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Demographics

Demographic variables Social stratification

– in the U.S.– in other cultures

Measurement of social class

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Definition

Demographics: the description of a population in terms its size, distribution, and structure

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Issues in Demographics

Population– size: number of

individuals– distribution

across a geographic region

rural, urban, or suburban

– Structure age economic stratification occupational distribution status/social class

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Demographics helps

Understand current markets--demand for products explained in terms of personal characteristics

Predict future markets

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Population

U.S.– growing, fueled by

immigration rather than birthrates (implications)

– shifting (away from Midwest toward South, Southwest)

– highly mobile

Germany– declining (large incentives

given to have children)– traditionally static

(immobile) but more mobile now due to

unification of East and West Germany

opportunities with EC

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Age

“Graying” countries– Germany, Japan, U.S.

High birthrate areas– Africa, parts of Asia, Latin

America

Age group vs. demand for products (refer to section on subculture)

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Other Demographic Variables

Occupation Education Income Ethnic group (refer to

section on subculture) Religious groups Geographic region

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Social Class

In the U.S.– often denied– not clearly defined but– clear differences in

individual status income power/privilege

In India– traditionally defined by

rigid caste (now officially outlawed but still in practice)

– movement traditionally not permitted

In Britain– class differences not

legally spelled out, but accepted by tradition

– class “consciousness”– some upward

movement possible

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Implications for Marketing Strategy

– “At level’’--accurately portray class standing

Positioning strategies– Upward Pull (opportunity

to enjoy pleasures of higher class)

– Appeal to newly wealthy (ability to enjoy better things in life now)

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Measuring Social Status--not an easy task

Single item measures– education– occupation/licensure– income

Multi-item indices– e.g., U.S. Census: occupation,

income, education

Other issues--e.g., club memberships, family relationships

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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 Segmentation exercise

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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

Note: Some of theseapproaches overlap.It is not essential to bedogmatic 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

Activities, Interests, and Opinions (AIO)

VALS, VALS2 Residence based

(e.g., PRIZM)

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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. 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 insearch 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

What do you meanyou won’t give mea discount? Then I’llgo 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, driver’s 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