Part 2: Principle: Strategy is Creative, Too The Consumer Audience Part 2: Principle: Strategy is Creative, Too Chapter 5

Questions We’ll Answer CHAPTER KEY POINTS 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?

HOW DOES CONSUMER BEHAVIOR WORK? Definitions 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.

INFLUENCES ON CONSUMER DECISIONS Cultural Influences Norms and Values 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).

INFLUENCES ON CONSUMER DECISIONS Social Influences Social Class Your position in 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. Family People related by blood, marriage, or adoption who live in the same household. Household: all those who occupy a dwelling, related or not. Demographics Statistical, social, and economic factors such as age, gender, education, income, occupation, race, family size, and sexual orientation.

Psychological Influences INFLUENCES ON CONSUMER DECISIONS Psychological Influences Perception and State of Mind Past experiences, what others say, and mental states. Needs and Wants A need is what we think is essential, a want is what we desire. Motivations Internal forces that stimulates a certain behavior. Attitudes Based on deeply held values, and resistant to change. Personality Created to make brands distinct from competitors. Psychographics Activities, opinions, and interests. Lifestyles Yankelovich Monitor’s MindBase, VALS.

Behavioral Influences INFLUENCES ON CONSUMER DECISIONS Behavioral Influences Usage Behavior Usage Rate: quantity or 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.

Trends in Consumer Buying Behavior THE POWER OF BRAND COMMUNICATION 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 Information Approach to Brand Decisions THE CONSUMER DECISION PROCESS The Information Approach to Brand Decisions 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

Paths to Brand Decisions 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) Think–feel–do Think–do–feel Feel–think–do Feel–do–think Do–feel–think Do–think–feel

Influences of B2B Decision Making THE CONSUMER DECISION PROCESS Influences of 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 used to generate leads for the sales force

SEGMENTING AND TARGETING Definitions Segmenting 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 (most likely prospects) and the most likely to respond to marketing communications messages

To Segment or Not to Segment SEGMENTING AND TARGETING To Segment or Not to Segment 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.

SEGMENTING AND TARGETING Types of Segmentation Demographic segmentation Divided by age, gender, ethnicity, income Life style segmentation Based on consumers’ life cycle Geographic segmentation Uses location as a defining variable Psychographic segmentation Based on how people spend their money and time, their interests and opinions and their 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

Sociodemographic Segments SEGMENTING AND TARGETING Sociodemographic 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

SEGMENTING AND TARGETING Niche Segments 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 SEGMENTING AND TARGETING 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. 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 new practices in Internet marketing.

SEGMENTING AND TARGETING 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.

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