most attractive
segment that matches its capabilities. Once it gains a foothold, it can expand by pursuing a
product specialization strategy, tailoring the product for different segments, or by pursuing a
market specialization strategy and offering new products to its existing market segment.

Another strategy whose use is increasing is individual marketing, in which the marketing mix
is tailored on an individual consumer basis. While in the past impractical, individual
marketing is becoming more viable thanks to advances in technology.

PROFILING TARGET AUDIENCE

Rather than trying to cover all characteristics of your target market in your marketing effortS
pick out a dozen or so traits of your target market and create a target market profile that is a
description of one member of your target market

Which customers do I need to profile?
Everyone involved in the purchase process should be profiled. Customers can usually be
segregated into two categories: decision-makers and influencers.
Decision-makers might include "Mom" or "CIO."
Influencers might include "teenager" or "systems analyst."

You must understand the specific characteristics of each category and the relationship
between them.
What are their relevant needs, goals, beliefs, fears, and selection criteria?
Where do they get information?
Who initiates the purchase?

How to profile
Geographics: The location, size of the area, density, and climate zone of your
customers.
Demographics: The age, gender, income, family composition and size, occupation,
and education of your customers.
Psychographics: The general personality, behavior, life-style, rate of use, repetition
of need, benefits sought, and loyalty characteristics of your customers.
Behaviors: The needs they seek to fulfill, the level of knowledge, information
sources, attitude, use or response to a product of your customers.


POSITION STRATEGY SPECIFIC DEMOGRAPHIC

Low price
Some companies position themselves as affordable options for consumers by selling low-
priced goods. This may require a corresponding decrease in quality, such as a restaurant
spending less on interior design or a car manufacturer offering fewer standard options, such
as leather seats.
An example of this low-price strategy is the $2 menus offered by many fast-food
chains. Consumers know they can get a burger, fries and drink for less than $5.00.
This strategy works only if your potential customer is looking for affordability.
High price
Some companies price their products or services higher than their competition to create a
perceived value.
Consumers wonder why a particular company is able to sell its product for more or why their
fellow consumers are willing to pay more for the product. In the end, they may believe that
the higher-priced product or service is worth more.
An example of this strategy is a personal trainer who charges $10 per hour more than
the other trainers in his/her suburb
Distribution
Where you sell your product says much about its quality.
Tennis and golf equipment manufacturers position certain models in their line as
higher quality by selling them only in pro shops or specialty stores.
Because these rackets and clubs are not available at Big W or Target, the public may
believe these are the top-of-the-line models and desire them more.
Affinity
If you have a customer base with a common, personal denominator, you can position your
company to play on their loyalty to their group.
Examples of this type of positioning include marketers who advertise their products
as made locally or in Australia; alignment with a charity; or sponsorship of a school
sports program.

TYPES OF MARKETS
Markets can be analysed via the product itself, or end-consumer, or both. The most
common distinction is between consumer and industrial markets.
Good vs Services
Individual vs Industrial

Consumer markets
Consumer markets are the markets for products and services bought by individuals for their
own or family use. Goods bought in consumer markets can be categorised in several ways:
Fast-moving consumer goods (FMCG's)
These are high volume, low unit value, fast repurchase
Examples include: Ready meals; Baked Beans; Newspapers
Consumer durables
These have low volume but high unit value. Consumer durables are often further
divided into:
White goods (e.g. fridge-freezers; cookers; dishwashers; microwaves)
Brown goods (e.g. DVD players; games consoles; personal computers)
Soft goods
Soft goods are similar to consumer durables, except that they wear out more
quickly and therefore have a shorter replacement cycle
Examples include clothes, shoes
Services (e.g. hairdressing, dentists, childcare)

Industrial markets
Industrial markets involve the sale of goods between businesses. These are goods that are
not aimed directly at consumers. Industrial markets include
Selling finished goods
Examples include office furniture, computer systems
Selling raw materials or components
Examples include steel, coal, gas, timber
Selling services to businesses
Examples include waste disposal, security, accounting & legal services

Industrial markets often require a slightly different marketing strategy and mix. In particular,
a business may have to focus on a relatively small number of potential buyers (e.g. the IT
Director responsible for ordering computer equipment in a multinational group). Whereas
consumer marketing tends to be aimed at the mass market (in some cases, many millions of
potential customers), industrial marketing tends to be focused.





























