Part 2 Principle: Be True to Thy Brand Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-1

1. What cultural, psychological, and behavioral influences affect consumer responses to advertising? 2. What characteristics are used to segment groups of consumers? 3. How does the consumer decision process work? 4. How does targeting work and how is it different from segmenting? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-2

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Consumer behavior describes how individuals and groups select, purchase, use, or dispose of products, and the needs and wants that motivate behaviors. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-4

One method:  Divide them by the type of market they represent – business or consumer.  Then create: ◦ Business-to-business (B2B) strategies; or ◦ Business-to-consumer (B2C) strategies Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-5

Another method:  Refer to them as: 1. Those who shop for and purchase the product 2. Those who actually use the product 3. Influencers Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-6

Norms and Values  Norms: a culture’s boundaries for “proper” behavior  Values: the source of norms which represent underlying belief systems  Corporate culture: describes how various companies operate. This may be formal or informal. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-7

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-8 These ads for 76 motor oil ran in national trade publications for the trucking industry. The creative team wanted to associate the 76 brand with Americana using a nostalgic appeal. How do you think this imagery speaks to truck fleet owners who authorize the purchase of commodities such as motor oil?

Advertisers strive to understand the underlying core values that govern attitudes and guide behavior. Ten basic core values Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall A sense of belonging 2.Excitement 3.Fun and enjoyment 4.Warm relationships 5.Self-fulfillment 6.Respect from others 7.A sense of accomplishment 8.Security 9.Self-respect 10.Thrift

Social Class Your position in society, which may be determined by: 1. Income 2. Wealth 3. Education 4. Occupation 5. Family prestige 6. Value of home 7. Neighborhood Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-10

Reference Groups Groups we use for models for behavior, such as: 1. Teachers 2. Religious leaders 3. Political parties 4. Religious groups 5. Ethnic organizations 6. Hobby-based clubs 7. Fellow workers or students Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-11

Brand communities Groups of people devoted to a particular brand.  For consumers, reference groups: 1. provide information 2. serve as a means of personal comparison 3. offer guidance Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-12

Family  People related by blood, marriage, or adoption who live in the same household.  A household consists of all those who occupy a dwelling, related or not.  Lifestyle reflects family situation, values and income. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-13

 Perception and state of mind Based on past experiences, what others say, and mental states.  Needs and Wants Needs are motivated by basic survival instincts. Wants are what we desire. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-14

According to one expert, successful brands satisfy the consumer’s need to: Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall Feel safe and secure 2.Feel comfortable 3.Be cared for and connected to others 4.Be desired by others 5.Be free to do what we want 6.Grow, become more 7.Serve others and give back 8.Be surprised and excited 9.Believe there is a higher purpose 10. Feel they matter

 Maslow’s Hierarchy of Needs (Figure 5.2 graphic goes here.) Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-16

 Satisfaction This is only one possible response to a brand message or brand experience.  Dissonance Cognitive dissonance refers to a conflict between thoughts. This creates a state of tension.  Motivation A motive is an internal force that stimulates you to behave in a certain manner. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-17

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 Segmenting Dividing the market into groups of people who have similar characteristics in certain key product- related areas.  Market segmentation An approach to more precisely match customer needs and wants with products.  Niche markets Tighter subsegments of a more general market segment. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-19

 Demographic segmentation Divided by age, gender, ethnicity, income.  Life-stage segmentation Based on a stage in the consumers’ life cycle.  Geographic segmentation Uses location as a defining variable. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-20

 Psychographic segmentation Based on how people spend their money, their interests and opinions, and views of themselves.  Behavioral segmentation Based on product category and brand usage.  Values and benefits-based segmentation Based on underlying values or consumers’ needs and problems. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-21

Demographics Statistical, social, economic characteristics including:  Age  Gender and sexual orientation  Education  Occupation  Income  Family status  Race  Religion  Geography Let’s look at each one in depth… Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-22

Age This is the most important demographic characteristic used by advertising planners. Age-related population categories: Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-23 The Greatest Generation The Silent Generation Baby Boomers Generation Jones Gen X Me Generation Generation Y Millennials

Gender and sexual orientation  Women account for about 85 percent of all consumer purchases in the United States.  Many brands are either masculine or feminine in terms of use.  Sexual orientation has become a marketing issue as gay and lesbian consumers have become serious target markets. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-24

Education, occupation, and income  U.S. males are falling behind females in higher levels of education.  Occupation is key because most people identify themselves by what they do.  The most affluent 20 percent have 50 percent of the total U.S. consumer income.  Advertisers are especially interested in consumers’ discretionary income. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-25

Family status  Age also relates to family status.  Over the past 30 years, people have tended to marry at an older age.  The number of families continues to shrink. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-26

Race, ethnicity and immigration  In the U.S., ethnicity is a major segmentation factor.  Hispanics, African-Americans, and Asians are projected to make more than half of the U.S. population by  Smart multicultural strategies recognize these trends.  Media use differences may be based on ethnicity. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-27

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-28 This ad for Tide targets the Hispanic culture. The translation is “The salsa is something you dance, not what you wear.” If you were on the Tide team, would you recommend using this ad? Why or why not?

