Consumer behavior

session 6
Lecture notes are available at:
http://Arash-management.blogspot.com

Main reference for this section:

Consumer behavior ( 2006)

Roger D. Blackwell
Paul W. Miniard
James F. Engel

Arash 1
Consumer behavior (CB)

Arash Najmaei

Arash.unity@gmail
Arash.unity@yahoo.com
H/P : 0172116875

Arash 2
 Demographics
lifestyle
and
households,
consumption pattern

Arash 3
 Demographics and life style

1. Definitions
2. Influences
3. Understanding lifestyle and the
impact
 Demographics is the size, structure, and distribution of a
population.

Marketers use demographic analysis as market segment

descriptors and in trend analysis.
Consumer analysts use demo-graphic trends to predict
changes in demand for and consumption of specific
products and services.
Demographic analysis provides information for social policy
 Demographic Analysis to
Predict Consumer Behavior
•Consumer analysts use demo-graphic trends to
predict changes in demand for and consumption of
specific products and services.

•Demographic analysis provides information for social

policy.

•Industrial demand is ultimately derived from consumer

demand.
In an industrial firm, you must understand not
only the customers’ minds, but also the minds
of the customers’ customers
 Demographic Analysis to
Predict Consumer Behavior

Demographics
1.Changing Structure of Markets
2.Geographic Factors
3.Economic Resources
4.Global Markets
 Market analysis requires
information about

people with needs

ability to buy
willingness to buy
 authority to buy
How many people will there be?

•Birthrate

•natural increase and life expectancy: surplus

of births over death in a given period

•fertility rate: number of live births per 1,000

women of childbearing age (15 to 44 years)
How many people will there be?

•total fertility rate: average number of children

that would be born alive to a woman during
her lifetime if she were to pass through all of
her childbearing years conforming to age-
specific fertility rates of a given year
•population momentum: future growth of any
population will be influenced by its present
age distribution
•Migration
Changes in age distribution affects the
types of products and services that will
be bought and consumed in the future
Cohort analysis is fundamental to
understanding changing consumer
markets
A cohort is any group of individuals linked
as a group in some way
The key to cohort analysis is examining the influences that are
shared by most people in a specific group

Ultimately, these influences affect consumer decision processes

and the types of products, brands, and retailers consumers
prefer when responding to a firm’s marketing strategy.

Cognitive age: the age one perceives one’s self to be

Cognitive age is measured in terms of how people feel and act,

express interests, and perceive their looks
Demographic Analysis to
Predict Consumer Behavior

Demographics
1. Age Structure of Markets
2. Geographic Factors
3. Economic Resources
4. Global Markets
Geodemography, refers to where people live, how
they earn and spend their money, and other
socioeconomic factors.

The study of demand related to geographic areas

assumes that people who live in proximity to one
another also share similar consumption patterns
and preferences
Cities are the most important unit of analysis in
most marketing plans.
Demographic Analysis to
Predict Consumer Behavior
Demographics
1.Age Structure of Markets

2.Geographic Factors

3.Economic Resources

4.Global Markets
 The ability to buy, typically measured by income and wealth

Income: money from wages and salaries as well as interest

and welfare payments
Wealth: a measure of a family’s net worth or assets in things
such as bank accounts, stocks, and a home, minus its
liabilities such as home mortgage and credit card balances

What consumers think will happen in the future consumer confidence

heavily influences consumption
Influences whether consumers will increase their debt or defer spending to
pay off debt
Measures of consumer confidence are important in making decisions
about inventory levels, staffing, or promotional budgets
Demographic Analysis to
Predict Consumer Behavior

Demographics
1.Age Structure of Markets

2.Geographic Factors

3.Economic Resources

4.Global Markets
 The most attractive markets are
countries that are growing both in
population and in economic resources

Which countries will grow the most

in the future?

Which countries have the highest

per capita income?

China and India

Low income countries offer an advantage to firms looking to buy
products from the lowest-cost source

There are pockets of consumers who are able to buy products, even in
the poorest countries

Emerging Markets
Marketing programs should focus on creating brand awareness
(because competitors will follow) and stimulating product trial

Marketers may have to teach consumers about products taken

for granted (deodorant)

Products may have to be adapted to local values

 Lifestyle: patterns in which people live and spend
time and money.