INTRODUCTION TO CONSUMER BEHAVIOUR

1. DEFINING CONSUMER BEHAVIOUR

It is the study of consumers and the processes they use to choose, use (consume), and
dispose of products and services. A more in depth definition will also include how that
process impacts the world. Consumer behaviour incorporates ideas from several sciences
including psychology, biology, chemistry and economics.

BUYER BEHAVIOUR

The systematic analysis of human behaviour relevant to marketing, together with
strategic implications of this analysis
Psychology/sociology/anthropology help us understand behaviour of social groups
and individuals
Strategic decisions should be partly based on an understanding of customers

"All marketing decisions are based on assumptions and knowledge of consumer behavior,"
(Hawkins and Mothersbaugh, 2007).

Researching consumer behavior is a complex process, but understanding consumer behavior
is critical to marketers-they can use it to:




Consumer behaviour can help marketers:
Provide value and customer satisfaction.
Effectively target customers.
Enhance the value of the company.
Improve products and services.
Create a competitive advantage
Understand how customers view their products versus their competitors' products.
Expand the knowledge base in the field of marketing,
Apply marketing strategies toward a positive affect on society (encourage people to
support charities, promote healthy habits, reduce drug use etc.)

VALUE AND RELATIONSHIP QUALITY

Consumers choose goods and services based on the assumption that they will be rewarded
with value and satisfaction. Consumption is the process by which goods and services are
used and assigned a level of value by the consumer.

That level could be positive, if the customer was satisfied, or it could be negative if they did
not find any value in their purchase.

Marketers have to provide the right combination of quality, price and customer service in
order to give customers positive value and satisfaction. That will in turn create happy, loyal
customers. The formula looks like this:

Quality + Price + Customer Service = Value and Satisfaction


If a product/service is provided that has low quality, and a high price, that does not create a
happy, satisfied customer.

At the same time, having a great product at the best possible price means nothing if the
customer is treated badly, or not provided with the opportunity to return unwanted items.



QUALITY

Quality is a product or service's ability to meet the customers' need or want. Quality is
difficult to define, and varies with each consumer, however we can take a look at some of
the components of quality for products and services:

Products
Performance-The product does what it is supposed to do.
Features-The product includes all the specifications that it says it has or that are
required, this includes safety measures.
Reliability-The product performs consistently.
Durability-When the product is being used it has to last under the conditions of
normal use.
Serviceability-The product is easy to maintain or repair either by the consumer or by
providing a warranty which says the company will provide repairs.
Aesthetics-This is important to consumers, products have to look good, and this
contributes to a brand equity and identity.
Perception-Even if the product has good quality, if the customer does not think so,
then it won't sell. The customer has to have positive feelings about the product, the
company, the brand name and the employees.

Services
Responsiveness-Services are performed in a prompt manner.
Reliability-The service is performed right, the first time, and all subsequent times.
Assurance-Knowledgeable and friendly employees are essential as customers will
equate employees behavior with the entire company. If a customer has a bad
experience with an employee, they will be less likely to purchase from the entire
company's offerings. Customers expect technical competence and professionalism
from salespeople.
Empathy-Providing individualized attention to customers will make them feel special
and keep them coming back.
Tangibles-Some services provide physical evidence that they occurred, for example a
restaurant cooks (service) and provides the food (product).


STAGES OF BUYER DECISION MAKING

Need recognition Search Evaluation of alternatives Final Purchase Postpurchase

How consumers make decisions

Compensatory decisions: All pros and cons are weighed up

Non- compensatory decisions: Do not weight up all factors but only consider/examine one
or a few attributes of the product
o Less rational decision
o Low impact product purchases
o A detergent may be seen as strong, gentle, budget, Environmentally
friendly
o
Can be divided into three types:
1. Conjunctive rule minimum standards for agreed upon attributes car price/fuel
economy/reliable
2. Disjunctive rule minimum standard applied for product in general mobile ph free
service period
3. Lexicographic ranking of importance of agreed upon attributes


