Kirk-Smith, M.D. and Mak, E.

(1992) A Consumer Typology for the UK Financial Services

market. In "Marketing in the New Europe and Beyond", pp. 257-266, Eds. J.Whitelock et al.,
NW Centre for European Marketing, University of Salford, Salford, 1992.

A CONSUMER TYPOLOGY FOR THE UK FINANCIAL SERVICES MARKET

E Mak and M Kirk-Smith

ABSTRACT: This paper presents a novel financial typology based on a cluster analysis of
responses to statements on financial attitudes of a sample of 2630 UK consumers. Each group
identified in the typology is related to their financial behaviour, social and cultural attitudes,
demography and media use. Different groups are characterised by their socio-cultural attitudes,
namely "The Uninvolved", "The Pleasurists", "The Conserving Carers", "The Belongers" and
"The Confident Modernists". The marketing implications for financial services of each group
are discussed.

1 INTRODUCTION

The financial services industry is changing rapidly. The general blurring of the traditional
boundaries between banks, building societies and insurance companies has resulted in increased
competition [1]. This pressure has made financial institutions recognise the importance of
marketing for long-term success and to recognise target marketing as an appropriate strategy
[2,3,4]. The first step of target marketing is to identify target market segments.

Many financial institutions now identify their target market groups for the consumer market
using socio-demographic or geodemographic segmentation (see [5] for review) or lifestage
criteria linked to income and savings information [6,7]. However, they have realised that these
forms of segmentation are very general and are often used as a matter of convenience [8]. The
limitations of these market segmentation methods have become apparent as the UK financial
service market has become more competitive [6,9].

A complementary approach to segmentation is the use of psychographics, in which consumers

with similar values, attitudes and life styles are grouped together. Examples include the Values
and Life Style methodology and the List of Values (LOV) [10]. As with all typologies, these
methods are limited in that as social attitudes change over time, they may no longer represent a
realistic segmentation of the consumer population. To monitor such changes the Research
Institute on Social Change (RISC) has conducted an annual questionnaire survey [11] since 1980
of socio-cultural changes in people's attitudes, motivations and habits across the European
Community (the ACE programme). In 1990, 12,500 people were interviewed in the five main
EC countries (the United Kingdom, France, Italy, Spain and Germany).

These data on socio-cultural changes offer the opportunity to develop a typology based on
consumers' financial attitudes which can be related to general attitudes to social change and to set
them in the context of continuous data on changing social trends. This paper presents a novel
financial typology based on responses to statements on financial attitudes administered to a

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sample of UK consumers as part of the wider ACE socio-cultural study. Each group identified in
the typology is related to their social attitudes and media use, and the marketing implications
discussed.

2 METHOD

2.1 POPULATION SAMPLING AND COVERAGE

A quota sample of 2630 was drawn in the UK to reflect the distribution of the population. Males
and females aged 15 years and over living in both urban and rural areas were included. Age
breaks were based on OPCS population estimates 1989 [12]. Social class percentages were
based on the JICNARS National Readership Survey 1989 [13]. Other quota controls were:
presence of children under 16 at home (31%); without children under 16 at home (69%); and
proportion of all females working full time (20%).

2.2 THE QUESTIONNAIRE

The questionnaire contained several sections. The nine statements relating to financial attitudes
are given in Table 1. Each response was scaled on a four-point interval scale (the four points
being Strongly Agree, Slightly Agree, Slightly Disagree and Strongly Disagree). These
responses were analysed to form the financial typology.

The remainder of the questionnaire consisted over 100 questions, covering respondents' social
attitudes to life, pleasure, work, relationship with others, pollution and participation in and
contribution to society. Other questions concerned respondents' financial behaviour, and
television viewership and demographic information (e.g., age, income, social class, education
and occupation). Responses were measured on a four point interval scale. Questionnaires were
left with respondents for two to three days and then collected by the interviewers and checked on
the spot for completion and consistency.

2.3 DATA ANALYSIS

Responses to the nine financial attitude questions were analysed using the FASTCLUS
procedure of the SAS statistical package [14]. The FASTCLUS procedure combines a method
for finding initial clusters with a standard iterative algorithm for minimising the sum of squared
distances from the cluster means.

To simplify interpretation, the responses to the social attitude questions were subjected to factor
analysis to form thirty factors or social trends, typically consisting of four items. Social trends
showing greatest differences between groups are given in Table 3. For business confidentiality,
and since their formation falls outside the scope of this paper, only brief explanations of the
trends relevant to the financial groups have been included.

