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Effect of demographics on consumer behavior

Group 10 10 – Komila Harry 14 – Aparna Kanchugar 24 – Shailaja Menon 34 – Anish Patel 61 – Vinay Shriyan

and judgmental commonalities and similarities can be identified between and within demographics. or product improvement. a solid marketing plan should make room for any marketing strategy. working-class.r. by generalizing a group a risk is taken with it's exceptions. By discovering. sales. With a solid marketing plan any number of demographics should only require marketing elements. Generally. Using smaller demographics may require a more detailed marketing plan. environmental conditions. A generational cohort is a demographic [group] that experiences the same event[s] at the same point in time. cultures. physical attributes.with minimal or no loss of time and efficiency. instinctive. Market-relevant attributes can include any number of shared values. This allows the development of a marketing strategy: providing the foundation for a solid marketing plan. increase interest and loyalty. loyalty. the pros and cons of using demographics we can emphasize those respective pros and minimize those respective cons. This group can be any number of people across the same time frame.Intro to demographics w. male. experiences. as well as provide improved functionality and efficiency . An example of this would be a: single. however. in greater detail. Several profiles may then come together to determine subgroups or subcultures in overall populations. enough of these attributes are combined together to form a concise image of the demographic group: this forms a demographic profile.t consumer behavior What is a demographic? A demographic is a group of consumers that share a collection of market-relevant attributes. then understanding . or political or financial elements that can be used to increase awareness. These profiles also display the characteristics of a typical member within these subgroups/cultures. with a high school education. no marketing technique is flawless. the smaller. and with a solid marketing strategy should require a nominal addition of said marketing elements. beliefs. . 18-24. cultural. However. With generational cohorts a variety of emotional. What are the pros and cons of targeting specific demographics in a campaign? Demographic research is a powerful and functional tool that can personalize marketing campaigns. learning. The more refined or detail rich the demographic.

Many researchers are more than willing to share and discuss ideas if politely contacted . experience is a big help in this regard. any amount of time spent researching and updating old information is vastly superior any sized. cultures change. This may improve the current campaign or even future campaigns. keep an open mind to new techniques. key points to remember when researching profitable demographics: Research is an ongoing process People change. basically. there is no best demographic for any campaign. Regardless. in a particular campaign. where logical connections cannot be assessed experiment. when you notice a free research opportunity/medium.make a log or blog to document information and help discover commonalities and connections. never hesitate to try new methods or test new attributes. one-time demographic. useful information can still be yielded. regularly engage communities and mediums. breaks down as: the more time and labor that can be devoted to information gathering. and don't be afraid to test new demographics: Even when met with overwhelming positive response. Participate in every level of interaction possible. and to what extent old information is updated or replaced will vary from campaign to campaign. Most importantly. Experimentation and tenacity are the tools of the wise novice. on the internet. regardless there is something to be gained. because of this change research is and ongoing process. and refine your results into consistent commonalities . nations change. Use relevant attributes for your research: It isn't always easy to determine what is relevant and what isn't. and always behave politely. A few examples of these mediums. do lots of research: There are countless ways to collect facts and opinions of many demographics. Despite any apparent advantage or disadvantage from these occasional diversions.The Five Common Attributes of Demographics • • • • Age Ethnicity Gender Level of Income Race • How do I select the best demographic for my campaign? In short. keep and open eye [and mind] to any medium or location in which you can interact with potential consumers. It. are: • Forums • Blogs • Social Networks • Media Sharing Networks • Chat or Instant Messaging Communities and Freeware • Newsletters • Bulletin Board Systems • Games Be varied when researching. or discover which demographics exist within a given market or location. Depending on the needs and immediate goals. Collaborate with other researchers: Share and learn a variety of methods and techniques whenever you discover another researcher. there are likely to be demographics that are more profitable than others. the more accurate and massive our demographics will be. however. The following are solid. Where research is free. How frequently information is gathered.