Changes in life circumstances
Marriage new house, car, furniture
New job/career change clothes, new car
Baby clothing, cot, stroller
Increased Income purchase more luxury products
Cultural changes trends in food and entertainment

Purchase and postpurchase

Satisfaction is relationship between consumer expectations and their experience
Satisfaction occurs when the value gained from the product equals or is higher than
expectations
Dissatisfaction occurs when the product fails to meet consumer expectations

CONSUMER LEARNING

Consumer behavior is largely learned behavior. Learning is a change of behavior following an
interaction between a person and their environment. A person touches a hot stove and then
gets hurt, because of that interaction they learn not to touch the hot stove again. Most
attitudes, values, tastes, behaviors, preferences, symbolic meanings and feelings are
acquired through learning.

People buy things and then make decisions for future purchases based on if they liked the
product, quality, service, and price. Social organizations help people learn "appropriate"
beliefs about issues like drinking and driving, proper nutrition, etc. Companies that help their
customers learn about their products and create positive feelings with their product, service,
brand name, and employees-have a competitive advantage

Knowledge and its acquisition
Acquiring knowledge is a cognitive activity
Cognitive approach to learning processing info, thinking, believing, having an
opinion, solving a problem
But learning need not involve thinking!
Experience can effect future

1. THE LEARNING PROCESS

Exposure - the customer becomes aware of product, service or advertisement
through at least one of their five senses (sight, smell, taste, touch, hearing). When a
customer walks into a store, goes onto a website, drives by a billboard, reads a
magazine or tries a free food sample, the learning process begins.
Attention - the customer processes the stimulus.
Understanding - the customer interprets the information and acts on it either by
purchasing the product or service, dismissing the information, seeking more
information (asking family and friends, going on the Internet) or remembering it for
future information.

Close relationship between consumer learning and decision making:
Learning about high involvement products involves active process of self-conscious
exploration
Learning about low involvement products (of less significance) we learn in a passive
way incidentally in our day to day lives

2. TYPES OF CONSUMER LEARNING






BEHAVIOURAL LEARNING
Classical Conditioning - Pavlovs dogs marketing eg Coke pairing with beach/good times
Operant (Instrumental) Conditioning mouse, lever, pellet of food Trial and error
Shaping loyalty card
Reinforcer Schedules every 5
th
dvd free, FlyBuys
Initial stages of learning continuous schedule more effective than partial
1. Extinction takes longer if on partial schedule (after initial learning)
rather than continuous schedule
2. Extinction takes even longer with variable reinforcement schedule
(after learning established)
3. Higher response rate where variable schedules used

massed vs. spaced messages
Start with massed, then move to spaced
Massed = quicker learning, quickly forgotten & quicker extinction
Spaced = slower learning, less quickly forgotten & slower extinction

COGNITIVE LEARNING
Problem Solving Apes, cage, banana, stick
Modelling (observational learning)/ imitating others role models, parents, teachers,
celebrities
Implications for marketers: Consumers may need to learn new behaviours
- Seeing someone else use the product successfully could reduce inhibitions to trying
something new
- Celebs functioning as role models encourage imitation
- TV ads show models using the product






CONSUMER MEMORY

Marketing messages can be effective only if the consumer correctly understands the
messages, and remembers them when needed. Memory refers to a consumer's ability to
understand the marketing messages and assign them value and meaning. Value and
meaning always together.

UNDERSTANDING MESSAGES

Three Things Influence Consumers Ability To Understand Messages
1. Physical characteristics of the message
2. Characteristics of the message receiver (consumer)
3. Characteristics of the environment

