Leg 2 from Lisbon to Cape Town. Theme 1: Segmentation Consumer Markets. Part 1.
Good afternoon.
Let me start today with the first topic from the Outline Theme one: Segmentation Consumer Markets: 1. Understanding Consumer Behavior.
Let´s go to the basics of the segmentation analysis for our customers. All the information below is from the classic book of Marketing at any top MBA Business School, “Marketing Management”, 15th Edition, by Philip T. Kotler and Kevin Lane Keller. I decided to stick to Professor Philip Kotler books because his contributions to the world of marketing do have an impact over the last century. He is called “The Father of Modern Marketing”.
Philip Kotler is the S.C. Johnson & Son Professor of International Marketing at the Kellogg School of Management, Northwestern University, Evanston, Illinois.
Philip Kotler.
“Professor Kotler has significantly contributed to Kellogg’s School of Management success through his many years of research and teaching there. Professor Kotler received his Master’s Degree from the University of Chicago and his Ph.D. Degree at MIT, both in economics. He did post-doctoral work in mathematics at Harvard University and in behavioral science at the University of Chicago. Professor Kotler is the author of 57 books including Marketing Management: Analysis, Planning, Implementation and Control, the most widely used marketing book in graduate business schools worldwide; Principles of Marketing; Marketing Models; Strategic Marketing for Nonprofit Organizations; etc. He has published over one hundred and fifty articles in leading journals, several of which have received best-article awards”. If you wish to read more about the theme of today, I recommend you to buy his book or lend it to someone who has it and read it from page one up to page 812. It is a “must” classic book for anyone who wants to do good strategy or marketing. The importance of “understanding the customer” is the key to any business or corporate strategist.
Why do we need to understand our customers? Why? Because only by understanding them, we will be able to produce what they want or need and delight them. We must understand our current customers, our prospective customers, and the opinion leaders which become centers of influence. An opinion leader who is a center of influence is always the connection to many new customers. An opinion leader is some person, a blogger, an organization whose beliefs or attitudes are respected by people who share an interest in some specific activity. All fields of our activities do have opinion leaders (sports, religion, politics, fashion, journalism, academic gurus, etc.)
The importance of knowing the consumer lands us in the study of consumer behavior.
“The consumer behavior is the mental and emotional process and the physical activities of people who purchase and use goods and services to satisfy particular needs an wants”.
“A consumer’s buying behavior is influenced by (1) cultural, (2) social, and (3) personal factors. Of these, cultural factors exert the broadest and deepest influence”.
- CULTURAL FACTORS: Culture has a strong influence on consumers. Kotler has classified three key determinants into this group of factors:
- Culture. Culture refers to the whole set of meanings, beliefs, attitudes, and ways of doing things that are shared by a homogeneous social group and typically handed down from generation to generation.
- Subculture. Subculture is a segment of a culture that shares a set of meanings, values or activities that differ in certain respects from those of the overall culture. Subcultures include nationalities, religions, racial groups, and geographic regions. When subcultures grow large and affluent enough, companies often design specialized marketing programs to serve them.
- Social class:
Picture source: http://www.thinglink.com
One classic depiction of social classes in the United States is defined in seven ascending levels: (1) lower lowers, (2) upper lowers, (3) working class, (4) middle class, (5) upper middles, (6) lower uppers, and (7) upper uppers. In other countries such as Chile, they have a different classification of social classes: The folks in the higher class fall into classes or categories A, B, and C1. Other classes down in level of earnings are C2, C3, D3, D2, D1, E (poor). Social class members show distinct product and brand preferences in many areas, including clothing, home furnishings, leisure activities, and automobiles. They also differ in media preferences and the degree of technology used.
- SOCIAL FACTORS: In addition to cultural and personal factors; social factors are related to reference groups, family, and social roles and status affect our buying behavior.
- Reference Groups: A person’s reference groups are all the groups that have a direct (face-to-face) or indirect influence on their attitudes or behavior. Groups having a direct influence are called membership groups. Some of these are primary groups with whom the person interacts fairly continuously and informally, such as family, friends, neighbors, and coworkers. People also belong to secondary groups, such as religious, professional, and trade-union groups, which tend to be more formal and require less continuous interaction. People are also influenced by groups to which they do not belong. Aspirational groups are those a person hopes to join; dissociative groups are those whose values or behavior an individual rejects.
- Family: The family is the most important consumer buying organization in society, and family members constitute the most influential primary reference group. There are two type of families for each individual: The family of orientation and the family of procreation.
- Social Roles and Status:
A role consists of the activities a person is expected to perform. Each role, in turn, connotes a status. A senior vice president of marketing may be seen as having more status than a sales manager, and a sales manager may be seen as having more status than an office clerk or the janitor.
- PERSONAL FACTORS: These are personal characteristics that influence a buyer’s decision. The main personal factors in this group are:
- Age and stage of the life cycle,
- Generation positioning,
- Occupation and economic circumstances,
- Personality and self-concept,
- Lifestyle and values.
Tomorrow, I will dig a bit more into each of the latter personal factors, and we will see a “fresh from the oven” example for this topic.
Again, why would I dare to spend more than 2 or 3 legs sharing about the importance of understanding our customers? Well, because the key of excellent strategists or strategic advisors is to understand the customers. Without that art expertise, it is impossible to help clients as strategic advisors. See you tomorrow!
Guess what is the business of this picture? We will see it tomorrow!!!
Source References:
http://www.mypearsonstore.com/bookstore/marketing-management-0133856461
Note: All the pictures shown on this blog do not belong to me. I do not own any of the lovely photos posted unless otherwise stated.
Eleonora Escalante Strategy 