FAMILY GROUP INFLUENCES AND SEGMENTATION Family influences Group

FAMILY /GROUP INFLUENCES AND SEGMENTATION • Family influences • Group influences • Segmentation – Methods – Tradeoffs – Segmentation in direct marketing MKTG 371 Family/Group Influences/Segmentation 1 Perner

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 MKTG 371 Family/Group Influences/Segmentation 2 Perner

The Family Life Cycle • Individuals and couples typically move through stages • Today’s world is complicated MKTG 371 Family/Group Influences/Segmentation 3 Perner

Potential Family Life Cycle Stages YOUNG SINGLE PARENT YOUNG COUPLE EMPTY NEST I/II FULL NEST I/II/III OLDER SINGLE BLENDED MKTG 371 Family/Group Influences/Segmentation 4 Perner

Economic/Marketing Implications of Household Cycles • Income tends to increase with time • But children/ obligations add cost • Divorce – increases costs – may change income distribution marriage MKTG 371 Family/Group Influences/Segmentation • Product demand due to – singles with low expenses – new couples – divorced families – children – empty nesters --> more income 5 Perner

Household Decision Making • Strategies of Influence – Constructive • Roles/influence – Information gatherers/holders – Influencers – Decision makers – Purchasers – Users • Bargaining • Reasoning (sincere) – Manipulative • Impression management • Authority • Emotion – Borderline • Information gathering • Values--desired end states MKTG 371 Family/Group Influences/Segmentation 6 Perner

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. MKTG 371 Family/Group Influences/Segmentation 7 Perner

Definition You must own at least three encyclopedias to belong to our group! MKTG 371 Family/Group Influences/Segmentation • Reference group: a group whose presumed perspectives or values are being used by an individual as the basis for his or her current behavior. 8 Perner

Reference Groups • Types of reference groups: – aspirational (“Mean Joe Greene”) – associative (colleagues) – dissociative (“Cadillac--It’s not your father’s car!”) MKTG 371 Family/Group Influences/Segmentation • Degree of importance: – primary – secondary 9 Perner

Types of Reference Group Influence • Informational • Normative • Identification MKTG 371 Family/Group Influences/Segmentation How can you be a cool person if you are not on the ‘Net? 10 Perner

Communication About Products • Word-of-Mouth – product info – rumors • Communicators – Opinion Leaders (considered experts) – Market Mavens--status from knowledge – “Purchase-Pals” MKTG 371 Family/Group Influences/Segmentation 11 Perner

SEGMENTATION • • Bases for segmentation Determining which segments exist Choosing segments to serve Serving chosen segments – positioning – promotion – product features • Segmentation in direct marketing MKTG 371 Family/Group Influences/Segmentation 12 Perner

Requirements for Segment Viability • Group identity (similarity within, differences between, segments) • Systematic behaviors • Marketing mix efficiency potential MKTG 371 Family/Group Influences/Segmentation 13 Perner

Three “Levels” of Segmentation • Personal characteristics – lifestyle – personality • Benefits sought – attributes – results • Behavior – approach to purchase – variety seeking/loyalty MKTG 371 Family/Group Influences/Segmentation Note: Some of these approaches overlap. It is not essential to be dogmatic in distinguishing. 14 Perner

Level 1: Personal Characteristics • Demographics – age, sex, ethnic group – geographic region – education, occupation, social class • Media exposure • Lifestyle/Psychographics MKTG 371 Family/Group Influences/Segmentation 15 Perner

Lifestyles and Psychographics: Examples • VALS, VALS 2 • Residence based (e. g. , PRIZM) MKTG 371 Family/Group Influences/Segmentation 16 Perner

VALS 2 Segments • The Needy • Inner-Directed Goal Consumption – Survivors – Sustainers • Outer-Directed Goal Orientation – – – Experiential – Socially Conscious – Integrated Belongers Emulators Achievers I Am Me MKTG 371 Family/Group Influences/Segmentation 17 Perner

VALS Japan • • • Exploration Self-expression Achievement Tradition Realists MKTG 371 Family/Group Influences/Segmentation 18 Perner

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 MKTG 371 Family/Group Influences/Segmentation 19 Perner

Level 2 Benefits Sought • Based on – differences in arbitrary tastes (e. g. , cola vs. noncola drink) – ideal point – tradeoffs (e. g. , taste vs. calories) – usage situation (e. g. , coffee for camping (instant) vs. higher quality for home brewing) MKTG 371 Family/Group Influences/Segmentation A consumer in search of benefits. 20 Perner

Level 3 Behavior • Attitude • Extent of usage • Shopping approach – – price elasticity deal-proneness brand loyalty sources of influence on brand choice: • advertising • sales person • store assortment MKTG 371 Family/Group Influences/Segmentation What do you mean you won’t give me a discount? Then I’ll go to the competitors! 21 Perner

Means of Segmentation in Direct Marketing • • • Income Past purchases Ethnic surnames Credit history Hobbies/interests (magazine subscription lists) MKTG 371 Family/Group Influences/Segmentation 22 Perner

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 MKTG 371 Family/Group Influences/Segmentation 23 Perner

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) MKTG 371 Family/Group Influences/Segmentation 24 Perner

Sources of List Value • Recency • Frequency of purchase • Value of past purchases • Geography (zip code as surrogate for lifestyle) • Gender identifiability MKTG 371 Family/Group Influences/Segmentation 25 Perner