Use the various consumer profiling methods to: 1.Profile yourself as a consumer (use VALS-2, Prism, and other demographic, psychographic, and lifestyle descriptors). 2.What are the implications for marketers (e.g., how is this reflected in how they do/can market to you more effectively)? 3.Profile the customers in your business (or department) by segments. 4.How does this information about your customers enable you to provide better products/services to them? 5.What more would you like/need to know about your segments? How could you find out? Group discussion questions for tonight

You might understand the parts, but might miss the whole chicken What is ?

Demographic/Geographic refers to age, sex, income, education, race, martial status, size of household, geographic location, size of city, and profession. Life stage refers to chronological benchmarking of people's lives at different ages (e.g., pre-teens, teenagers, empty-nesters, etc.). Generational Cohort refers to the defining experiences each generation experiences that shape their lifestyles and values. Lifestyle refers to the collective choice of hobbies, recreational pursuits, entertainment, vacations, and other non-work time pursuits Psychographics refers to personality and emotionally based behavior linked to purchase choices; for example, whether customers are risk-takers or risk- avoiders, impulsive buyers, etc. Belief and value systems includes religious, political, nationalistic, and cultural beliefs and values. Behavior analysis includes what behaviors consumers actually engage in (after all is said and done) Methods of Seg-men-ta-tion

Requirements for segmentation Question: What are some criteria that could be used to ensure that a segmentation has utility? Identifiable : the differentiating attributes of the segments must be measurable so that they can be identified. Relevant/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.

Pitfalls of Segmentation appeal to segments that are too small misread consumer similarities and differences become cost inefficient spin off too many imitations of their original products or brands become short-run rather than long-run oriented unable to use certain media (due to small segment size) compete in too many markets confuse people become locked in to a declining market too slow to seek innovation possibilities for new products

Trade association data Industry publications and databases Government databases (e.g., Census Bureau, state trade measurements) Sales, volume, and brand market share measurement systems ACNielsen Company — tracks retail store salesACNielsen Company movement to consumers The American Marketing Association External Sources of Information

Free & low cost secondary sources Contact the editorial staff of trade publications. Search computerized databases such as Google, etc. Contact local barter organizations and clubs like the Chamber of Commerce, Lions Club, and Rotary Club. Contact colleges and universities for departments/experts working on your field. Contact local, state, and federal government agencies. Contact international clubs and trade associations. Contact industry-specific advertising, promotion, and public relations agencies. Contact local and national broker, distributor, and private label manufacturers. Contact and interview buyer targets.

Demographic Profile

Business segmentation can help companies align their sales territories based on the opportunities on the ground. The BEFOREmap shows territories determine by geometry—four quadrants dividing the central area— while the AFTERmap shows territories that vary in size based on the number and potential value of target businesses (the red dots indicating the locations of target businesses). By mapping its business prospects by size and industry type in Lexington, Kentucky, a company can better realign its sales territories based on the concentrations of its high- quality prospects.

ClaritasClaritas (Prizm demographic profile by Zipcode) SRI VALS Survey (lifestyle profiling)VALS Sample Segmentation Services & Systems AGSAGS Demographic Database Family Lifecycle Family Lifecycle & Retailing RicercarRicercar geodemographic profiling MosaicMosaic Segmentation Yankelovich Nielson

Demographic analysis Demographic data packs PRIZM market segments Prizm ZIP profile PRIZM– Potential Rating Index for Zip Marketers

Mosaic segments A Affluent Suburbia 01 Very high-income, families with older children in suburban areas 02 Very high-income, large families in suburban areas 03 Very high-income, young, suburban families with children 04 Empty-nest, high-income, suburban couples 05 High-income, families with older children in suburban areas 06 Large, high-income families in major market suburbs 07 High-income families with children in suburbs 08 Suburban, high-income families with older children

How would you describe your current stage in the family lifecycle, and what are examples of marketing to your niche?

Cluster analysis Cluster analysis builds hierarchical trees based on similarity among individuals compared across several dimensions of questions Everyone in the room Individual people Group of people who are more similar than other groups

Types Applications VALS-2 survey 9% 11% 16% 13% 12% 13% Strugglers Actualizers Principles Status Action Fulfilled

Social Technographics Ladder (2008) Forrester categorizes social computing behaviors into a ladder with six levels of participation; we use the term "Social Technographics" to describe analyzing a population according to its participation in these levels.

Profile of Motor Boat Owner Segmentation

The Intergenerational Cohort Approach (see Meredith, G. E., Schewe, C. D., & Karlovich, J. (2001) Defining Markets, Defining Moments: America's 7 Generational Cohorts, Their Shared Experiences, and Why Businesses Should CareDefining Markets, Defining Moments

Depression Cohort (Born from 1912 – 1921; Came of age during the Great Depression; Aged 79 – 88 in 2000): This group’s coming of age experience consisted of economic strife, elevated unemployment rates and having to take menial jobs to survive. Financial security— what they most lacked when coming of age— rules their thinking. Marketing Tip : Having lived through the Depression, this cohort prefers to pay more for a smaller serving, rather than throw something away. As a result, single-serving products are now becoming popular. Maxwell House Filter Pack Singles, Pillsbury single-serve cakes, and Orville Redenbacher single- serve microwave popcorn are all examples.