1. PHYSICAL CHARACTERISTICS OF THE MESSAGE
Imagery: When the brand name, words, and slogan work together to create an image
in the mind of the consumer, it will invoke ideas, feelings and objects, and a direct
recovery of past experiences. Disney is big on evoking nostalgia and past experiences,
they want adult customers to remember being taken to the Disney parks as a child
and then repeat the experiences with their own children. Much of their
advertisement depicts families having wonderful experiences together, while the
adults are remembering being there as children.
Color: Colors have an enormous impact on marketing messages, and color affects
consumers in a subjective manner, so that most of the time consumers dont even
know they are being affected! For example, in the US, the color red makes people eat
25% more, therefore most restaurants use red as their main color. The meaning and
value assigned to colors changes with the culture, so marketers need to be fully
aware of how color is interpreted by different groups of people. For example, the
Starbucks Coffee Company logo is green, but when they opened shops in Malaysia,
they had to change the logo to brown because in that culture green is associated
with sickness.
Font: The presentation of words and how they are shaped will also enhance the
marketing message and contribute to the value and meaning. For example, these two
different fonts for a cigarette company will convey entirely different meanings, and
may attract two different customers.
Simplicity of the message: A simple message is generally easier to understand. Using
short phrases and easy to read terminology, such as heart healthy will quickly and
easily convey the message that the product is good for your heart.
Consistency of the message: The message needs to fit in with the surrounding
informationstyle, color, text, photographs, musicall have to work together. For
example, showing a television ad for travel to the Caribbean will have soft, flowing
fonts, bright colors, and reggae music. It can sometimes be an advantage to have
inconsistent messages, some consumers may remember the ad more if some of the
elements dont make sense.
Source of the message: Consumers will be more likely to remember and purchase
products endorsed by credible sources, animated characters or celebrities. They have
to be likeable, have some expertise or at least pretend that they have expertise), be
trustworthy, and attractive.

2. CHARACTERISTICS OF THE MESSAGE RECEIVER (CONSUMER)
Intelligence: unless you are specifically marketing a product to extremely intelligent
individuals, it is best to word marketing messages on a level most people can
understand, and dont ever talk to your customers in a way that would make them
feel inferior.
Involvement: A customer with higher levels of involvement with the product, service
and marketing information will have more recall than a consumer with less
involvement. Creating more interest in the product and making a website more
interactive will help to increase sales. More involvement means more sales.
Familiarity: Generally, the more familiar a customer is with a product, the more likely
they are to purchase it; however, having too much familiarity can lead to adaptation,
when customers become tired of their familiar purchases and seek out novelty
items. For example, in the US in the 1990s, ketchup sales began slipping and to
revamp sales, ketchup manufacturers created green and purple ketchup, these
novelty items boosted sales, but only for a few months, when consumers became
tired of them.
Expectations: If the customer doesnt know what to expect from the product or
service, then they are not going to purchase it. This explains why familiar brand
names like Campbells Soup, Coca-Cola and Disney do not change their logos
customers are familiar with them, have positive thoughts about them and know what
to expect.
Physical limits: Marketers need to remember that some consumers have limitations
such as hearing impairment or color blindness and this needs to be taken into
consideration when creating marketing messages.

3. CHARACTERISTICS OF THE ENVIRONMENT
Intensity of information: If a consumer is overloaded with stimuli in an environment,
they are much more likely to avoid the ad, or not comprehend it at all. Lets face it,
we live in a world cluttered with advertisements, it can be difficult to break through
all of it and get to your target market customers. Marketers have to be more creative
since customers can now skip commercials (thanks to recordable television);
marketers use product placement in the actual movie or television show, the
characters in the show use the brand name products and may even talk about how
they like the brand name. This is all part of the advertising. Marketers are also
making use of new social marketing movements such as Twitter and Facebook that
can be programmed to reach customers that want to see your marketing messages.
Framing: Messages can be framed to seem positive or negative and this will affect
how customers assign value. "If you dont use sunscreen, you could get skin cancer"
or "Use sunscreen to moisturize and protect your delicate skin".
Timing: Many factors will influence how a message is interpreted and assigned value
including: amount of time customer has to view a message, time of day, and type of
medium used. A customer driving in the morning 70mph past a billboard for coffee
may only have a few seconds to interpret the message, but since it is a time of day
when that product is most consumed, they may be more likely to act on the
message.

The value and meaning assigned is largely determined by internal factors, (thoughts,
feelings, emotion, attitude, perception, motivation, personality, lifestyle) which are different
for each consumer.

For example, a consumer who drinks lots of milk, sees an advertisement that says "Got
Milk?" and since they already have positive feelings for the product they will purchase more
milk, whereas a consumer who does not enjoy drinking milk and sees the same ad, may
dismiss the ad or may try drinking more milk for a short period of time and then decrease
consumption again.

