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External Influences on Consumers


External Influences on Consumers MKT 750 Dr. West Agenda Snapshot of important demographic trends and how to keep on top of them A brief look at generational and ... – PowerPoint PPT presentation

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Title: External Influences on Consumers

External Influences on Consumers
  • MKT 750
  • Dr. West

  • Snapshot of important demographic trends and how
    to keep on top of them
  • A brief look at generational and cultural
    influences and the need to understand them
  • Explore how social dynamics and word of mouth
    affect consumers

This weeks readings
Last weeks readings
Snapshot of Demographic Trends
  • Demographics tell us where demand is headed
  • Age, SES, Household composition, Regional Shifts
  • So, what are the important trends to be aware of?
  • The US population more than tripled from 76
    million in 1900 to 281 million in 2000.
  • Growth of 32.7 million in the 1990s represents
    the largest numerical increase in any decade in
  • Where did this growth occur?

Snapshot of Demographic Trends
Snapshot of Demographic Trends
Snapshot of Demographic Trends
  • The US population grew increasingly metropolitan,
    from 28 percent in 1910 to 80 percent in 2000.
  • The suburbs, rather than central cities accounted
    for most of the growth
  • By 2000 half of the population lived in suburban

Snapshot of Demographic Trends
Snapshot of Demographic Trends
Snapshot of Demographic Trends
  • In 1900 half of the US population was less than
    22.9 years old.
  • By 2000, half of the population was more than
    35.3 years old.
  • The population age 65 and over increased
    tenfold, from 3.1 million in 1900 to 35 million
    in 2000.

Snapshot of Demographic Trends
Snapshot of Demographic Trends
US Growth Projections
  • The mature segment of the population will
    increase dramatically.
  • 65 segment will increase from
  • 12.7 to 23.5 of the population
  • 85 segment will increase from
  • 1 to 5.9 of the population

Projected Growth (Millions)
Snapshot of Demographic Trends
  • In 1900, 7 out of 8 (87.5 percent) Americans was
    classified as white/not-Hispanic.
  • At the of the century, the ratio was 3 out of 4
    (75 percent).
  • From 1980 to 2000, the Hispanic population more
    than doubled
  • By 2000, the percentage of minority populations
    ranged from
  • 16 percent for people over age 65
  • 39 percent for those under age 25

Snapshot of Demographic Trends
  • National Trends Projections

Buying Power (billions of dollars)
Selig Center For Economic Growth, 2002
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How to stay informed
  • AdAge now owns American Demographics
  • www.adage.com
  • US Census
  • www.census.gov
  • Read broadly!

The Concept of a Household Life Cycle
  • Going back to the early 1960s researchers came to
    understand that consumer needs change in a
    predictable way over time related to a household
    life cycle
  • Single
  • Newly married
  • Full nest I
  • Full nest II
  • Empty Next
  • Solitary Survivor

The Concept of a Household Life Cycle
  • While times and household settings have changed
    the concept of a life cycle remains relevant and
  • Income level, as it relates to age and number of
    wage earners
  • Discretionary income, as it relates to raising a
  • Product category spending, but not brand
  • Household production, as it relates to time

Stages of the Household Life Cycle
Identifying with Subcultures
Understanding American Generations
  • An age cohort is defined by common experiences
    and a shared history
  • These include political, economic, social
    conditions, and technological developments that
    shape ones values, preferences, and consumption
  • Remember PEST?

Understanding American Generations
  • Cohort analysis reveals that each generation
    behaves differently from other generations over
  • For example, it would be a mistake to presume
    that retiring Baby Boomers will behave like the
    Depression Era Cohort that preceded them

Generational Influence
Life Stage
Current Conditions
Cohort Experiences
Culture/ Upbringing
Marketing Communications
Marketplace Behavior
Understanding American Generations
The Pre-Depression Generation
  • These Mature or Senior consumers were born before
    1930 are 25 million strong
  • Shared Experiences
  • They grew up in traumatic times which strongly
    impacted their spending habits
  • Vanquished the Germans and Japanese
  • Built the suburbs and shopping malls
  • Developed miracle vaccines...
  • Values
  • Accomplished their goals through hard work and
  • Allegiance to their country
  • Respect for authority who they turn to for
    direction and guidance

The Depression Generation
  • This cohort of 35 million consumers was born
    between 1930 and 1945 and dont like being
    referred to as Seniors
  • Shared Experiences
  • They matured during the more prosperous years of
    the 1950s and early 1960s
  • Music and television were important parts of
    their early lives
  • Values
  • They are strongly patriotic, like the generation
    before them
  • Learned from their parents to be thrifty and save
    for a rainy day
  • Enjoy life and love to travel
  • Their children and grandchildren are especially
    valued and they spend heavily on them

