FAMILY /GROUP INFLUENCES AND SEGMENTATION

Family influences Group influences Segmentation

Methods Tradeoffs Segmentation in direct marketing

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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
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The Family Life Cycle

Individuals and couples typically move through stages Todays world is complicated

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Potential Family Life Cycle Stages

YOUNG SINGLE YOUNG COUPLE EMPTY NEST I/II

FULL NEST I/II/III

SINGLE PARENT
BLENDED
MKTG 371 Family/Group Influences/Segmentation

OLDER SINGLE
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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

Product demand due to

singles with low expenses new couples divorced families children empty nesters --> more income

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Household Decision Making

Roles/influence
Information gatherers/holders Influencers Decision makers Purchasers Users

Strategies of Influence
Constructive
Bargaining Reasoning (sincere)

Manipulative
Impression management Authority Emotion

Borderline
Information gathering

Values--desired end states

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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.
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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!

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Reference Groups
Types of reference groups:
aspirational (Mean Joe Greene) associative (colleagues) dissociative (Cadillac--Its not your fathers car!)
MKTG 371 Family/Group Influences/Segmentation

Degree of importance:
primary secondary

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Types of Reference Group Influence

Informational Normative Identification
How can you be a cool person if you are not on the Net?

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Communication About Products

Word-of-Mouth
product info rumors

Communicators
Opinion Leaders (considered experts) Market Mavens--status from knowledge Purchase-Pals

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SEGMENTATION
Bases for segmentation Determining which segments exist Choosing segments to serve Serving chosen segments
positioning promotion product features

Segmentation in direct marketing

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Requirements for Segment Viability

Group identity (similarity
within, differences between, segments)

Systematic behaviors Marketing mix efficiency potential

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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.

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Level 1:

Personal Characteristics
Demographics
age, sex, ethnic group geographic region education, occupation, social class

Media exposure Lifestyle/Psychographics

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Lifestyles and Psychographics: Examples

VALS, VALS2 Residence based
(e.g., PRIZM)

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VALS2 Segments
The Needy
Survivors Sustainers

Inner-Directed Goal Consumption

Experiential Socially Conscious Integrated

Outer-Directed Goal Orientation

Belongers Emulators Achievers I Am Me

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VALS Japan
Exploration Self-expression Achievement Tradition Realists

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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

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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)
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A consumer in search of benefits.

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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
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What do you mean you wont give me a discount? Then Ill go to the competitors!

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Means of Segmentation in Direct Marketing

Income Past purchases Ethnic surnames Credit history Hobbies/interests (magazine subscription lists)

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Sources of Info for Direct Marketing Segmentation

Phone books--often contain both names and addresses; yellow pages State registrations (vehicle, drivers licenses) Past purchases (from company or outside) Professional and school directories Magazine subscription lists Credit rating bureaus

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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)

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Sources of List Value

Recency Frequency of purchase Value of past purchases Geography (zip code as surrogate for lifestyle) Gender identifiability
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