ROUTLEDGE LIBRARY EDITIONS: CONSUMER BEHAVIOUR. Volume 5 CONSUM ER PROFILES

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2 ROUTLEDGE LIBRARY EDITIONS: CONSUMER BEHAVIOUR Volume 5 CONSUM ER PROFILES

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4 CONSUMER PROFILES An introduction to psychographics BARRIE GUNTER AND ADRIAN FURNHAM O Routledge Taylor &. Francis Group LONDON AND NEW YORK

5 First published in 1992 This edition first published in 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY Routledge is an imprint o f the Taylor & Francis Group, an informa business 1992 B. Gunter and A. Furnham All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: (Set) eisbn: (Set) ISBN: (Volume 5) eisbn: (Volume 5) Publisher s Note The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent. Disclaimer The publisher has made every effort to trace copyright holders and would welcome correspondence from those they have been unable to trace.

6 Consumer profiles An introduction to psychographics Barrie Gunter and Adrian Fumham * London and New York ROUTLEDGE

7 First published 1992 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge a division of Routledge, Chapman and Hall, Inc. 29 West 35th Street, New York, NY B. Gunter and A. Furnham Typeset in Times by Leaper & Gard Ltd, Bristol Printed and bound in Great Britain by Biddles Ltd, Guildford and King s Lynn All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue reference for this title is available from the British Library. Library of Congress Cataloging in Publication Data

8 Contents List o f tables List o f figures Preface viii ix x 1 Introduction: market segmentation strategies 1 The role o f market segmentation 1 Target marketing 3 Segmenting consumer markets 3 Physical attribute classification 5 Beha vioural attribute classification 20 Conclusion 29 2 History and background of psychographics 31 Introduction 31 Clarifying the definition o f psychographics 33 Qualitative or quantitative psychographics 35 3 Personality profiling of consumers 40 Introduction 40 Psychoanalytic theory 41 Moti vation theory 43 Social theory 44 Trait-factor theories 45 Self-concept theory 46 The application o f personality variables to consumer markets 48 Conclusions from personality research 61 4 Psychographic systems for consumer profiling 62 Introduction 62 Psychographics 64 Lifestyle concepts and measurements 70 The basic VALS system 12

9 Contents A comparison o f VALS and other monitors New VALS system Social value groups List of Values Conclusion Critique of psychographics Introduction General or specific? The pros and cons of psychographics Appraising psychographics Application of psychographics Conclusion Applications of psychographics: I. Consumer activity Introduction Shopping types The supermarket customer Psychographic profiles for different retail categories Local versus non-local shopping Fashion Product specific segmentation Conclusion Applications of psychographics: II. Media markets Introduction Segmenting media markets Television audience segmentation Psychographic audience typologies Home video Conclusion Applications of psychographics: III. Consumer sub-groups Introduction The women s market The elderly Conclusion Putting psychographics into practice Introduction Advantages of psychographics General guidelines for practitioners Syndicated research Specific concerns with market segmentation

10 Contents vii The generalisability o f market segmentation 168 Conclusion 169 Bibliography 171 Index 184

11 Tables 1.1 CACI market analysis geodemographic classifications AIO categories of lifestyle studies Sample lifestyle categories based on perceived activities, interests and opinions Key demographics of the VALS segments VALS segments and consumer behaviour Psychographic profiles of camera purchasers Benefit segments in the less expensive camera market Profile of heavy users of eye make-up and shortening Interest factor summary Overview of 14 interest segments Need factor summary 132

12 Figures 1.1 Marketing segmentation bases 2.1 Lazar s lifestyle hierarchy 4.1 The original VALS typology

13 Preface Two unrelated events led us to write this book. The first was market led. Various organisations had, at different times, approached us to advise them on how to segment markets for specific products by behavioural and attitudinal criteria. These were interesting and challenging ad hoc projects, yet we felt the need to do this more systematically. The second factor occurred as a result of regular visits to different business school libraries. We kept seeing references to psychographics and psychological segmentation of the market. We began to collect them and eventually read them. It soon became apparent to us that no comprehensive review of this important but neglected area existed so we decided to do it ourselves. It was an enjoyable task and as a result believe we are now better practitioners of psychographic segmentation. It is our hope that readers will benefit from this analysis in the same way. Barrie Gunter and Adrian Furnham