Reflects a person’s activities, interests, and

opinions as well as demographic variables

Since lifestyles change readily, marketers must keep

research methods and marketing strategies current
Psychographics: an operational technique to
measure lifestyles; it provides quantitative
measures and can be used with the large samples
needed for definition of market segments.

Can also be used in qualitative research techniques

such as focus groups or in-depth interviews

Demographics profile who buys products whereas

psychographics focus on why they buy

AIO measures: activities, interests, and opinions of

consumers
 VALS
• Acronym stands for: Values,
Attitudes and life style .a
psychological segmentation metric
was developed in 1970s to explain
American life style and values
shaping consumer behavior .
 Values and Lifestyle System
VALS™ suggests that consumer buy products
and services and seek experiences that fulfill their
characteristic preference and give shape,
substance, and satisfaction to their lives

An individual’s primary motivation determines

what in particular about the self or the world
governs his or her activities

Primary motivations include ideals, achievement

and self-expression
 Values And Lifestyle System
Consumers who are primarily motivated by
ideals are guided by knowledge and principles

Consumers primarily motivated by achievement

look for products or services to demonstrate their
success to their peers

Consumers primarily motivated by self-

expression desire social or physical activity,
variety, and risk
VALSTM Lifestyle Segments
 VALSTM Types
Innovators: successful, sophisticated, take-
charge consumers with many resources and high
self-esteem. Image is important

Thinkers: satisfied, mature, comfortable,

practical people who look for durability, value,
and functionality in products

Achievers: motivated by the desire for

achievement, career-oriented, and prefer prestige
brands that signal success. Social lives revolve
around family, place of worship, and work
 VALSTM Types

Experiencers: young, enthusiastic, impulsive, and like

risk taking, variety, and excitement. Like new and off-beat
products and activities
Like Thinkers: conservative, conventional, and
motivated by ideals, with beliefs based on codes of
church, community, family, and nation. Buy proven
brands from home country and are generally loyal
consumers
Strivers: concerned about approval and opinions of
others and seek self-definition, security, and image of
success. Emulate those they want to be like, but lack
resources
 VALSTM Types

Like Experiencers: express themselves and experience

the world by working on it. Practical people who are
self-sufficient, live within a traditional context, and
prefer value to luxury
Survivors: live narrowly focused lives with few
resources and represent a modest market for most
products. They are cautious consumers and seek safety
and security
 Global Lifestyles

Increased globalization requires that

marketing strategy be increasingly planned
on a global basis

VALSTM and other approaches are being

used to identify lifestyle segments across
country borders and segment international
markets
 Households and Consumption
patterns
1. Overview
2. Household as consumers
3. Impact of households to the market
4. Factors of consumptions
 family and household influences
• Many products are purchased by a family unit
• Individual’s buying decisions may be heavily
influenced by other family members
• How families make purchase decisions depends on
the roles of the various members in the purchase,
consumption, and influence of products
• Family: a group of two or more persons
related by blood, marriage, or adoption
who reside together
• Nuclear family: immediate group of
father, mother, and child(ren) living
together
• Extended family: nuclear family, plus other
relatives such as grandparents, uncles and
aunts, cousins, and parents-in-law
• Family of orientation: family into which one is
born
• Family of procreation: family established by
marriage
• Some families are extending these definitions
to include pets
Pets Are Family Members Too

Do you
agree?

© AP/Wide World Photos

• Household: all persons, both related and unrelated, who
occupy a housing unit.

Nonfamily households include:

1. Elderly persons living with nonfamily members
2. Persons of the opposite sex sharing living quarters
3. Friends living together
4. Same-sex couples
 Families and Households
Families are the largest single category of
households
Rapid rise in the number of nontraditional families
and non-family households