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Baby Boom Generation
  • This massive group of 80 million consumers born
    between 1945 and 1964 has shaped our society and
    economy throughout their lifetime
  • Shared Experiences
  • Grew up during one of the most prosperous eras in
    recent history
  • Permissive parenting ala Dr. Spock
  • Assassination of leaders, Vietnam war, sexual
  • Values
  • Me generation focused on self-improvement
    rather than self-sacrifice and individual
  • Focused on the present and very career oriented
  • Highly educated, above the law

Baby Boom Generation
  • Understanding this market
  • They prize holding on to youth more than the
    previous generation
  • SUVs represent a symbol of youth and vitality
  • Fitness Revolution - want to enjoy their
  • Vitamins, herbal remedies, fitness, h2o
  • Bio Chemistry
  • Dye graying hair (men and women)
  • Use anti-age creams
  • Resort to tummy tucks, eye lifts, and botox

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Generation X
  • This smaller generation is still 45 million
    strong and born between 1965 and 1976.
  • Shared Experiences
  • Reached adulthood during difficult economic times
  • Was the first generation to be raised in
    dual-income households (Latch-key kids)
  • Likely to have been affected by divorce and AIDS
  • Values
  • View friends as family because they had to rely
    on them so much growing up
  • Less willing to make sacrifices for their career
    than BBs
  • Dont have the live for today mentality of the

Generation X
  • Understanding this market
  • This generation heralded the trend in X-treme
    sport and the WWF
  • Grunge look and irreverent attitudes
  • They are currently moving into the family stage
    of the HLC
  • Housing and child related needs are important
  • Better at saving their money

Generation Y
  • This group represent the next baby boom (echo
    boom) with 71 million consumers born between 1977
    and 1994
  • Shared Experiences
  • The older half of this group grew up in
    prosperous times but the recent downturn in the
    economy is likely to leave a mark
  • Terrorist threats and security concerns will have
    a lasting impact but it is unclear how it will
    shape these individuals values and behavior as
  • Technology and the internet will impact this
    generation in much the same way as television
    affected the Depression generation

Generation Y
  • We are still learning about this generation and
    they are only now beginning to emerge as
    independent consumers
  • Values
  • Respect for ethnic and cultural diversity
  • Independence and autonomy
  • Understanding this market
  • Dont respond to marketing hype
  • Event sponsorship works well
  • They like the ability to customize products to
    convey their personality
  • Respond well to humor, irony, and the truth!
  • Their preferences and tastes are still evolving,
    which makes them highly coveted

Understanding American Generations
  • It is important to realize that generation is
    one of many factors that influence consumer
    behavior, thus
  • The differences within generations can sometimes
    be greater than the differences between themeven
    so characterizations can be useful in
    understanding the nature of the group as a whole
  • Generations do not have sharp boundaries and
    therefore those who are near the age boundaries
    may exhibit the behavior of both groups

Our Multicultural Society
  • One of the major challenges markets face today is
    adapting to cultural diversity
  • African Americans
  • Hispanic / Latino Americans
  • Asian Americans
  • Just as we are diving deep to understand teens
    in this class, it is necessary to immerse
    yourself in another culture in order to
    understand and respond to their needs as

Cultural Influence
Symbols/ Language
Heroes/ Infuencers
Lifestyle/ Customs
Marketing Communications
Market Behaviors
Other-Oriented values
  • Individual/Collective
  • Does the culture emphasize and reward individual
    initiative or cooperation and conformity to a
  • Youth/Age
  • Do family activities focus on the children or
  • Extended/Limited Family
  • To what extent does one have lifelong obligations
    to family members?

Other-Oriented values
  • Masculine/Feminine
  • Are rank, prestige, and important social roles
    assigned primarily to men?
  • Competitive/Cooperative
  • Does one obtain success by excelling over or
    cooperating with others?
  • Diversity/Uniformity
  • Does the culture embrace variation in religious
    belief, ethnic backgrounds, political views, etc?

Environment-Oriented Values
  • Cleanliness
  • To what extent is cleanliness emphasized?
  • Performance/Status
  • Is one rewarded based on performance or inherited
  • Tradition/Change
  • Is things valued for the sake of tradition or is
    progress pursued?