3 RESULTS

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The following financial service target groups, and their percentage of the total sample, were
identified. Each group's name was chosen from their respective socio-cultural profiles:

Group One (9.2%) = The Uninvolved

Group Two (23.2%) = The Pleasurists
Group Three (22.2%) = The Conserving Carers
Group Four (23.7%) = The Belongers
Group Five (21.6%) = The Confident Modernists

Main aspects of each group's responses to the statements on financial behaviour and socio-
cultural attitudes are presented in Tables 2 and 3. A summary of each group's profile on these
factors, including and demographic and television media habits, are presented in Table 4. Space
limitations preclude inclusion of complete supporting data; these will be presented at the 1992
MEG conference.

4 DISCUSSION AND MARKETING IMPLICATIONS

The Uninvolved and Belongers have low discretionary income and a generally low financial
involvement. It may be difficult for financial institutions to develop a profitable product for these
groups. Therefore the following discussion will concentrate on the remaining three groups:

THE CONFIDENT MODERNISTS: They are well educated, typically top/middle level
managers, teachers and white collar workers. They are more likely than others to live in large
towns. Their key attribute is their rationality and self-confidence. They see themselves as
successful with a purpose in life. This purpose is primarily secular and they are low on ethical
concerns of social fairness, integrity, and care for the environment. They have low interest in
holistic attitudes to personal development.

This Group is confident in understanding and using financial services, seeing themselves as
financially well organised with few financial problems. They have the highest use of financial
services. Borrowing is acceptable to them, they are great users of credit. Half of those who do
not repay their credit card bills in full come from this group.

Marketing implications: The Confident Modernists are good targets for loans and credit
facilities given their open attitude to credit and borrowing. They provide a potentially highly
profitable market for credit cards due to their tendency of not repaying credit card bills in full.
Efforts should be made to increase their already high credit card ownership and usage, e.g.,
reduced interest rate or longer interest-free repayment period on higher usage, in frequency or
amount. These busy managers and office workers may be interested in telephone and home
banking through personal computers.

THE CONSERVING CARERS: This Group is skewed towards middle to older age higher
income earners, e.g., entrepreneurs, top to middle level managers, teachers and better-off retired
living in country towns or small villages. Three-quarters of them live in households of three

3
people or less, many of them being "empty-nesters". Their main characteristics are a desire for
personal expression and spirituality. They want to be individual, different and original. At the
same time they are rationalists who put more emphasis on order and logic than on feelings,
emotions and impulses. They have very high community sense and involvement in society and
they have a high caring for the environment. They are high on ethical values in general.

They have the highest savings among the five groups (e.g., shares, personal pensions, SERPS
and endowment policies), are financially well organised and live easily within their income.
They do not worry about their economic security. However, borrowing is not acceptable to
them, and they prefer prearranged loans to store credit if they need to make a choice. They tend
to repay their credit card bills in full. If they have to go into debt for buying something, they
would rather go without.

Marketing implications: This group will grow rapidly during the 1990's as the ethical trends
evolve and the population ages. As a high income and high savings group, they are the key target
for savings and investment services. Further savings and investment potential can be explored
among this group, especially those couples who have repaid their mortgages and do not have the
economic burden of children. However, since many financial institutions will be targeting to the
Conserving Carers, targeting to their specific concerns is needed, e.g., "saving for a better
future". Television may not be an effective medium to communicate with the Conserving Carers
because of their low television viewership, so the press or direct marketing may be better.
Banking by mail or telephone may be suitable since many live in country towns or small
villages.

THE PLEASURISTS: This is the youngest group (average 35 years) with a slightly above
average income. The majority of them are blue collar workers coming from the C, D social
classes with large households. They have strong hedonistic needs, seeking pleasure and
emotional experience. They want to live intensely and be connected more closely with their
instincts. Spirituality and personal expression are not important to them. They have low societal
involvement and community sense. They are more likely to take risks, including business-
related, than others.

They are financially overstretched and have a high need for credit and advice. They are
financially very disorganised with no time to organise their finances. They find bank charges and
bank statements difficult to understand. Borrowing is acceptable to them. They tend to avoid
credit because of the repayment difficulty they perceive and they are less likely to own credit
cards than the population on average. If they have credit cards, they are more inclined not to
repay their credit card bills in full than the rest of the population. After mortgage repayments
they have not much money left for other savings, except perhaps company pensions and SERPS.

Marketing implications: They have a high need for advice on how to better manage their
money and improve their liquidity, and also on how to make use of credit facilities without
losing control of them. Higher credit card ownership and usage should be encouraged because
credit card holders tend not to repay bills in full. Therefore, the interests receivable makes this a
profitable credit card business target. Multi-function accounts might help them organise their
finances.