14 1 Introduction: Market segmentation strategies THE ROLE OF MARKET SEGMENTATION The world is too large and filled with too many diverse people and organisations for any single marketing mix to satisfy everyone. Unless the product or service is an item such as an unbranded, descriptivelabel, universally-required detergent aimed at the mass market, any attempt to satisfy everyone may be doomed to failure. An organisation that decides to operate in some market - whether consumer, industrial, reseller or government - recognises that it normally cannot equally serve all the customers in that market. The customers may be too numerous, widely-scattered and heterogeneous in their buying requirements. Thus, organisations often need to identify the most attractive parts of the market, those they are best suited to serve or that section where competition is weaker or non-existent. The car manufacturer who decides to produce and market a single model to satisfy everyone will encounter seemingly endless decisions about such variables as the number of doors, type of transmission, colour, styling and engine size. In its attempt to satisfy everyone, a company or business may be forced to compromise in each of the areas it has to cover and, as a result, may discover that it does not satisfy anyone. The process of dividing the total market into several relatively homogeneous groups with similar product or service interests, based upon such factors as demographic or psychological characteristics, geographic locations or perceived product benefits is called market segmentation. Understanding how consumers can be divided up into different types or classes is widely regarded as essential to effective marketing strategy. Marketers have not always held this view. Traditionally their thinking has passed through three distinct stages:

15 2 Consumer prof iles (a) Mass marketing : In mass marketing, the seller mass produces, mass distributes and mass promotes one product to all buyers. (b) Product differentiated marketing: The seller produces two or more products that exhibit different features, styles, quality, sizes and so on. (c) Target marketing: The seller distinguishes among many market segments, selects one or more of these segments and develops products and marketing mixes tailored to each segment. The philosophy of targeting products and services at specific target groups has gained increasing influence during the post-1945 period. As people have become wealthier and as traditional values have changed, tastes and needs have widened and the structure and requirements in many markets have become more and more differentiated. New products have therefore had to be developed which appeal to particular markets or market segments. It is the function of market research to identify those segments which permit the development of products and services with clear identities but which are, nevertheless, large enough to permit economical production and adequate returns to scale. Rising real incomes and the move away from traditional classdetermined patterns of behaviour will further increase the significance of market segmentation. As we will see in this book, this development will entail the application of more sophisticated techniques of consumer classification based on psychological dimensions, as well as the more effective use and deployment of traditional geographical and demographic criteria to market segmentation. Having said that, there are still instances where direction of marketing effort to the total market for a category of products is justified. For instance, the market may be so small that directing marketing effort to the total market may be the only profitable strategy. In another situation, heavy users may constitute such a considerable portion of the market that the obvious strategy is to concentrate on developing products for, and communicating with, these heavy users. Under different circumstances again, an organisation s product (its brand) may so dominate a market that its appeal is total: it elicits a positive response from all segments of the market and therefore there is little point in concentrating merely on one or two segments. These considerations aside, however, the whole marketing effort becomes more manageable when some key group is identified as the target market. Products can be developed more efficiently through close attention to a more homogeneous group of potential buyers.

16 Introduction 3 When the group has been identified, marketing communications are often easier and more economical. Costly wastage of advertising expenditure (e.g., due to overlapping groups with neither the means nor the intention to buy) can be avoided. Today s companies are finding it increasingly hard to practise mass marketing and in any case, mass markets are undergoing demystification. Consumers will soon be able to enjoy a multiplicity of television channels supplied by terrestrial, satellite and cable distribution systems in addition to the numerous radio stations, magazines and newspapers to which they are exposed. In future, advertisers will be forced to design products that fit with the multiplicity of channels, with multiple retail outlets and with a multiplicity of discrete consumer target audiences. The necessity of subtle, sensitive target marketing has now received almost total recognition. TARGET MARKETING Companies are increasingly embracing target marketing. Target marketing helps sellers identify marketing opportunities more successfully. The marketers can develop the right product for each target market. They can adjust their prices, distribution channels and advertising to reach the target market efficiently. Instead of scattering their marketing effort ( shotgun approach) they can focus it on the buyers who have the greatest purchase interest ( rifle approach). Target marketing calls for three steps: (a) Market segmentation : The act of dividing a market into distinct groups of buyers who might require separate products and/or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. (b) Market targeting: The act of evaluating and selecting one or more of the market segments to enter. (c) Product positioning: The act of formulating a competitive positioning for the product and a detailed marketing mix. SEGMENTING CONSUMER MARKETS Market segmentation results from a determination of factors that distinguish a certain group of consumers from the overall market. Classifying consumers in this way can help manufacturers and communicators to adjust their advertising, marketing, distribution