there will always be some exceptions to the rules and commonalities you discover. shop for and buy products and services. and do not falter. Anticipate exceptions: A demographic is a generalization. allowing you to maximize your return-on-investment. Yahoo and MSN and other popular sites in their distribution network. and some-time later any mistake should be forgiven or forgotten. as well as being an unmistakable human element. .t consumer behavior Search engine / Online Ad-network With search engine marketing. some information gathering/updating. you can advertise online—where more and more customers are going every day to learn about. to attract potential customers to your business.and queried. whether you’re selling online products. Sponsored Search and Content Match feature cost-per-click pricing--you’re only charged when your ad is clicked (instead of every time it is displayed). Be prepared. A quick correction. Cases of demographics w. Search Marketing can be beneficial to most businesses. Signing up for an account allows you to advertise your business in search results on tier I search engines like Google. Correction is part of the ongoing research-process. you can still use search engine advertising distribution tactics. promoting business services or providing media and information on your website. The amount you’re actually charged each time your ad is clicked depends on two things: your bid(how much you have bid for that keyword) and your ad’s quality(how relevant your ad is to a particular keyword). Even if your business is a traditional brick-and-mortar store and you don’t sell anything online.r.

Demographic Targeting @ Yahoo and Google ad networks Demographic Targeting solution allows advertisers to reach consumers identified by their demographic characteristics. With huge number of registered users and high average frequency of visits. Google's ability to accumulate data and implement it right brought Google in a dominating status. such as age. . demographic targeting provides the broadest reach (millions of impressions) of any provider. Below are revenue comparison of both. • • • • • Sex (Male and / or Female) Age Groups Annual Household income Ethnicity Single / Married • • Sex (Male and / or Female) Age Groups Although Yahoo was a company that came 4 years earlier than Google in the market. gender and many others. Search engine Demographic Targeting is powered by age and gender information provided by consumers themselves. Unlike other demographic targeting services that try to guess age and gender based on consumer website visits.

comprehensive financial information to the consumer was new.com’s story is one of early adoption.com’s senior vice president of consumer marketing. Bankrate. Bankrate. "At the time.com used Google AdWords testing and targeting features to increase measured conversions by 102% and click-through-rate by 57%. We now have 22 in-house editors and reporters and provide free rate information to consumers on more than 300 financial products. "That core idea hasn’t changed.Success Stories from online Advertising From 2006 to 2007." They accomplished with demographic targeting: • Improved clickstream: Focus on targeted landing pages increased revenue derived from AdWords traffic by 66% • • • Increased conversions: Measured conversions increased by more than 102% from 2005 to 2007 Developed highly-effective ads: Constant testing resulted in a 57% increase in click-through-rate (CTR) Improved return: Increased its return-on-advertising-spend (ROAS) by 35% from 2006 to 2007 . Bankrate acquired dot com status in 1994 – shortly after the browser was born – and shifted its focus to financial information for consumers. Bankrate. objective. Started 25 years ago as a newsletter for mortgage industry professionals." says Michael J. the idea of providing unbiased. Ricciardelli.