SPLIT MEMORY THEORY

Left brain functions
Right hand control
Speech
Writing
Language centre
Logical thought
Right brain functions
Left hand control
Spatial perception
Word comprehension
Non-verbal concepts
Creative thinking

WHAT ATTRACTS ATTENTION?
Size a bigger banner was over 50% more effective than a standard banner
Richer media, including higher res with added effects, eg flashing and audio
increased attention
Frequency more than four ads compared one increased brand awareness by almost
90%
Position ads that appear as one shifts from one web pages to another are most
effective (3 times more effective than other ads on the page





CONSUMER MOTIVATION

Motivation is an internal state that drives us to satisfy needs. Motivation is the energizing
force that activates behavior. Once we recognize that we have a need, a state of tension
exists that drives the consumer to the goal of reducing this tension and eliminating the need.
Consequently, only unmet needs motivate.

Maslows Hierarchy of Needs
According to Maslow's hierarchy of human needs, for each need there are positives gained
and negatives that are avoided by meeting that particular set of needs. Products that are
purchased because of a need will satisfy a goal and avoid unwanted consequences. For
example, people need to feel secure so they purchase smoke detectors, therefore gaining
protection and avoiding loss and fear of fire.


According to McGuire, there are 12 psychological motives, 12 reasons why consumers are
motivated to make purchases:
1. Need for consistency
2. Need for attribute causation
3. Need to categorize
4. Need for cues
5. Need for independence
6. Need for self-expression
7. Need for ego-defense
8. Need for reinforcement
9. Need for affiliation
10. Need for modelling
11. Need for novelty
12 Need for assertion

1. Need for consistency
People have a basic desire to have all parts of themselves consistent and they purchase
products that fulfill this need. People that listen to country music will purchase
products like cowboy boots, heavy duty trucks and pets.
2. Need for attribute causation
People have the need to determine who or what causes things to happen to them. For
example, some people choose to attribute it to themselves, fate or an outside force
like God.
3. Need to categorize
Categories allow people to process a large amount of information. Vehicles are
categorized into cars, SUVs, light trucks, heavy duty trucks, van, sporty, mid-size,
hybrid, electric and so on. This helps consumers quickly narrow down their choices
when purchasing a vehicle.
4. Need for cues
Most people will view others behavior and infer what they feel and think. Clothing plays
an important role in presenting image of a person. People quickly judge others by the
clothing they are wearing and the vehicle they drive.
5. Need for independence
Americans strive for individuality and self-expression and many products are marketed as
"limited edition" or being different and unique
The Japanese culture discourages individuality and focuses on affiliation, and behavior
that enhances family and culture.
6. Need for self-expression
Americans are known for letting others know who and what they are by their extravagant
purchases, especially clothing and cars. Who really needs a $1,200 pen? What is that
saying about that person?
7. Need for ego-defense
The need to defend your identity. An insecure customer will purchase well-known brand
names for fear of being labeled socially incorrect.
8. Need for reinforcement
People are motivated to act because they are rewarded for doing it. For example, showing
off a new diamond ring to your friends creates acceptance and approval.
9. Need for affiliation
Affiliation is the need to develop mutually helpful and satisfying relationships with others,
which is a critical part of all peoples lives.
10. Need for modeling
Conformity and the need to base behavior on that of others. This is the major motivation
of children, tweens (8-12 year olds), and especially teenagers-and in their social
world conformity mean acceptance.
11. Need for novelty
People have variety seeking-behavior and this may be a reason for brand switching and
impulse buys, but that depends on the person. People experiencing rapid life changes
will seek stability, while people in stable life situations will seek change. The travel
industry uses this by changing up their ads and showing adventure vacations where
people are actively having fun and some ads showing relaxing vacations where
people are swinging in a hammock.
12. Need for Assertion
Customers need to engage in activities that will increase self-esteem and self-esteem in
the eyes of others. Most consumers respond positively to ads that appeal to this
need. In an advertisement for a ladies razor, it will say "show off your beautiful legs
to your man," this will appeal to women by showing that the product increases your
self-esteem.

