profile the market

8/11/2019 Profile the Market

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PROFILE THE MARKET

1. SEGMENTATION

Segment: An identifiablegroup ofindividuals,families,businesses, ororganizations,sharing

one or more characteristics or needs in an otherwise homogeneous market. Market

segments may respond in a predictable manner to amarketing orpromotionaloffer.

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 marketingrefers 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 berealized 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 marketingon 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.
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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:


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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 whereorder 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 lifeSolid 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.


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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 andTV.

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 singleproduct 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 ofthe 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


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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 smallersegments 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 imageAccess 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.


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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-makersmight include "Mom" or "CIO."

Influencersmight 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 STRATEGYSPECIFIC 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


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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 thanthe 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 consumerand 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


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Selling finished goods

Examples include office furniture, computer systems

Selling raw materials or components

Examples include steel, coal, gas, timber

Selling services to businessesExamples 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.


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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,


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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


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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 entirecompany'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 recognitionSearchEvaluation of alternativesFinal PurchasePostpurchase

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


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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/fueleconomy/reliable

2. Disjunctive ruleminimum standard applied for product in generalmobile ph free

service period

3. Lexicographicranking of importance of agreed upon attributes

Changes in life circumstances

Marriagenew house, car, furniture

New job/career changeclothes, new car

Babyclothing, cot, stroller Increased Incomepurchase more luxury products

Cultural changestrends 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


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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 acustomer 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-consciousexploration

Learning about low involvement products (of less significance) we learn in a passive

wayincidentally in our day to day lives

2. TYPES OF CONSUMER LEARNING


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BEHAVIOURAL LEARNING Classical Conditioning - Pavlovs dogs marketing eg Coke pairing with beach/good times

Operant (Instrumental) Conditioningmouse, lever, pellet of foodTrial and error

Shapingloyalty card

Reinforcer Schedulesevery 5th

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 SolvingApes, 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


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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 eat25% 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.


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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 likelythey 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 whatto 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 creativesince 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".


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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 themessage.

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 decreaseconsumption again.

SPLIT MEMORY THEORY

Left brain functions

Right hand control

Speech

Writing

Language centre

Logical thoughtRight brain functions

Left hand control

Spatial perception

Word comprehension

Non-verbal concepts

Creative thinking

WHAT ATTRACTS ATTENTION?

Sizea bigger banner was over 50% more effective than a standard banner

Richer media, including higher res with added effects, eg flashing and audioincreased attention

Frequencymore 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


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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 consistency2. 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 novelty12 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.


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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 travelindustry 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.


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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 ahousehold'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 costsincrease, 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 andshelter 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.


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VALS assigns individuals a VALS type on the basis of their responses to questions in theVALS

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 AmericaAnother 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 forupscale, 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
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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 andactively 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, arepolitically 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


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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 theyplace 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, orcanning 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:


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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


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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 meaning4. 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


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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 perceivercharacteristics

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 carsfunctional 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 characteristicsaspects of the individual that significantly influencetheir perception. Eg previous experience, expectations, need state (hungry/cold), personality

and perceivers role and responsibility.

External cues:Environmental characteristicsthat 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


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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

backgroundThis figure ground tendancy is also an internal cue

Think about messaging and merchandising

Intensity

Size

Contrast

Movement

Novelty

Context & Repetition

Stimulus Strength And PerceptionAbsolute 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 riseideally not noticed

Price reductionseen 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 specialsHigher 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


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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 inmost info

Too much info in msgs will cause information overloadperceptual blocking

Product awareness may not be consciousenvironmental cues LIslogan 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 defencewhen perceivers ignore info because of its threatening nature Selective Exposure perceivers choose to attend to certain information and explore

it further


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CONSUMER PERSONALITY

The distinguishing characteristics held by individuals that predispose them to behave in

certain ways in given situations

Heredity Influences

Determinants of individual differences that are transmitted from parents to child, through

the parents genes

Environmental Influences

Determinants of individual differences that result from an individuals experiences

THEORIES OF PERSONALITY

1 Freudian Theory Unconscious needs or drives are at the heart of human motivation.

Emphasises experience during stages of physical maturation

2 Neo-Freudian Theory Social relationships are fundamental to the formation and

development of personality. Development of style (a mask) for overcoming social anxiety

3 Trait Theory Quantitative approach which sees personality as a set of psychological traits

1. FREUDIAN THEORY

Human personality is based on three interacting components:

Id Warehouse of primitive or instinctual needs for which individual seeks

immediate satisfaction e.g. thirst, hunger, sex

Superego Individuals internalexpression of societys moral and ethical codes of

conduct (acts as a brake to the impulsive nature of Id)

Ego Individuals conscious control that balances the demands of the id and superego(internal monitor that attempts to balance the impulsive Id and constraints of the

Superego)

Freuds Ego Defense Mechanisms (often used to cope with Frustration)Methods by which people mentally redefine frustrating situations to protect their

self-images and their self-esteem.