World War II Cohort (Born from ; Came of age during World War II; Aged in 2000): Sacrifice for the common good was widely accepted among members of this Cohort, as evidenced by women working in factories for the war effort and men going off to fight. Overall, this cohort was focused on defeating a common enemy, and their members are more team-oriented and patriotic than those of other generational cohorts. Marketing Tip : The1940s were an intensely romantic period. Therefore romance (candlelight dinners, hand-holding, soft music) can provide a wonderful context for advertising messages. In ads for Lazy-Boy recliners, the company uses a scene of a couple sitting on the porch of a Victorian- type home; the man is dressed in clothes of the ‘40s, while the woman, clearly his sweetheart, is looking down demurely as he speaks to her. Older adults immediately relate to the ad, which goes on to emphasize how long the company has been in business—another strong selling feature for this cohort.

Post-War Cohort (Born from ; Came of age after WWII; Aged in 2000): These individuals experienced a time of remarkable economic growth and social tranquility, a time of family togetherness, the Korean conflict, McCarthyism, school dress codes, and moving to the suburbs. Overall, this cohort participated in the rise of the middle class, sought a sense of security and stability, and expected prosperous times to continue indefinitely. Marketing Tip : Post-War grandparents are healthy, active, educated and endowed with sizeable nest eggs. Spending by grandparents on their grandchildren is on the rise. Yet, toy stores are so focused on capturing the young parent market that they ignore this fact. A good example of a company taking advantage of this market is Genesis Direct of Secaucus, NJ, which markets a catalog called Gifts For Grandkids. The company provides a quarterly newsletter that offers tips that subtly help grandparents carry out their roles.

Leading-Edge Baby Boomer Cohort (Born from ; Came of age during the turmoil of the ‘60s; Aged in 2000): This group remem- bers the assassinations of John and Robert Kennedy and Martin Luther King, Jr. It was the loss of JFK that largely shaped this cohort’s values. They became adults during the Vietnam War and watched as the first man walked on the moon. Leading-Edge Boomers were dichotomous: they championed causes (Greenpeace, civil rights, women’s rights), yet were simultaneously hedonistic and self- indulgent (pot, “free love, ”sensuality). Marketing Tip : You can reap major rewards by tying your product to health and wellness values. Retailers can joint-venture with hospitals to offer on-site health seminars that have a direct nutritional link to providing health and wellness. Offering tips in newsletters on health and fitness is another way to enhance satisfaction. Financial institutions should consider designing financial instruments (like “Christmas Club”) that promote saving strictly for health, wellness and fitness purposes.

Trailing-Edge Baby Boomer Cohort, or “Generation Jones” (Born from ; Came of age during the first sustained economic downturn since the Depression; Aged in 2000): This group witnessed the fall of Vietnam, Watergate and Nixon’s resignation. The oil embargo, and the raging inflation rate and the more than 30 percent decline in the S&P Index led these individuals to be less optimistic about their financial future than the Leading-Edge Boomers. Marketing tip : Technology is making it easier to telecommute, and more and more Trailing-Edge Boomers are finding ways to work from home. Marketers looking to serve this labor force should offer telecommuters ways to get out of the house. Fitness clubs could offer special packages to attract home-based workers, many of whom have the flexibility to work out during the day and make up the time later in the evening. Restaurants could host telecommuter roundtables—monthly or bimonthly luncheons that would give home-based workers the opportunity to meet and network with new people.

Generation X Cohort (Born from ; Came of age during a time of instability and uncertainty; Aged in 2000): These are the latchkey children of divorce and have received the most negative publicity. This cohort has delayed marriage and children, and they don’t take these commitments lightly. More than other groups, this cohort accepts cultural diversity and puts quality of personal life ahead of work life. They’re “free agents,” not “team players. ”Despite a rocky start into adulthood, this group shows a spirit of entrepreneurship unmatched by any other cohort. Marketing Tip : Because this cohort is very street smart when it comes to advertising, oversold sales pitches full of hype will fall flat. They need to be spoken to in a way that says, “You’re different. We respect that.” Chrysler’s Neon’s “Hi” campaign, which showed the car with the simple message “Hi” written above it, was very effective with Xers mainly because it dropped all pretensions and talked directly to the customer in a non-threatening way.

Generation Y Cohort (Born from 1977-?; Came of age during the “Information Revolution;” Aged 23 and under in 2000): We call the youngest cohort “Generation Y,” or “Y-Gen, ”because the advent of the Internet is a defining event for them, and be- cause they will be the “engine” of growth over the next two decades. While still a work in progress, their core value structure seems to be quite different from that of Gen-X. They are more idealistic and social-cause oriented, without the cynical, “What’s in it for me?” free- agent mindset of many Xers. Marketing Tip : This is the most diverse cohort of all. One third are from a minority group compared to one fourth of the total population. In marketing to this group, reflect greater diversity in your ads. The Gap and Benetton have been particularly effective in mirroring diversity in their advertising. Even Ralph Lauren’s “wasp-ish” lines of clothing have embraced racial and ethnic diversity.

Using several of the segmentation approaches, describe yourself as a target market. Next, see if you can write a descriptive paragraph for each of 3-5 target groups in your business. Be prepared to share these with your team and the class. Segmentation Task

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