Advertising Principles and Practices The Consumer Audience

Questions We’ll Answer Why is consumer behavior important to advertisers? What cultural, social, psychological, and behavioral influences affect consumer responses to advertising. How does the consumer decision process work? What is the difference between segmenting and targeting?

Dove Redefines Beauty What critical consumer insights drove the marketing campaign? How is Dove changing the definition of real beauty? \ Visit the Site Prentice Hall, © 2009 5-3

How does consumer behavior work? Consumer behavior: how consumers select, purchase, use, or dispose of products, and the needs and wants that motivate behaviors Consumers: people who buy or use products or adopt ideas to satisfy needs and wants Customers: consumers who buy particular brands or patronize specific stores Prospects: potential customers who are likely to buy the product or brand Principle: Buyers may not be the users and users may not be the buyers. Buyers and users often have entirely different needs and wants.

Influences on Consumer Decisions Prentice Hall, © 2009 5-5

Cultural Influences Norms and Values Subcultures Corporate Culture Norms: a culture’s boundaries for “proper” behavior Values: the source of norms, which represent underlying belief systems Subcultures Smaller groups of cultures defined by geography, age, values, language, traditions, or ethnic background Corporate Culture How various companies operate (formal vs. informal) Core Values: Sense of belonging Excitement Fun and enjoyment Warm relationships Self-fulfillment Respect from others A sense of accomplishment Security

Social Influences Social Class Reference Groups The position you and your family occupy within your society Determined by income, wealth, education, occupation, family prestige, value of home, and neighborhood Reference Groups Models for behavior such as teachers, religious or political figures, religious groups, ethnic organizations, your peers Provide information Means of personal comparison Offer guidance

Social Influences Family Two or more people who are related by blood, marriage, or adoption and live in the same household Household: all those who occupy a dwelling, related or not. Lifestyle: your family situation, values, and income that determines how you spend your time and money

Social Influences Demographics Statistical, social, and economic factors that characterize a population such as age, gender, education, income, occupation, race, and family size Identifies audiences and helps advertisers develop messages and select media U.S. Census Bureau collects demographic data every 10 years

Social Influences: Demographics Age Gender Family Status Race and Ethnicity Education Occupation Income Geography Sexual Orientation Principle: Your income is a key demographic factor because you are meaningful to a marketer only if you have the resources needed to buy the product advertised.

Social Influences: Demographics The Greatest Generation (born in teens through the late 1920s) Fought World War II, opened up college education to the middle class; lived frugal yet financially satisfying lives. Silent Generation (born mid- to late-1920s to the war years) Active seniors, had the most “positive impact” on America having built the post-war economic boom of the country. Baby boomers (born between 1946–1964) Largest category; final years of their careers; lived through Civil Rights movement, anti-Vietnam war protests; moon landing. Generation Jones (mid- to late-1950s to mid-1960s) Dream of affluence trying to “keep up with the Joneses.” Gen X or Baby Busters (born 1965–1979) Independent minded, somewhat cynical, concerned with their physical health and financial future. Generation Y or Echo Boomers (1980–1996) More technologically savvy, forming brand relationships, more altruistic. The Millennium Generation (2000 and after) More brand conscious.

Psychological Influences Perception and State of Mind Your past experiences with a brand, what others say, and mental states affect behavior Needs and Wants Innate (primary) needs: water, food, shelter, and sex Acquired (secondary) needs: esteem, prestige, affection, power, learning, and beauty Want: based on a desire or wish for something. Satisfaction/dissatisfaction Cognitive dissonance Principle: An item we need is something we think is essential or necessary for our lives; an item we want is something we desire.

Psychological Influences: Maslow’s Hierarchy of Needs Prentice Hall, © 2009 5-13

Psychological Influences Motivations Motive: an internal force that stimulates a certain behavior Attitudes Based on deeply held values, and resistant to change Personality Brand personalities can be created to make brands distinct from competitors. Principle: Strategies that are designed to affect attitudes focus on establishing, changing, reinforcing, or replacing them.

Psychological Influences Psychographics Activities: work, hobbies, social events, vacation, entertainment, shopping Opinions: self, social, future, political, business, culture, economics, education, Interests: family, home, job, food, media, achievements, recreation Principle: Often, differences in consumer behavior lie in psychographics—consumers’ interests and lifestyles —rather than in demographics.

Psychological Influences Lifestyles Looks at patterns of consumption, personal relationships and leisure activities. Yankelovich Monitor’s MindBase VALS Products are linked to lifestyles in the way they reflect the interests of people and the settings in which the products are used.

The VALs System The VALs System categorizes consumers according to psychological traits that correlate to purchase behavior. Thinkers and Believers— motivated by ideals; abstract criteria such as tradition, quality, and integrity. Achievers and Strivers— motivated by achievement, seeking approval from a values social group. Experiencers and Makers— motivated by self-expression and the need to stand out from the crowd or make an impact on the physical world. Visit the Site Prentice Hall, © 2009 5-17

Behavioral Influences Usage Behavior Usage rate: quantity of purchase—light, medium, heavy. Brand relationship: past, present or future use of product — nonusers, ex-users, regulars, first-timers, switchers. Innovation and adoption: how willing people are to try something new. Perceived risk: what you have to gain or lose by trying something new. Experiences The experience of buying vs. acquiring the product itself. Our decisions are based on our experience with the brand. Principle: In many product categories, 20 percent of the users buy 80 percent of the products.