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5 CONCLUSIONS

In summary, the Conserving Carers are the prime target for savings and investment businesses
for financial institutions because of their high income and their saving habit. Both the Pleasurists
and the Confident Modernists are good targets for loan and credit facilities, though more advice
is needed for the Pleasurists than the Confident Modernists.

This typology illustrates how the use of consumer financial attitudes in conjunction with
financial usage social, lifestyle, demographic and media data allows a far richer description of
each segment compared to other segmentation methods. From target customers' values and
attitudes are derived their needs and wants. To ensure that the typology is kept up to date, it is
necessary to regularly monitor social changes. Only then can changing financial attitudes be set
in the context of the underlying changes in values and hence to the long-term evolution of the
society's financial service needs.

Acknowledgements: This research was funded by RISC (UK), London. We would like to thank
Drs Elizabeth Nelson and Ben Cutler of RISC for their invaluable help and advice.

REFERENCES

1. Fasingwood C J and Storey C (1991) Success factors for new consumer financial services,
International Journal of Bank Marketing, 9.2, pp 3-11.
2. Soutar G N and McNeil M M (1991) A benefit segmentation of the financial planning
market, International Journal of Bank Marketing, 9.2, pp 25-29.
3. Andrew K (1990) The changing face of banking, International Journal of Bank Marketing,
8.5, pp 3-15.
4. Robertson D H and Bellenger D N (1977) Identifying bank market segments, Journal of
Bank Research, Winter, pp 280-281.
5. Rothman J (1989) Editorial, Journal of the Market Research Society, 31.1, pp 1-5.
6. Burnett J J (1990) Adult singles: an untapped market, International Journal of Bank
Marketing, 8.4, pp 10-16.
7. Personal Communication: Geraldine McKibben, Marketing Department, Trustee Savings
Bank Plc (August 1991).
8. Meidan A (1984) Bank Marketing Management, pp 21-45, Macmillan Education Ltd.,
London.
9. Cornish P and Denny M (1989) Demographics are dead - long live demographics, Journal of
the Market Research Society, 31.3, pp 363-373.
10. Kahle L R et al. (1986) Alternative measurement approaches to consumer values: the List
of Values (LOV) and Values and Life Style (VALS), Journal of Consumer Research, 13,
pp 405-409.
11. Nelson E. (1986) The consumer of the future, Journal of the Market Research Society,
28.4, pp 325-334.
12. Office of Population Censuses and Surveys (1989), OPCS, Fareham, Hants.
13. JICNARS (1989) The Marketing Data Book, RSL, London.
14. Fast Statistical Package Documentation (1990) pp 493-495, SAS Institute, USA.

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TABLE 1: FINANCIAL ATTITUDE STATEMENTS AND GROUP RESPONSES(1)

1. When it comes to money I am a very organised person.

2. I find it very difficult to live within my income and not get into debt.

3. I find I never have enough time to organise my finances properly.

4. Nowadays borrowing money for a major household purchase is quite acceptable.

5. If I were going to borrow money for a major household purchase I always arrange the loan in
advance rather than use the store credit facilities.

6. I avoid credit as I know I will have difficulties with the repayments.

7. If you cannot afford to pay cash, you should go without rather than go into debt.

8. Using credit gives me the flexibility I need to organise my finances.

9. I find it difficult to understand the charges on my bank statement and wish they would make
them clearer.

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TABLE 2: USE OF FINANCIAL SERVICES

GROUPS
Total(1) One Two Three Four Five

Bank c/a (2) 53.2% 81 107 103 64 137

Building Society c/a 15.2% 68 112 102 82 119
c/a Debit Card 28.5% 73 92 113 54 157
Bank or Build.Soc. s/a 77.7% 89 93 109 93 110
Mortgage 39.4% 74 108 105 55 146
Credit Cards 43.0% 67 89 123 46 161