ENGELS LAW AND MARKET PROFILING

Engels law
An economic theory introduced in 1857 by Ernst Engel, a German statistician, stating that
the percentage of income allocated for food purchases decreases as income rises. As a
household's income increases, the percentage of income spent on food decreases while the
proportion spent on other goods (such as luxury goods) increases.

For example, a family that spends 25% of their income on food at an income level of $50,000
will spend $12,500 on food. If their income increases to $100,000, it is not likely that they
will spend $25,000 (25%) on food, but will spend a lesser percentage while increasing
spending in other areas.

Engel's Law similarly states that lower income households spend a greater proportion of
their available income on food than middle- or higher-income households. As food costs
increase, both for food at home (such as groceries) and food away from home (for example,
at a restaurant), the percentage spent by lower income households is expected to increase.

Implications for Marketing Profiling
The lower the percentage of family income spent on food the higher the disposable income
of that family.

Differences in consumer spending patterns at different income levels, as observed by Ernst
Engel in a paper published in 1857. Engel noted that the percentage of income families spent
on food declined as their income level rose. The percentage of income spent on clothing and
shelter remained constant, and the percentage of income spent on recreation, education,
luxuries, and savings programs rose. Although written more than a century ago, Engel's Laws
still apply today.

VALS

Understanding customers is critical to marketing. VALS strengthens demographic
characterizations by explaining the deeper psychological drivers of consumer behavior.
VALS is a consulting and consumer research service. VALS consulting provides clients with
tailored marketing strategies for targeting, positioning, and communicationsreal-world,
real-time, actionable strategies. Consumer surveys and focus groups inform our work.

VALS segments US adults into eight distinct typesor mindsetsusing a specific set of
psychological traits and key demographics that drive consumer behavior. The US
Framework, a graphic representation of VALS, illustrates the eight types and two critical
concepts for understanding consumers: primary motivation and resources. The combination
of motivations and resources determines how a person will express himself or herself in the
marketplace as a consumer.
VALS assigns individuals a VALS type on the basis of their responses to questions in the VALS
Survey. VALS-typing populations of interest, such as customers or constituents, is the first
step in a VALS approach to achieving strategic marketing and communication goals.

Segmenting Publics in America
Another way of segmenting publics is to do it based on values and lifestyles. Such
segmentation regularly is used by marketers to focus product and service appeals on
particular socioeconomic levels. According to the VALS Lifetime Scale, segmentation
separates consumers into eight distinct categories based on income and social class.

INNOVATORS
Innovators are successful, sophisticated, take-charge people with high self-esteem. Because
they have such abundant resources, they exhibit all three primary motivations in varying
degrees. They are change leaders and are the most receptive to new ideas and technologies.
Innovators are very active consumers, and their purchases reflect cultivated tastes for
upscale, niche products and services.
Image is important to Innovators, not as evidence of status or power but as an expression of
their taste, independence, and personality. Innovators are among the established and
emerging leaders in business and government, yet they continue to seek challenges. Their
lives are characterized by variety. Their possessions and recreation reflect a cultivated taste
for the finer things in life.
Favorite Things:
A rewarding experience
Problem solving
Personal challenges
Authentic products

THINKERS
Thinkers are motivated by ideals. They are mature, satisfied, comfortable, and reflective
people who value order, knowledge, and responsibility. They tend to be well educated and
actively seek out information in the decision-making process. They are well-informed about
world and national events and are alert to opportunities to broaden their knowledge.
Thinkers have a moderate respect for institutions of authority and social decorum but are
open to consider new ideas. Although their incomes allow them many choices, Thinkers are
conservative, practical consumers; they look for durability, functionality, and value in the
products that they buy.
Favorite Things:
An informed discussion or debate
Finances management
Being a smart shopper
Proven products

BELIEVERS
Like Thinkers, Believers are motivated by ideals. They are conservative, conventional people
with concrete beliefs based on traditional, established codes: family, religion, community,
and the nation. Many Believers express moral codes that have deep roots and literal
interpretation. They follow established routines, organized in large part around home,
family, community, and social or religious organizations to which they belong.
As consumers, Believers are predictable; they choose familiar products and established
brands. They favor U.S. products and are generally loyal customers.
Favorite Things:
The familiar
A close-knit family
Traditional gender roles
A religion-based life