Projection

Identification

Rationalisation

Regression

Displacement/Aggression

Sublimation

Repression


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2. NEO FREUDIAN THEORIESHORNEYS CAD THEORY

Using the context of child-parent relationships, individuals can be classified into:

Compliant: Regarded as having a strong need for the approval and love of others

Aggressive: They overcome their anxiety by being hostile to others or attempting to

assert power over others

Detached: Attempts to resolve their social anxieties by adopting a mask of

independence, where they act as if they dont really need others

Research Findings

AggressivePreference for Old Spice aftershave

CompliantConsumer conformists, heavy users of deoderants and related products

DetachedTea drinkers (US)

JUNGS ANALYTICAL PSYCHOLOGY

Introversion/Extraversion

Considered an inherent trait although influenced by environment.


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IntroversionPersons interests are oriented towards their inner world of concepts

and ideas.

Extraversion- Persons interests are oriented towards the outer world of action,

objects and people.

3. TRAIT THEORIES

Orientation is primarily quantitative or empirical

Trait theorists are concerned with the construction of personality tests that enable

them to pinpoint individual differences

Important single characteristics that can form the basis for target market selection

include:

Visualisers Vs Verbalisers

Masculine Vs Feminine

Traditionalists Vs Modern

Specific personality-type traits or characteristics ascribed by consumers to different

brands.

MATERIALISM

The value an individual places on the ownership of inanimate objects

Possessiveness(people who value acquiring and showing-off possessions

and seek lifestyles full of possessions)

Non-generosity(people who are particularly self-centered and selfish)

Envy(people who covert the possessions of others and have many possessions thatdo not lead to greater happiness)

SELF CONCEPT

Real selfwhat we think we are

Ideal selfwhat we would like to be

Real social selfhow we think others see us

Ideal social selfhow we would like others to see us

Multiple selfour sense of self may vary depending on circumstances or role

Extended selfwe are what we have

Social Character


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Inner-directed people seem to prefer ads that stress product features and personal

benefits

Other-directed people prefer ads that feature an approving social environment or

social acceptance

Ways possessions can extend the self

Actually

Symbolically

By Conferring Status

By Bestowing Feelings of Immortality

By Endowing With Magical Powers


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CONSUMER ATTITUDES

Attitudes can be defined as learned predispositions to respond to an object or class of

objects in a consistently favourable or unfavourable way.

must have an object eg person, product, beliefneed not be tangible

must be evaluative either favourable or unfavourable predisposition to an object

are learned - gained through experience not inherited

are consistent (stable) early impressions leading to negative attitudes are difficult to

change

Attitude formation

Attitudes are learned through

Classical conditioning

Operant (Instrumental)Conditioning

Cognitive LearningModelling &

Problem Solving

Sources of influence on attitude formation

Direct and past experience

Influence of family and friends

Direct marketing

Exposure to mass media

Attitude change

Attitude changes are learned, they are influenced bypersonal experience and other sources

of information.

Personalityaffects both the receptivity and the speed with which attitudes are likely to be

altered.

Changing the Basic Motivational Function

Associating the Product With a Special Group, Event, or Cause

Resolving Two Conflicting Attitudes

Changing Beliefs About Competitors Brands

Message factors:

Source Receiver

Channel

One sided Vs two sided message

Ordering of information

Repetition

Message appeal (eg., security, excitement)

Message code (eg., visual, verbal)

Source credibility depends upon

Perceived expertise


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Perceived trustworthiness

Physical characteristics

Likeability

Meaningfulness

Similarity with audience

MEASUREMENT OF ATTITUDES

Observation of Behaviour

- an indirect method of measurement

- tends to be subjective

- supplement to other research methods

Qualitative Research Methods

- in depth interviews, focus groups, projectivetests

- open ended and free response type questions

Self-Report Attitude Scales- Likert scale, Semantic Differential Profiles, Rank Order scales

THREE (TRI) COMPONENT THEORY OF ATTITUDES

AffectiveThe feelings that an individual has towards an object. Also relates to the

way in which an individual evaluates the object.

CognitiveAn Individuals Beliefs about the object.

BehaviouralWhat an individual actually does in relation to the object.

Cognitive Dissonance: discomfort or dissonance occurs when a consumer holds conflicting

thoughts about a belief or an attitude object (there is inconsistency among the three

attitude components) eg consumer experiences doubts after making a purchase (post

purchase dissonance)

Consumers resolve this dissonance through a variety of strategies designed to confirm thewisdom of their choice.

Single Component Attitude Model

Assumes that the affectivecomponent represents the attitude itself.

Cognition and intention to behave then follows.

This model may have more relevance to low involvement products.

Balance Theory


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Attribution Theory

Attribution theory is concerned with how people assign causality to events and form or alter

their attitudes as a result of assessing their own or other peoples behaviour.

Defensive Attributionsuggests consumers are likely to accept credit for successful

outcomes (internal attribution) and to blame other persons or products for failure (external

attribution).

The Attitude-Towards-the Ad model proposes that a consumer forms various feelings

(affects) and judgments (cognitions) as the result of exposure to an advertisement, which, in

turn, affect the consumers attitude toward the adand attitude toward the brand

profile the market

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