Religion  Here, culture and demographics come together.  Some religions forbid certain products. As a class: What are some examples? What does this imply for advertisers? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-29

Geography  People residing in different regions need certain products.  Media planners use designated market areas (DMAs) to describe certain media markets. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-30

Psychographics refer to lifestyle and psychological characteristics including:  Activities  Values  Interests  Attitudes  Opinions Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-31

Attitudes An attitude is a predisposition that reflects an:  opinion  emotion  mental state …directed at some  object  person  idea Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-32

Lifestyles Lifestyles can be analyzed in terms of:  Patterns of consumption  Personal relationships  Interests  Leisure activities Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-33

Lifestyles The Yankelovich MONITOR™ MindBase™ identifies eight consumer groups:  “I am Down to Earth” (Figure 5.4 Mindbase graphic)  “I am Driven”  “I am Sophisticated”  “I Am at Capacity”  “I Measure Twice”  “I am Rock Steady”  “I am Devoted” Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 5-34

Lifestyles The VALS™ system by SRIC- BI categorizes consumers according to psychological traits:  Thinkers and Believers are motivated by ideals  Achievers and Strivers are motivated by achievement  Experiencers and Makers are motivated by self- expression Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-35

Sociodemographic segments This approach refers to people in terms of when they were born. As a class: Try to figure out who these labels describe: Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-36 Dinkies Guppies Skippies Slackers Bling-Bling Generation Ruppies

Brand usage and experiences  Usage Rate: quantity or purchase — light, medium, or heavy.  Experiences: our decisions are based on our experience with the brand.  Innovation and Adoption: how willing people are to try something new.  Perceived risk: what you have to gain or lose by trying something new. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-37

Trends and fads  Related to lifestyle and psychographic factors, and the fascination with choice in a consumer culture.  Young people are particularly involved in trends.  Trend spotters: researchers that identify trends affecting consumer behavior.  Cool hunters: specialize in identifying trendy fads that appeal to young people. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-38

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The traditional view: 1.Need recognition 2.Information search 3.Evaluation of alternatives 4.Purchase decision 5.Post-purchase evaluation  The purchase may be low-involvement or high- involvement.  In low involvement, there’s little or no information search. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-40

 The path depends on the type of product and the buying situation.  Not all responses begin with thinking about a product.  Not all responses follow the same route to a decision.  Brand planners need to know how the decision process works for a specific product category. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-41

Influences on B2B decision marketing Decisions are usually more rational than emotional:  Many individuals involved; decision by committee.  Rational and quantitative criteria dominate.  Often based on specs to those who bid on the contract.  Long time between initial contact and decision.  Quality is important; repeat purchases based on performance.  Personal selling is important. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-42

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 Markets are divided into segments; then profitable segments are selected as target audiences.  Through targeting, the organization can: ◦ design specific communication strategies to match the audience’s needs and wants. ◦ position the product in the most relevant way to match their interests. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-44

Profiles are descriptions of the target audience that reads like a description of someone you know.  The target is described using the variables that separate this prospective consumer group from others who are not in the market.  Each time you add a variable to a target audience definition, you narrow the size of the target audience.  Behavioral targeting is getting more attention due to the increasing importance of digital marketing. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-45

Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-46 One of advertising’s most familiar slogans moved women who were tired of being told that there are things ladies don’t do, such as color their hair. What lesson can you learn from a successful ad like this?

 Microtargeting: using vast computer databanks of personal information to identify voters most likely to support one candidate or another.  This data mining practice enables advertisers to direct highly tailored messages to narrow slices of a segment. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-47

Examples:  Advertising potentially unhealthy products to specific segments like sugary foods to children.  Emphasis on advertising to young consumers while ignoring the 78 million Boomers now in their “power years.” As a class: What others can you think of? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-48

In Chapter 6, we will:  Discover how demographic and psychographic segments are identified.  Examine the research needed to support these strategic planning decisions. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-49

“ A Model New Way to Connect with Customers”  Reconnecting with a valuable segment of the target audience helped Old Navy improve its fortunes.  The store improved its clothing lines, stores, merchandising and promotional strategies.  It also launched a clever campaign using quirky talking mannequins. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-50

“ A Model New Way to Connect with Customers” Key lessons:  Old Navy utilized a key insight about the target audience: young moms.  As a class: What others can you think of? Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall5-51