ACHIEVERS
Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep
commitment to career and family. Their social lives reflect this focus and are structured
around family, their place of worship, and work. Achievers live conventional lives, are
politically conservative, and respect authority and the status quo. They value consensus,
predictability, and stability over risk, intimacy, and self-discovery.
With many wants and needs, Achievers are active in the consumer marketplace. Image is
important to Achievers; they favor established, prestige products and services that
demonstrate success to their peers. Because of their busy lives, they are often interested in
a variety of time-saving devices.
Favorite Things:
Recognition and rewards
Peer-group acceptance
Material possessions
Rules following that leads to success

STRIVERS
Strivers are trendy and fun loving. Because they are motivated by achievement, Strivers are
concerned about the opinions and approval of others. Money defines success for Strivers,
who don't have enough of it to meet their desires. They favor stylish products that emulate
the purchases of people with greater material wealth. Many Strivers see themselves as
having a job rather than a career, and a lack of skills and focus often prevents them from
moving ahead.
Strivers are active consumers because shopping is both a social activity and an opportunity
to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their
financial circumstance will allow.
Favorite Things:
A lottery win
Stress relief
A sense of belonging
Stability

EXPERIENCERS
Experiencers are motivated by self-expression. Young, enthusiastic, and impulsive
consumers, Experiencers quickly become enthusiastic about new possibilities but are equally
quick to cool. They seek variety and excitement, savoring the new, the offbeat, and the risky.
Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities.
Experiencers are avid consumers and spend a comparatively high proportion of their income
on fashion, entertainment, and socializing. Their purchases reflect the emphasis that they
place on looking good and having "cool" stuff.
Favorite Things:
A social-media following
Being entertained
Being established
The ability to purchase

MAKERS
Like Experiencers, Makers are motivated by self-expression. They express themselves and
experience the world by working on itbuilding a house, raising children, fixing a car, or
canning vegetablesand have enough skill and energy to carry out their projects
successfully. Makers are practical people who have constructive skills and value self-
sufficiency. They live within a traditional context of family, practical work, and physical
recreation and have little interest in what lies outside that context.
Makers are suspicious of new ideas and large institutions such as big business. They are
respectful of government authority and organized labor but resentful of government
intrusion on individual rights. They are unimpressed by material possessions other than
those with a practical or functional purpose. Because they prefer value to luxury, they buy
basic products.
Favorite Things:
Practical contributions
Independence
Helpfulness to others
Contractor-grade power tools

SURVIVORS
Survivors live narrowly focused lives. Because they have few resources with which to cope,
they often believe that the world is changing too quickly. They are comfortable with the
familiar and are primarily concerned with safety and security. Because they must focus on
meeting needs rather than fulfilling desires, Survivors do not show a strong primary
motivation.
Survivors are cautious consumers. They represent a very modest market for most products
and services. They are loyal to favorite brands, especially if they can purchase them at a
discount.
Favorite Things:
A home-brewed cup of coffee
Thoughtful gestures
Memories
Safety and security



CONSUMER PERCEPTION


EMOTION AND PERCEPTION

Emotion is difficult to define, and even more difficult to predict. However, they are
important to marketers because consumers tend to react to marketing messages and make
purchases based on feelings and emotions. Emotion can be used to create product benefits.
Such as with Tide detergent and Cheerios cereal; their commercials feature families having
wonderful moments together, that couldn't have happened without those products.
Emotion in advertising enhances attention, attraction, and is processed more
thoroughly by the consumer and may be remembered better.
These are the elements of the relationship between emotion and understanding:
Self control-the ability to control your emotions
Emotional empathy-the ability to understand other people's emotions
Positive/negative outlook-a person's outlook on life can be upbeat and optimistic or
depressed and negative; most people fall somewhere in between
Productivity-ability to use emotions to solve problems

Perception is the process by which people select, organize, and interpret information
Perception has four major steps:
1. Exposure - When a stimulus (like a billboard) comes within range of your senses (vision)
2. Attention - Determined by the individual and the situation; Nerves pass the information
onto the brain for processing
3. Interpretation - when marketing messages are assigned meaning
4. Memory
a. Short-termfor immediate decision making
b. Long-termfor retention