Although haute couture and luxury have been doing well.000 to millions of dollars and though the market is small it has been expanding due to the explosion of new wealth in emerging markets such as India.14 million "ultra high net worth households. As a result.S. these brands make less money per garment." which turned off many of its wealthy customers. dollar. Burberry has greatly reduced the presence of its trademark plaid . over three times more than its sales ten years ago) and its stock price increased by 51% from 2006 to 2007. the fashion industry is relatively insulated from economic changes. Thus. mainstream and discount brands. they focus on volume. Eg Coach. people who form the backbone of the affordable luxury market have begun to cut back on non-essential goods such as clothing and accessories. In addition. Target At the highest levels. and discount. recession in the United States have done nothing to harm haute couture. which is actually seeing an increase in customers in a time when so many other companies are fighting decreasing sales. Since the plaid was everywhere. The luxury market is doing well compared to mainstream.8 billion in the United States. these "aspirational" shoppers. Gap etc is mass appeal. For example. As a brand becomes more popular. These inexpensive items allow access to a brand and a lifestyle that lower-income consumers aspire to but cannot afford. becoming affordable to the middle and lower classes as well. It is occupied by only a handful of companies that produce custom-made clothing for the world's wealthiest individuals. around 2002 the trademark Burberry plaid was seen on everything from expensive bags and coats to cheap caps and scarves. it was no longer exclusive or "special. as their goods are made (and priced) to appeal to a large number of people. Burberry has reported record sales (over $1. Tiffany. China and the Middle East. Since their prices are much lower than their luxury counterparts. Chanel etc • Luxury segment is a step down in terms of quality and price. In 2006. tourists have been spending more money in American stores. A person who can afford anything does not want to own something anyone can buy. 49 million foreign visitors spent a record $104. due to the devaluing of the U. Prices for a couture piece range from $25. Prada. • The goal of mainstream brands like Polo Ralph Lauren. have hit middle-class consumers hard. the downturn in the United States economy has had an adverse effect on affordable luxury. Christian Dior . For example. Increased foreign spending combined with an increase in the number of wealthy individuals means the luxury market is in a growth phase. leading to decreased sales. Their target demographic is middle-to- . They are generally perceived by consumers as being of lower price and quality than affordable luxury goods. Today. they want something special and unique.Fashion in US!! Fashions change !! The fashion industry can be divided into five segments: haute couture. • Discount brands cater to low-income consumers eg Walmart. In this case the concept of exclusivity no longer applies. There are no clear-cut criteria for a brand to be classified as "luxury. mainstream. Eg . they sacrifice an air of exclusivity for popularity. However. Eg Dolce & Gabbana . • Affordable luxury targets "aspirational" consumers. where its customers have less financial security and thus are not spending as much money on clothes and accessories as they used to." which are worth at least $5 million. Giorgio Armani Privé (segment of Giorgio Armani). • Haute couture (women’s garments only) is the most expensive and exclusive of all four segments.S. Many luxury companies walk a fine line between increasing market share and maintaining the elite image that is so important to rich consumers with a lot of money to spend. These brands market to middle-and-lower-class consumers.000 a year. in 2006 there were 1. While the wealthy continue shopping as much as ever. it is not regarded as highly by the wealthy clientele. Gucci. those who are not rich enough to afford luxury brands but will accept lower-priced alternatives. in an effort to regain its exclusive status. • The luxury market is growing despite the suffering U." however one important factor is the concept of exclusivity. This number is four times more than the number of ultra high net worth households a decade ago. in addition to rising credit card debt and gas prices. luxury. but still serves a wealthy clientele. In 2006 8 million American households earned more than $150. affordable luxury. selling as many goods as they can and appealing to a large number of people.5 billion for fiscal year 2007. affordable luxury and discount brands. which is a 7% increase since 2002. recession. [ Also. economy.

These individuals are no longer splurging on clothes and accessories as much as they used to. Demographics in US Demographics are important to fashion companies.7 million in 2005 to 22. They need to know what kind of person is buying their products. Affluent Americans tend to be highly educated and work-driven.7% from 19.2 million in 2006. which is bad news for all three segments.000. Below are brief descriptions of a number of important demographics to fashion companies: Affluent Households An affluent household has an annual income greater than $100. . They make up only 18% of American households yet spend almost one out of every three dollars in the United States. what products they advertise most and where those advertisements appear. increasing 12.lower class individuals who are more susceptible to poor economic conditions than their richer counterparts. Affluent households are the fastest-growing segment of the American population. It heavily influences the kinds of advertisements a company makes.

. cater to this demographic by providing lowerpriced merchandise in addition to their more expensive products. these households would also be more interested in sales. 62% of American women are overweight. Affluent households are interested in value: highest quality at the lowest price. as opposed to older consumers who have many more responsibilities such as full-time jobs and children. Cato Women influence over 80% of consumer purchases in the United States and are even involved in a majority of purchase decisions involving stereotypically "male" products. especially those aged 15-24. Baby boomers compose about 28% of the American population. many women are influenced by trends. A greater proportion of their money goes towards necessities like food and utilities than affluent or middle-income households. there are some general trends in how women perceive fashion products.000 and form the primary market for affordable luxury. Men In the past few years men have begun to have more of an interest in shopping.000 and $100. and thus the male demographic has become even more important for retailers. women of all ages want clothing that flatters their figure and looks modern. whereas older males tend to prefer bargain shopping. These are people who cannot afford high-end luxury. but are not so poor that they cannot splurge every once in a while. combined with their free time. Plus-Size Women [ An especially important demographic in the United States is plus-size women. J Crew Group. They want to shop in stores they feel most comfortable in--meaning a store that does not cater to the 18-49 age group. Phillips Van Lauren. many of them are students and have more time on their hands. The fashion industry is heavily focused on women. many young shoppers use shopping as a social event. For that same reason. Hot Topic etc. [ Boomers are most interested in the "experience" of shopping for clothes. Middle-Income Households Middle-income households have an annual income between $30. Many fashion companies do not make plus-size clothing.The above graph ranks the retailers affluent households are most likely to frequent. Tiffany. they have no problem shopping elsewhere if they see more bang for their buck.000. meaning that though they can afford luxury retailers such as Saks (SKS). Target etc in order to stretch an already tight budget. Young Consumers [ Young consumers. These households are more likely to be attracted to discount brands such as: Walmart. Boomers can switch from one brand to another if they see higher value for their purchases somewhere. Also. Although the brands and products they are most into depend on a number of other factors (such as wealth). and are most interested in value. Brands that cater to young consumers include Guess ? Baby Boomers – Stores that cater to the baby boomer population are: Polo Ralph. usually have much more time to shop than older consumers [. First and foremost. meaning they want to enjoy the shopping process. Men ages 18-24 are most interested in shopping and brands. leaving much less to spend on clothing and accessories. have an estimated spending power of about $2 trillion and are currently between 44 and 62 years old. Brands such as: Coach. Low Income Households [ Low-income households have an annual income less than $30. which. Some retailers that cater to men are: Hermes. Some popular retailers that cater to the plus-size market are: Cato. means they are more likely to shop around at many different brands to find the particular item they want. such as electronics and cars. Women Brands that cater to women include: BEBE. in other words to older men a brand is not as important as getting the best deal. In addition.

