Market Segmentation & Psychographics

Market Segmentation
The process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) and individuals for the firm to serve.
A Market Segment
A subgroup of people or organizations with similar product needs

Example: Starbucks’ main target market are men & women between the ages of 25-40 (that market segment brings 49% of business).

Vague Segmentation
The process of identifying groups of consumers who have a common set of values

It’s one way of doing “market segmentation”

Attitude
A positive or negative tendency in our perception of objects or people in our environment
Functions of Attitudes
Ego-defensive
Utilitarian
Value-expressive
Social-adjustive
Can matching the content of the ads/messages to the “attitude functions” increase scrutiny and persuasion?
It’s not only a matter of matching, but instead, one must pay attention to personality characteristics such as “need for cognition” and whether or not people are high or low “self monitors
Other Variables that Matter in Persuasion
Argument quality (weak vs. strong)

Match vs. mismatch of the function that the attitude serves

Audience’s “need for cognition” tendency (how much they like to think)

Audience’s “self-monitoring” tendency (low vs. high)

Low Self-Monitors vs. High Self-Monitors
Low self-monitors are driven by goal to “stand out”
(more persuaded by the MERIT of a product)

High self-monitors are driven by goal to “fit-in”
(more persuaded by the IMAGE of product)

Ethical Considerations
Today, the proportion of black smokers who smoke menthol cigarettes is nearly three times that of white smokers. Many experts say the main reason for that is marketing.:”We are specifically targeted by the tobacco industry to smoke them… They’re willing to kill people in order to earn a profit.”

“The three most heavily advertised brands—Marlboro, Newport, and Camel—were the preferred brands of cigarettes smoked by adolescents (ages 12-17 years) and young adults (ages 18-25 years) during 2008-2010” -Centers for Disease Control (CDC)

Value Profile
Knowing target segment’s value profile can help design more appealing ads
How can we determine the best bases for segmenting markets?
There is no simple way.

One way, has been to target ads to large pools of credit card customers categorized into segments such as “Top Tier Auto Spenders,” or “Frequent Transactors.”

Psychographics
The description of consumer lifestyles, values, personality, and behavior with respect to products (usage patterns & attitudes)

How? Following a post hoc model, consumers are asked about their activities, interests, and opinions (AIO)

A Model to Identify Consumers, Get Feedback, and Influence Them
Measure baseline consumer behavior (using research of past behavior & attitudes)

Design “marketing mix” stimuli (logos, products, packaging, ads, & commercials)

Measure changes in consumers’ attitudes (the change represents feedback – – helps evaluate the success of the strategy)

Continue process of reworking marketing mix stimuli (to further influence consumers)

Strategies to Influence Consumer Behavior
Affective

Cognitive

Behavioral

Affective Strategy
Classically conditioning emotions to products
Cognitive Strategy
Provide factual information

Highlight competitive advantages

Behavioral
Positive reinforcement

Modeling desired behaviors

Strategies to Influence Consumer Behavior – Stimuli in Environment
SALES PROMOTION = An action-focused marketing event to impact the behavior of a firm’s customers.

Trade Promotion or Consumer Promotion

Trade Promotion
Referred to as “trade promotion” (e.g., advertising or displays) when the customers are the channels
like retailers
Consumer Promotion
Referred to as “consumer promotions” (e.g., coupons, free samples, bonus packs, contests, price deals) when the customers are the final consumers
Methods to Measure Overt Consumer Behavior & Changes
Nielsen data
Scanner data
Credit card debits & receipts
Physical count of shoppers
Hits on a webpage
Inventory analysis
After purchase telephone surveys
Warranty card information
Values & Lifestyles (VALS) American Segments
1. SURVIVORS = lowest income,
focus on day-to-day needs.
2. BELIEVERS = conservative,
& do not change easily.
3. THINKERS = mature,
well-educated, value-oriented.
4. STRIVERS = emulate others.
5. ACHIEVERS = higher resources,
prefer status-symbol products.
6. MAKERS = value self-sufficiency,
& buy basic products.
7. EXPERIENCERS = seek stimulation
& novelty, spend $ on socializing &
entertainment.
8. INNOVATORS = greatest resource base;
plenty of self-confidence, high incomes & education
How Can Values Be Measured?
I. Inferring from Cultural Environment

II. Means-end Chain Analysis

III. Value Questionnaires

Inferring from Cultural Environment
Titles of magazines & movies, & media content)
Means-End Chain Analysis
“Value laddering”: asking, to determine root values
Value Questionnaires
Rokeach Value Survey

Personality Surveys

List of Values (LOV) -asks people to rank 9 values by importance (e.g., self-respect, warm relationships, sense of accomplishments, self-fulfillment, fun & enjoyment in life, excitement. Sense of belonging, being well respected, & security).

Personality Surveys
Psychoanalytic Approaches
Trait Theories
Phenomenological Approaches (t
Social Psychological Theories
Behavioral Approaches
Psychoanalytic Approaches
Oral, anal, phallic stages
Trait Theories
Introvert vs. extrovert
Phenomenological Approaches
That people’s personality is shaped by their interpretation of life events – e.g., locus of control models & Dweck’s mindset theory
Social Psychological Theories
Focuses on social explanations – e.g., downward comparison theory, intergroup processes, etc.
Behavioral Approaches
Personality is a function of how individuals have been rewarded or punished
The Myers-Briggs Type Indicator (MBTI) Assessment
MBTI is a questionnaire designed to measure psychological preferences in how people perceive the world and make decisions.

These preferences were extrapolated from the typological theories proposed by Carl Jung

Conundrum: It’s widely used by HR, but not an established personality measure among academics in psychology!

4 Letters of a Myers-Briggs Type
Outwardly or inwardly focused: I (introverted), E (extroverted)

How you take in info: S (sensing), N (intuition)

How you make decisions: T (thinking), F (feeling)

How you live your outer life: J (judging), P (perceiving)

How Personality Affects Consumer Behavior
Personality is NOT always a good predictor of consumer behavior (the associations may be stronger for some types of consumer behavior than for others…)

However, personality studies may help marketers understand why some people are more susceptible to persuasion, why they like a certain ad, or why they engage in more information processing…

Personality Traits Related to Consumer Behavior
Optimal stimulation level (“sensation seeking”)

Dogmatism (tendency to be resistant to change and new ideas)

Need for uniqueness

Creativity

Need for Cognition (likes to think vs. prefers to take shortcuts)

Confidence (i.e., susceptibility to influence)

Frugality

Self-monitoring behavior

Competitiveness (desire to outdo others through “conspicuous consumption”)