Any of these types of households may or may not

include children
Buying behavior is best described by the term
consumer unit (CU) or minimal household unit (MHU)
 Families and Households
Structural variables affecting families and
households:
Age of head of household
Marital status
Presence of children
Employment status
Marketers monitor these variables to
predict changes in demand for specific
products and categories
 Families and Households
Sociological variables affecting families
and households:
Cohesion: emotional bonding between family
members
Adaptability: ability of a family to change its power
structure, role relationships, and relationship rules
in response to situational and developmental
stress
Communication: facilitating dimension, critical to
movement on the other two dimensions
 Families Celebrations and
Gift Giving
Gift giving and family holidays are increasing in
importance
Traditional holiday spending and promotions
have shifted to other holidays throughout the year
Physical movement of large gifts have become
difficult leading to increase sales of gift
certificates, gift cards, and Internet gift purchases
Appeal to Different Ways Market
Segments Celebrate Holidays
Appeal to Different Ways Market
Segments Celebrate Holidays
 Who Determines What the
Family Buys?
Instrumental roles: financial, performance, and other
functions performed by group members (also known as
functional or economic roles)

Expressive roles: involve supporting other family

members in the decision-making process and
expressing the family’s aesthetic or emotional needs
including upholding family norms
 Role Behavior
Individual roles in family purchases

Initiator/gatekeeper: initiator of family thinking about

buying products and gathering information to aid
decisions

Influencer: individual whose opinions are sought

concerning criteria and which products or brands most
likely to fit those criteria

Decider: person with the financial authority or power to

choose how the family’s money will be spent on which
products and brands
 Role Behavior
Individual roles in family purchases
Buyer: person who acts as the purchasing agent
by visiting the store, calling suppliers, writing
checks, bringing products into the home and so
on

User: person or persons who use the product

 Role Behavior
Different family members will assume
different roles depending on the situation
and product.

Children may be influencers and users for

items (such as cereals and toys) while
parents may be the decider and the buyer.
 Role Behavior
Spousal roles in buying decisions
Autonomic: an equal number of decisions is made by each
spouse, but each decision is individually made by one
spouse or the other
Husband dominant: the husband or male head-of-
household makes a majority of the decisions.
Wife dominant: the wife or female head-of-household makes
a majority of the decisions
Joint: most decisions made with equal involvement by both
spouses
 Family Life Cycles

Family life cycle (FLC) : the process of

families passing through a series of stages
that change them over time.

The concept may need to be changed to

household life cycle or consumer life cycle to
reflect changes in society
 Activities and
Life Stage Behaviors
Young Singles
Newly Married Couples
Full Nest I, II, III
Married, No Kids
Older Singles
Empty Nest I, II
Solitary Survivor
Retired Solitary Survivor
 FLC affects demand for many products
Descriptions of life stages can be combined with additional information about
consumer markets to analyze consumer's needs, identify niches, and develop
consumer-specific marketing plans.

Individuals may repeat family stages if their family situations change or they
may be in stages different from most people their age.

FLC helps explain how families change over time and can identify core target
markets when modified with market data.

The FLC is an important predictor of family or household spending

In the last decade, consumers have changed their household spending from
“things” to “services”
 Changing Roles of Women
Female consumers now outnumber male consumers as
women tend to liver longer than men do.

Women represent a greater proportion in the population,

improved purchasing ability, and assume greater
importance in the workplace.
Female employment is increasing around the world
Employment outside the home increases income and
family buying power, but it may also increase expenditures
for specific items such as child care, clothing, food away
from home, and gasoline
Working Families Want Fashion
 Changing Roles of Women
Women and Time
As roles outside the home increase, women
have less leisure time
Marketers have developed time-saving products
to appeal to women, including convenience
foods
Marketers have also developed products to help
women enjoy the leisure time they do have
Relaxation or Self-Indulgence
Personal Care Products for Men
 Children and Household
Consumer Behavior
Children change dramatically how the family functions, in terms of
relationships, employment, and purchases.
Children reduce parents’ participation in the labor force, change how
families spend their money and reduce the amount of time and money
available for leisure.

Children exert direct influence over parental spending when they

request specific products and brands
They exert indirect influence when parents buy products and brands
that they know children prefer without being asked or told to make a
specific purchase
 Children and Household
Consumer Behavior
1. Childhood Socialization
2. Children learn their consumer behaviors through
socialization
3. Children learn shopping behaviors from shopping with
parents
4. Co-shopping explain to their children why they buy
certain products over others, thereby, teaching their
children how to shop
Summary…..