17 4 Consumer profiles Figure 1.1 Marketing segmentation bases channels and prices to reach target markets more effectively. Understanding the physical characteristics of consumers in terms of age, sex, geographic location, income and expenditure patterns, mobility and their psychological characteristics covering activity patterns and attitudes, interests and values, is central to the success of the overall marketing strategy. There are four commonly used bases for segmenting consumer markets (see Figure 1.1). The first two can be broadly subsumed under Physical Attribute Classification and the others represent forms of Behavioural or Psychological Attribute Classification. Physical Attribute Classification includes: (i) geographic segmentation, which refers to the dividing of an overall market into homogeneous groups on the basis of population location and has been used for hundreds of years; and (ii) demographic segmentation, which refers to the dividing of an overall market into homogeneous groups based upon characteristics such as age, sex and income level. Demographic segmentation is the most commonly used method of subdividing total markets. Behavioural Attribute Classification, on the other hand, includes, (i) Product use and benefit segmentation which focuses upon product purchase behaviour and the benefits the consumer expects to derive from a product or service. These segmentation bases can be important to marketing strategies, provided they are significantly related to differences in buying behaviour; and (ii) psychological segmentation, which utilises profiles of consumers developed either from standardised personality inventories or from analyses of the reported activities, opinions, interests and lifestyles of individuals.

18 Introduction 5 As we will explain in this first chapter, marketing researchers have traditionally used demographic and socio-economic data to develop market segments and predict the market behaviour of individuals. Growing disenchantment with such segmentation schemes, initially witnessed within the business community in the United States (and later spreading to other national and international markets), led to the investigation of alternatives. One such alternative was the concept of the life cycle. This line of exploration revealed that for various sets of products and services, a household s life-cycle stage (or development) is a better predictor of ownership or use than straight demographics alone (Wells and Gubar, 1966). Even life-cycle data, however, cannot explain why two households with identical demographic profiles can exhibit radically different behaviour in the marketplace. To this end, researchers have examined the role of various lifestyle variables in the marketing mix. These variables, which variously comprise standardised, classical personality measures, or custom-built, consumer-oriented psychological inventories, have been explored in a wide range of marketing contexts. This book will provide an extensive review and critique of the work that has been done in this field. PHYSICAL ATTRIBUTE CLASSIFICATION Geographic segmentation This approach divides the market into different geographic units like regions, counties, states, cities, neighbourhoods and TV regions. For some countries and territories there are enormous and quite specific differences which exist. These segments are important because where people live, work and play can have a great impact on their purchasing behaviour. There is no single best method for geographically segmenting one market. Major geographic segmentation dimensions can be grouped into two categories: market scope factors and geographic market measures. Market scope factors distinguish between global, national, regional and local markets. Geographic market measures can include such factors as population density (urban, suburban, rural), climate (cold, temperate, tropical, etc.), standardised market areas and census classifications. All sorts of geographic factors can make a substantial difference in consumer purchasing because geographic regions differ in climate,