Behavioral Influences: Diffusion of Innovation Curve Prentice Hall, © 2009 5-19

Trends in Consumer Buying Behavior Trends and fads Related to lifestyle and psychographic factors as well as desire for choice in a consumer culture. Young people are very involved in trends. Trendspotters: researchers that identify trends affecting consumer behavior Cool Hunters: specialize in trends that appeal to youth Brand proselytizer: consumer paid to positively influence people about a brand “Take charge” mentality of today’s consumers

The Consumer Decision Process Traditional View Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase evaluation Low-involvement or high-involvement In low involvement, there’s little or no information search

The Consumer Decision Process Paths to Brand Decisions Depends on product and buying situation Planners must know how the process works for different product categories (e.g., cars vs. candy bars) Path Goal Example Advertising’s Objective think–feel–do learning, interest computer game, CD, DVD Provide information, emotion think–do–feel learning, college, a computer, provide information, arguments understanding a vacation feel–think–do needs a new suit, a motorcycle create desire feel–do–think wants cosmetics, fashion establish a psychological appeal do–feel–think impulse a candy bar, a soft drink create brand familiarity do–think–feel habit cereal, shampoo remind of satisfaction

The Consumer Decision Process Influences on B2B Decision Making Many individuals involved; decision by committee Rational and quantitative criteria dominate Often based on specs who bid on the contract; low bid wins Long time between initial contact and decision; decisions last a long time and are supported by a contract Quality is hugely important and repeat purchases are based on performance Personal selling is important; advertising’s role is to used to generate leads for the sales force.

Segmenting and Targeting Dividing the market into groups of people who have similar characteristics in certain key product-related areas. Targeting Identifying the group that might be the most profitable audience and the most likely to respond to marketing communications messages.

Segmenting and Targeting Market aggregation strategy When planners use one marketing strategy that will appeal to as many audiences as possible–“Coke is it!” Treats the market as homogeneous (single, undifferentiated, large unit). Market segmentation Marketers recognize consumer differences and adjust strategies and messages accordingly (Diet Coke vs. Caffeine free Coke). Target market From these segments, marketers identify, evaluate, and select a group of people with similar needs and characteristics who are most likely to be in the market for the advertiser’s product.

Types of Segmentation Demographic segmentation Life style segmentation Geographic segmentation Psychographic segmentation Behavioral segmentation Benefits segmentation Values and benefits-based segmentation

Sociodemographic Segments Based on when you were born and lifestyle factors Baby Boomers, Generation X, Generation Y, Echo boomers Gray Market (young seniors age 60–75, older seniors 70+) Other lifestyle segments Dinkies: double income young couples with no kids Guppies: gay upwardly mobile professionals Skippies: school kids with purchasing power Slackers: high school kids who don’t care or do much Bling bling generation: coined by rappers and hip hoppers; flashy people with a high rolling lifestyle and costly diamonds and jewelry Ruppies: retired urban professionals; older consumers with sophisticated tastes and a generally affluent lifestyle

Niche Markets Subsegments of a more general market defined by some distinctive trait Ecologically minded moms who don’t use disposable diapers Skateboarders Classical music enthusiasts Educationally oriented senior travelers

Profiling the Target Audience Markets are divided into segments; then profitable segments are selected as target audiences. A profile is a description of the target audience that reads like a description of someone you know. Behavioral targeting is getting more attention due to new practices in Internet marketing.

Narrowing the Target The target is described using the variables that separate this prospective consumer group from others who are not in the market. Principle: Each time you add a variable to a target audience definition, you narrow the size of the target audience. Prentice Hall, © 2009 5-30

Targeting Issues Ethical Issues Advertising potentially unhealthy products to specific segments like sugary foods to children. Emphasis on advertising to young consumers while ignoring Boomers in their “power years.” Microtargeting Using vast computer databanks of personal information to identify voters most likely to support one candidate or another. Used in swing states to identify potential supporters.

Discussion Questions

Discussion Question 1 You are working as an intern at the Williams Russell Agency and the agency has just gotten a new account, a bottled tea named Leafs Alive that uses a healthy antioxidant formulation. The sale of bottled tea, as well as healthy products, is surging. Analyze your target market using the following questions: What consumer trends seem to be driving this product development? What cultural, social, psychological and behavioral factors influence this market? Plot the consumer decision process that you think would best describe how people choose a product in this category. Choose one of the VALS or Yankelovich Monitor’s Mindbase groups that you think best describes the target market for this product. Explain your rationale.

Discussion Question 2 Consider the social factors that influence consumer decisions. Identify two demographic or psychographic factors that you think would be most important to each of these product marketing situations: Full line of frozen family-style meals (for microwaving) that feature superior nutritional balances. Dairy product company (milk, cheese, ice cream) offering an exclusive packaging design that uses fully degradable containers. A new SUV that is lighter in weight and gets better gas mileage than the average SUV.

Discussion Question 3 Analyze the decision making involved in choosing your college. Interview two of your classmates and determine what were the influences on their decision to attend this school? How did you—and the people you interviewed—go about making this decision? Is there a general decision-making process that you can outline? Where are the points of agreement and where did you and your classmates differ in approaching this decision? Draw up a target audience profile for students attending your college. How does this profile differ from another school in your same market area?

Discussion Question 4 Five-minute debate: One of your classmates argues that the information-driven approach to a consumer decision sis absolutely the most important route and advertising strategies should focus on that type of situation Two other classmates disagree strongly: one argues that a feeling-driven approach is much more effective in generating a response, and the other says the only thing that counts is driving action, particularly sales. In class, organize into small teams with each team taking of the three positions. Set up a series of debates with each side having 1 1/2 minutes to argue its position. Every team of debaters must present new points not covered in the previous teams’ presentations until there are no arguments left to present. Then the class votes as a group on the wining point of view.

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