and by the end of 2006 the country had 345. Although women still do make the majority of clothing purchases.S. Less Affordable Luxury. For example.14 million. the economy grew more than 10% annually during the last five years. the nouveau riche in China and Russia are developing a big appetite for high fashion. Hermès opened men’s-only stores in New York City. in the past few years men as a whole have begun to pay more attention to their appearance and the fashion industry has responded by focusing more on catering to male clientele.000 U. In China for example. especially in the United States. The middle-class "aspirational" shoppers who are integral to that segment's success are not indulging as much as they used to. ] China. 33% of whom were women. companies are beginning to take advantage of the male demographic and appeal to them in order to increase sales. wealthy markets for luxury goods companies. to 1. These trends lead to decreased sales of affordable luxury and increased sales of genuine luxury products.S. [ These people are able to afford whatever luxury brand they want and the brands that are able to follow the money. economy. Chinese citizens are becoming increasingly fixated on luxury goods--they are viewed as a status symbol. dollar millionaires.Trends and Forces in the Fashion Industry Increasing Focus on Men [ Fashion was once seen as almost exclusively a "women's domain. more than ever. . is facing a problem due to the poor state of the U. More "Genuine Luxury" [] [29] The affordable luxury market. In the U. alone the number of "ultra high net worth households" increased fivefold from 1996 to 2006.S." However. Russia and the Middle East present large. New Markets for Consumers of High Fashion are Emerging Worldwide [ Now. there has been an increase in "extremely high net-worth" individuals in the United States and abroad. In addition.

In addition. Household incomes and accumulated wealth are typically lower among minorities than whites. racial/ethnic groups. and minority populations are on average. The prevalence of dualincome households. but generation Xers and younger working professionals are now entering this market as well.S.000. The typical firsttime home buyer is 32 years old with a household income of $54. Most often purchased as vacation homes and weekend retreats (as opposed to investment properties). The Homeownership Alliance predicts that homeownership rates will exceed 70% by 2013. and the desire to relax in locations free from the threat of terrorist attacks are motivating many second-home purchases. While most home buyers are married couples. The same economic conditions that have enabled first-time home buyers to attain a piece of the American dream were also instrumental in stimulating many households to purchase second and third properties.S economy in recent years. As it turns out. single women are the second-largest segment of home buyers (22%). Although the U. increasing mobility/connectivity. more than 75% of non-Hispanic whites own their homes.800according to a 2003 report by the National Association of Realtors. racial and ethnic minority populations will drive increasing homeownership rates as will the large number of baby boomers moving into peak home owning years. younger than the white population.Hispanic white and minority households is due to differences in economic circumstances and the age composition of these populations. This increase will equate to at least 10 million additional homeowners. limiting the depth of the 2001 recession and leading the economic recovery ever since. second-home sales account for an estimated seven percent of the entire home market.800 household income • 6% down payment • $13600 home price Repeat buyer • Age 46 . an analysis by five of the nation’s leading housing and mortgage economists for the Homeownership Alliance points out significant differences in ownership rates across income levels. Expect this profile to change as racial/ethnic and other under served Americans increasingly enter the home buyer ranks. homeownership rate reached a record high 68% in 2003. For example.Homeownership in US The housing sector has been a pillar of strength for the U. and makes a down payment of 6% on a home that costs an average $136. First-time buyer • Age 32 • $54. A large part of the gap in homeownership between non. even exceeding single men (11%). marketers should not exclude singles from first mortgage loan promotional campaigns. He/she uses the Internet to facilitate their search. and regions of the country. Baby boomers—ages 38 to 56—make up the lion’s share ofsecond-home owners today. Asian and Hispanic/Latino populations tend to live in urban areas of the East and West coasts where homes are less affordable. with roughly one-half of the gain attributed to minority home buyers. compared to less than half of AfricanAmerican and Hispanic/Latino households. Over the next decade.