19 6 Consumer profiles Table 1.1: CACI market analysis geodemographic classifications Classification Characteristics Percentage of 1984 UK households A Agricultural areas B Modern family housing higher incomes C Older housing of intermediate status D Poor quality older terraced housing E Better-off council estates Less well-off council estates G Poorest council estates H Multi-racial areas 1 Agricultural villages Areas of farms and small holdings 3 Cheap modern private housing Recent private housing, young families 5 Modern private housing, older children 6 New detached houses, young families 7 Military bases 8 Mixed owner-occupied and 18.6 council estate 9 Small town centres and flats above shops 10 Villages with non-farm employment 11 Older private housing, skilled workers 12 Unimproved terraced with older 4.5 housing 13 Pre-1914 terraces low income families 14 Tenement flats lacking amenities 15 Council estates, well-off older 12.3 workers 16 Recent council estates 17 Council estates, well-off young workers 18 Small council houses often Scottish 19 Low rise estates in industrial 10.2 towns 20 Inter-war council estates, older people 21 Council housing for the elderly 22 New council estates in inner 6.7 cities 23 Overspill estates high unemployment 24 Council estates with overcrowding 25 Council estates with worst poverty 26 Multi-occupied terraces poor 3.4 Asians

20 27 Owner-occupied terraces with Asians 28 Multi-let housing with Afro- Caribbeans 29 Better-off multi-ethnic areas High status 30 High status areas few children non-family 31 Multi-let big old houses and flats areas 32 Furnished flats mostly single people Affluent suburban housing Better-off retirement areas 33 Inter-war semis white collar workers 34 Spacious inter-war semis big gardens 35 Villages with wealthy older commuters 36 Detached houses exclusive suburbs 37 Private houses, well-off elderly 38 Private flats with single pensioners Introduction 1 Source: Whitehead, R.T., Geodemographics - the bridge between conventional demographics and lifestyles, Admap, May 1987, cultural groups that have settled there, time zones and so on. But with increasing mobility and universal telecommunications, distinct geographically-based market segments are disappearing. The above classifications provide a basic framework of the most common dimensions upon which geographic market decisions can be based. The categories are not mutually exclusive however. Within some classifications, more than one variable should be examined, and several forms of geographic bases should be explored and analysed to maximise the value of the marketing information. To maximise the value of the physical dimensions, a composite geodemographic model has been used for segmentation analysis. The basic premise behind geodemographics is that the sum of the whole is more powerful than the individual parts (geography, demographics and socio-economic factors). Essentially, geodemographics consists of neighbourhood classifications. Consumers are classified principally on the basis of where they live, in a comparable fashion to the way social class defines consumers by their occupation. Both social class and type of residential neighbourhood can provide useful breaks according to which consumer behaviour can be classified and predicted. There is now plenty of choice of geodemographic systems. In the United Kingdom, they each take 1981 census statistics to classify the

21 8 Consumer prof iles small neighbourhoods by which the census is reported. An area of posh suburbia or grotty council housing cannot escape from its basic character, however sophisticated the statistical techniques or however detailed the way it is described. The best known and most widely accepted is the ACORN system, which stands for A Classification of Residential Neighbourhoods. Others include Pinpoint s PIN classification, CCN s MOSAIC and McIntyre s Superprofiles. ACORN takes account of the socio-economic structure and family structure of a neighbourhood and by relating these variables to different types of residential areas can also usefully say something about lifestyle. Table 1.1 shows how the 11 ACORN groups are broadly defined and how the 38 different types of area are divided between them. MOSAIC adds personal financial data to the mix, which contributes little of value to most general marketing applications. PIN has developed extraordinarily detailed geographic precision which again offers little extra for most applications. The census is only reported for broad neighbourhoods, not individual homes, and in so far as discrete communities do exist on the ground, the hundred metre resolution used by other systems is quite adequate to locate them. Neighbourhood classifications have been found to reveal more about lifestyles than traditional standard demographics. One of ACORN s first claims to offer new insights in market segmentation was that it described the differences between the readerships of individual quality press bibles whose profiles appeared similar in terms of traditional demographics. If we take a single socio-economic division, for instance that of Cl, ACORN could provide further distinctions between owner-occupied neighbourhoods, areas of better-off council housing and areas of poor council housing. ACORN has also been found to relate well to formal lifestyle classifications, on which this book focuses its attention. Demographic and socio-economic segmentation Demography is the statistical study of human populations and their vital characteristics. Socio-economic factors, which are closely linked to demographics, are used to analyse a population in terms of economic and social classes. The broad definition of demographics as used in market analysis typically includes both demographic and socio-economic variables. The most common approach to market segmentation is to divide consumer groups according to demographic variables. These