1. Percentage of the total sample using this service.

2. c/a = current account; s/a = savings account

TABLE 3: MAIN SOCIAL TRENDS

GROUPS
Total(1) One Two Three Four Five
Pleasure 46.3% 115 132 64 102 94
Polysensuality 34.9% 127 109 74 130 73
Personal expression 26.7% 73 64 189 64 98
Taste for risks 42.7% 95 126 95 77 104
Achievement 38.3% 117 100 96 118 77
Emotional experience 29.1% 128 152 62 100 70
Uncertainty 47.9% 97 112 98 85 108
Roots 17.9% 108 95 80 151 67
Cellulisation 28.5% 120 87 96 112 96
Networking 21.7% 93 114 100 82 107
Hetrarchy 36.3% 92 111 106 82 105
Flexibility 24.1% 73 114 105 77 117
Mental exploration 24.5% 100 110 93 112 83
Self maniplation 39.6% 99 106 97 116 79
Well-being 25.5% 103 84 115 122 77
Care for environment 20.6% 71 95 121 105 91
Personal resilience 16.2% 105 116 85 113 81
Community sense 15.9% 112 70 135 116 73
Society involvement 13.5% 82 90 130 112 74
Social fairness 15.2% 69 94 114 118 85
Spirituality 15.9% 85 70 137 134 63
Integrity 17.3% 91 95 137 89 83
Ecosystem 31.9% 89 91 129 81 106
1. The Total column shows the percentage of people falling into
the top tertile of agreement with each trend. The numbers are
indices, e.g., a Group scoring 50 on an item with a total of 70%
means that 35% (50*70) of that Group are in the top tertile.

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TABLE 4: SUMMARY OF THE GROUP PROFILES

THE UNINVOLVED

Financial Attitude and Behaviour: Unsophisticated. Not believing in credit or borrowing.

Worried. Mistrustful of financial involvement. Low financial service usage.

Socio-cultural Profile: Lack purpose in life. Lack strong values. Aimless. Inflexible.
Hedonistic.

Socio-demographic Profile: Low income. Low education level. Skewed to housewives,

retirees, widowed. Skewed to blue-collar workers, unemployed. C2, D, E's.

Media Exposure: Watch more than 4 hours TV everyday. Favourite channel: ITV. Favourite
programmes: Game participation and variety shows. High cable TV subscription. High satellite
dish ownership.

THE PLEASURISTS

Financial Attitude and Behaviour: Disorganised. Open attitude to credit. High mortgage
ownership. Low savings. Less likely to repay credit card bills in full. Financially overstretched.
Need credit and advice.

Socio-cultural Profile: Look for excitement in life. Hedonistic. Need economic security.

Socio-demographic Profile: Young. Slightly above average income. C, D social classes. Least
religious.

Media Exposure: Highest TV viewership. Highest pay TV subscription and satellite dish
ownership. High video renting rate. Go to cinemas a lot. Watch TV everyday (8:30pm
onwards). Favourite channels: Channel 4, Sky Channel. Favourite programmes: Shows for
young people, adult movies/shows.

THE CONSERVING CARERS

Financial Attitude and Behaviour: Not pro-borrowing. Do not believe credit gives
flexibility. Work to develop and fulfil themselves. Very high financial service usage. Highest
savings.

Socio-cultural Profile: Want personal expression and spirituality. Want to achieve personal
integrity. High ethical values. Rationalistic.

Socio-demographic Profile: Skewed toward middle/old age. High income earners. Skewed to
entrepreneurs, top/middle level managers and teachers. Empty nesters. A, B social classes.

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Media Exposure: Light TV viewership. Favourite channels: BBC1 and BBC2. Favourite
programmes: cultural and public affairs programmes.

THE BELONGERS

Financial Attitude and Behaviour: Live on a cash economy. Not pro-borrowing. Not believe
credit gives flexibility. Lowest financial service usage. No money for savings. Only half as
likely to own a mortgage or a credit card as the population average.

Socio-cultural Profile: Lead an aimless life. High on polysensuality. Lack economic security
and sense of security in general. Need warm relationships. Religious.

Socio-demographic Profile: Oldest. Skewed to blue collar workers. Skewed to retirees,

housewives. Only one-third of them working. Northerners, Greater Londoners. C2, D, E's.

Media Exposure: Watch more than 4 hours TV everyday. Favourite channel: ITV. Favourite
programmes: religious, health/medical programmes, variety and game participation shows.

THE CONFIDENT MODERNISTS

Financial Attitude and Behaviour: Confident in understanding and using financial services.
High financial services usage. Twice as likely to own a store credit card as the population as a
whole. Tend not to repay credit card bills in full. High savings.

Socio-cultural Profile: Rationalist and confident. Low need for body-centred pleasure. Secular
life-purpose. Low on ethical concerns.

Socio-demographic Profile: High income. A, B, C1's. Two-thirds of them between 25 and 44

years old. Skewed to top/middle level managers, teachers. Not religious.

Media Exposure: Watch an hour or two TV everyday (early morning programmes). Favourite
channels: BBC1 and BBC2. Selective TV watching (practical programmes). Low cable and pay
TV subscription. Low satellite dish ownership.

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