For an ad to be successful it must have the following four elements:
1. Exposure
Must physically reach the consumer
2. Attention
The consumer must attend to it
3. Interpretation
It must be properly interpreted
4. Memory
Must be stored in memory that will allow retrieval

The act of perception individuals actively impose order on their experience of
environmental stimuli. Among these stimuli are aspects that are relevant to marketing
communications:
Package and or Product Design
Price/quality
Perceived usage situations
Design of a service environment such as retail
Word of Mouth (WOM)

COMMERCIAL STIMULI

These aspects of marketing also apply to competing products and our perception of the
overall competitive market
Understanding the way consumers order this information is important
Selecting some stimuli and excluding others
Organising the stimuli that have been accepted into an overall pattern which is then
interpreted
This interpretation gives the overall perception a sense of meaning

Different People will perceive similar information in different ways
Perception is a function of both environmental characteristics and perceiver
characteristics
Our perception of another is influenced by our own make up and expectations
Complex psychological products result in a variety of perceptions by different consumers
eg cars functional objects, status symbols, or works of fine engineering and design

Sensation: Bombardment of an individuals receptors by external stimuli, even if person is
not aware of the stimuli
Perception: We impose order on sensation by selecting, organising and interpreting the
sensation
Internal cues: Perceiver characteristics aspects of the individual that significantly influence
their perception. Eg previous experience, expectations, need state (hungry/cold), personality
and perceivers role and responsibility.
External cues: Environmental characteristics that significantly influence perception
Gestalt: Second stage perception
Perceiver organises sensations into a meaningful whole
Tendency of perceivers to arrange stimuli into a holistic configuration
Seeing things as a totality rather than a collection of details
Optical illusions
Implications for HI products
Take care with all associated market stimuli not to impair the overall image
Lower price may damage image, Retail environment may impact negatively or
positively
Kim Kardashian wont be chosen to represent Chanel

Perceptual Adaption
Individuals become aware of the traffic noise only when they move OUT of the city
Perceivers tend not to notice traffic noise because of continual exposure to it
Their perceptions have adapted to the environment and ignore stimuli that are ever present
External Cues
Aspects of our environment that attract our attention and influence the way we construct
our perceptual field
Anything that stands out & parallels the Restorff effect
However we organise our perceptions in a manner that separates the figure from the
background
This figure ground tendancy is also an internal cue
Think about messaging and merchandising
Intensity
Size
Contrast
Movement
Novelty
Context & Repetition

Stimulus Strength And Perception
Absolute Threshold
Is the minimum strength from a stimulus required for that stimulus to be perceived
Is the point where a stimulus is just able to be detected/noticed
However just making something bigger or louder can cause complications relating to
figure/grounding
Difference threshold and the JND
We may want consumers to perceive a difference or we may not
Price rise ideally not noticed
Price reduction seen as slashing pricing
Refers to perception of change in a given stimulus
The point at which one does notice the change
Minimum change required for the difference to be perceived is the JND
If we want change noticed we go above the JND
If we want change to go unnoticed we go under the JND
Perception of change is also partly an internal cue we tend to compartmentalise
change as see discreet jumps rather than gradual or continuous change eg bottle of
drink and price rise examples

Webers Law
Changes should be less than the JND for price increases and greater than the JND for specials
Higher quantity or stimulus intensity, the larger the JND
As stimulus intensity increases so does the necessary difference required in order for the
difference to be perceived

Selective Perception
We do not register all sensations that stimulate our receptors
2 schools of thought
1. Nervous system cannot cope with all sensations and we only take in a limited amount
of information
2. Not all info that is accepted is attended but held in another channel bought to
consciousness later

The two theories raise several strategic issues:
Consumers are flooded with info, likely to experience perceptual adaptation and not take in
most info
Too much info in msgs will cause information overload perceptual blocking
Product awareness may not be conscious environmental cues LI slogan etc
Buyers in buying process HI actively search out related information

Selective attention selection of stimuli which determine a perceivers conscious
awareness
Perceptual blocking act by perceivers of ignoring certain information due to
information overload
Perceptual defence when perceivers ignore info because of its threatening nature
Selective Exposure perceivers choose to attend to certain information and explore
it further