Environment-Oriented Values
  • Risk Taking/Security
  • Are the societies heroes ones who have met and
    overcome obstacles?
  • Problem Solving/Fatalistic
  • We can do it versus What will be will be
  • Nature
  • Is nature admired or viewed as something to

Self-Oriented Values
  • Active/Passive Lifestyle
  • Sensual gratification/Abstinence
  • Material/Nonmaterial
  • Hard Work/Leisure
  • Postponed/Immediate Gratification
  • Religious/Secular

Responding to Cultural Diversity
  • Firms, such as Hallmark, are responding to the
    needs of different minority segments by
  • Developing different product offerings
  • Employing minorities
  • Working with specialty agencies who understand
    the culture and know how to appeal to them.

Other Sources of External Influence
  • Family and friends play a very important role in
    our lives and influence our decision making and
    consumption in a multitude of ways
  • Household or group decision making
  • Word of mouth influence
  • Social dynamics and reference groups
  • Role models and aspirational influences

Household Decision Making
Group Decision Making
  • Understanding who plays which roles
  • Initiator The person who first recognizes a need
    or starts the decision process
  • Information gatherer The individual who has
    expertise and interest and seeks information on
    different aspects of the decision
  • Influencer The person who influences which
    alternatives are considered and which criteria
    are considered

Group Decision Making
  • Understanding who plays which roles
  • Decision maker The person who makes the final
  • Purchaser Who actually purchases the product
  • User The individuals who use/consumer the

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Multi-step Flow Model
Likelihood of Seeking WOM
Do You Know a BzzAgent?
  • BzzAgents actively share their opinions and
    experiences with others and earn points for doing
    so (see www.bzzagent.com)
  • BzzAgents are
  • Naturally strong communicators
  • Trained how to talk about products and services
    with others
  • Honest in sharing their opinions
  • In touch with new products and trends

What is WOM?
  • WOM is not
  • Street teaming where people hand out freebies and
  • Shill or roach marketing where firms hire
    actors to create staged conversations
  • Spamming where people send e-mails to people who
    dont want them
  • Pseudo on-line opinions where firms post fake
    blogs and reviews

What is WOM?
  • WOM is
  • Honest Real Powerful!!!
  • It is something we all do everydayits how we
  • It is a shared opinion about a product or service
  • It is perceived as much more credible than
    marketing communication because
  • It isnt self-serving and you hear about the
    pros cons

Benefits of WOM
  • Receiver
  • Reduces risk
  • Increase confidence
  • Increase likelihood of social acceptance
  • High credibility
  • Saves time
  • Enhanced relationship
  • Sender
  • Prestige and power
  • Enhanced position within a group
  • Reduce doubt about ones own choice
  • Reciprocity
  • Increase the cohesion within a group

Creating Buzz
  • Viral Marketing leverages the word-of-mouth
    channel of information
  • Not a new approachwe have known a lot about the
    power of word-of-mouth
  • Its twice as effective as radio advertising
  • Four times as effective as personal selling
  • Seven times as effective as newspapers and

Creating Buzz
  • Identify the opinion leaders/influentials to get
    the ball rolling
  • Grassroots efforts can be very effective
  • If you have something newsworthy get the
    message out to the media
  • PR is a great way to get the buzz going

Social Networks
  • Scale-Free
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  • Distributive
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Social Networks
  • Scale-free networks tend to have hubs and
  • Identifying the individuals who are connected to
    multiple hubs will speed the spread of

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Reference Group Influence
  • Informational Influence when an individual uses
    the opinions or actions of peers as information
  • Normative Influence when an individual engages
    in a behavior to gain a reward or avoid sanction
    from peers
  • Identification influence when an individual
    internalizes the group values and norms

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Understanding Social Needs
  • Brands that have recognized the social needs of
    their customers are reaping benefits by
    facilitating the development of brand communities
  • These communities are based on social
    relationships among fans
  • They enhance the attachment members feel toward
    the brand and provide value through the sharing
    of experiences and information

Characteristics of brand community
  • Consciousness of kind
  • A common enemy
  • Shared rituals and traditions
  • A social hierarchy
  • Norms of behavior
  • A sense of moral responsibility

  • Reading
  • Finish your readings in Chapters 4 - 7, and 13
  • Individual assignment
  • You might want to consider putting together some
    multiple choice questions for the exam
  • These can be posted on the class discussion board
    in the general area so others can read and study
    from them
  • Team Assignment
  • You should have your recruits in place for your
    primary data collection soon
  • Next time we will discussion ethnographic
    research techniques and your team should have
    thought through what questions they intend to ask
    of teens and Clipper Associates.
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