technology products. and not-for-profit organizations. A favorable perception about the product makes the buyer to purchase the product. The same object is perceived differently by different individuals. government agencies. It helps a marketer to decide on the right marketing message which needs to be communicated to the prospect consumer. young people under age 25.A company will say that audience opinion is one of the topmost factors affecting the rise or fall . Learning . money. Nowadays there are agencies taking care of a brand online such that they can immediately give a feedback of what the public opinion about a brand / product is.• $74. The buyer can be made to learn new ideas by constant advertising. and should make a long-term commitment to serving the under served. and basic savings accounts. Activities – The way a person carries out his work or the type of hobbies he has tells a lot about a person. Activities.Interest & Opinions Perception: This is the process in which the buyer assimilates the information which comes to him from numerous sources. their activities. These individuals and households need five basic financial services that credit unions are poised to provide: payroll and other check cashing. African Americans.Interest & Opinions: It tells a marketer of what a consumer likes. tastes. They should plan for a large number of transactions with small margins. Lifestyle Activities. PSYCHOGRAPHIC FACTORS IN CONSUMER BEHAVIOUR Pyschographic segmentation: Psychographic segmentation is one which uses people lifestyle.600 household income • 23% down payment • $18900 home price Second-home buyer • Age 47 • $85. and start with one emerging market at a time. the unbanked U.S. Perception Learning: When individuals learn new ideas. and those earning less than $25. low-cost money transfer services. market consists of as many as 40 million consumers. The perception of a particular situation is different from one individual to another. fashion or recreation. interests as well as opinions to define a market segment. what are his interests and how does his thought process work. A continual influx of immigrants will only serve to expand this market.A consumers interests may vary in food. the buyer then forms an opinion on the product or idea. Pyschographic segmentation Factors: Lifestyle Activities. they tend to evaluate their ideas and beliefs and try to incorporate the new learning into them. notes that no more than 40% of people—those with the greatest spending power are tapped as markets for the vast majority of goods and services offered by today’s corporations. interests and opinions Perception Learning Motivation Attitude Memory Factors Lifestyle: Is a pattern of living that determines how people choose to spend their time. micro-loans. Credit unions will need to revise and repackage product/service offerings. a global business consultant. services and activities that are associated with a certain lifestyle. Interests . According to Federal Reserve estimates. unmarried individuals. and energy and that reflects their values. The strategies and tactics for reaching unbanked and under served markets are different than for traditional markets. credit unions should seek out creative partnership opportunities with local businesses. think in terms of core competencies.900 household income • 66% married couples • 37% purchase as investment The untapped potential A recent Futurist article suggested that the largest market in the world is absent from the radar screens of most corporations. Opinions. a mechanism with which to pay bills. Hispanics/ Latinos. women. He goes on to say that the bottom 60% consist of under served and largely untapped markets that offer extraordinary opportunities for profitable enterprises with the vision to meet their needs. The author. Finally.000 per year are more likely than their respective counterparts to be unbanked. and preferences Consumers often choose goods. Marketing managers can use positive reinforcement tools to make the customer learn the product better. Based on the information input.

This also leads to better recall of the brand. An effective marketing manager succeeds in awakening the need of the customer for the product. The buyer gets motivated to achieve their goals or motives. Memory Motivation: Motives refer to the needs which have been awakened in a buyer. Attitude may also be developed due to other external parameters. when they become aware of such needs.Memory: Brand visibility and constant reinforcement through marketing communication and advertising helps to embed the product in the buyer’s minds. then he may develop a negative attitude towards that product. if a consumer comes to know that a particular product is originated in a country which he does not like. which is a crucial factor to influence the buying decisions. Motivation Attitudes : Attitudes influence the buying decisions to a large extent. Attitudes . This leads to a buying decision by the customer for the product. may be developed from the perception with regard to product or the organization. even though the product is a popular one of superior quality. For instance. Attitude. either positive or negative.