The Value Proposition

Why should a consumer buy from you?

Competitive Advantages

What makes you better than your competition?

Choosing A Differentiation Strategy

You chose a target market, now what?

Tuesday, October 23, 2012

Marketing 101: The VALS Study

As marketers are certainly aware, a consumer's economic situation will undoubtedly affect their purchasing decisions in some way.  Marketers of income-sensitive products and services should be watching for changes in a demographic's income, savings and access to the prevailing interest rates.  If financial trends are towards a recession, we should be making proactive changes to alter our product and service lines, or reposition the messaging of our campaigns. During good economies, we should be doing the same.  The point is, our messaging, and our products, should be CONSTANTLY evolving to best reflect the consumer's buying environment.

Marketer's need to remember that although consumers in a chosen demographic may be coming from the same subculture, social class and occupation, they will usually have very different lifestyles.   It is our job to understand these lifestyles so we can tailor our messaging as best as possible to convince the consumer that our products and services have the right value they are looking for.  Recall, a lifestyle is a consumer's pattern of living, and is expressed within their activities, interests and opinions.  Activities, Interests, and Opinions are commonly referred to as AIO Dimensions.  These AIO Dimensions are usually defined as:

- Activities: work, hobbies, shopping, sports, social events
- Interests: food, fashion, family and recreation
- Opinions: about themselves, social issues, business, products

Lifestyle is more than a social class or a consumer's personality, it encompasses a consumer's patterns of action and their interaction with the world around them.  When utilized affectively, the lifestyle concept helps us understand changing consumer values and how they affect consumer buyer behavior.

The most widely used lifestyle classification system is the VALS study.  VALS classifies people by their psychological characteristics via four major demographics that correlate with consumer buyer behavior.  The VALS study helps us understand how consumers spend their time and money, and it divides consumers into groups we can understand based on their primary motivations and resources.

Primary Motivations are defined by the consumer's ideals, the achievements they are seeking to attain, and their methods of self expression.  Consumers that are primarily motivated by ideals are usually guided by knowledge and principles.  Consumers that are primarily motivated by achievement tend to look for products and services that demonstrate their success in an outward manner to their peers.  Consumers that are primarily motivated by self expression usually desire social or physical activities that provide their lives with variety and some sense of risk.

Resources refers to the consumer's level of economic, education, health, self-confidence, and "energy" resources.  In a VALS study you are categorized has having high resources or low resources. The resource classification does not have any regard for a consumer's Primary Motivations.  The resource categorization also defines consumers that have extremely high or low resources: Innovators and Survivors.  Innovators have so many resources (ie: usually money since it enables so many things) that they will display all of the primary motiavtors to some degree.  On the other hand, Survivors have so few resources (ie: economically poor) that they usually show no primary motivations at all. These consumers have to focus on meeting needs and not on fulfilling any of their desires.

There is so much more to say about these different classifications of consumers.  Let's dive deeper into the classifications of the VALS study.

Innovative consumers are typically defined as sophisticated, successful, "take-charge" people with extremely high self-esteem and self-confidence. Because these consumers have such abundant amounts of resources, they are able to exhibit all three primary motivations at various levels. They are considered to be change and thought leaders.  Innovators are usually extremely receptive to new ideas and technologies in the marketplace. Innovators are very active consumers, and their buyer behavior reflects their tastes for upscale, niche products and services.  Innovators are very conscious about their "image", however not as an outward appearance of their status or power, but as an individual expression of their tastes, style, independence, and personality. Innovators are usually members of the established and emerging leaders in society, business and government, yet they continue to seek new challenges.  They never stand still; they love variety. Their material possessions and recreational activities reflect a preference for the "finer things in life."

Survivors live very focused lives. Because they have few resources (mainly economic) with which to exist, these consumers often feel like that the world around them is changing too fast . Survivors are more comfortable with the "familiar" and "traditional", and they are primarily concerned with the safety and security of their families. Because these consumers must focus on meeting needs rather than fulfilling wants and desires, Survivors don't show a strong levels of primary motivations.  Out of the necessity of their situations, Survivors are cautious consumers. These consumers represent a very modest market for most products and services. Survivors tend to be loyal to specific, habitually purchased brands, especially if they are at discounted prices.

Thinkers represent consumers motivated by their ideals. These consumers are more mature, more satisfied, more comfortable with themselves, and are highly reflective.  Thinkers value order in life, knowledge through educational opportunities, and personal responsibility. Thinkers are usually well educated, and eagerly seek out information to aid in the process of decision making. These consumers keep up with current events.  Thinkers have a moderate respect for institutions of authority and social decorum, but they are always open to entertain new ideas. Even though Thinkers usually have incomes that enable them the freedom to satisfy many desires, they tend to be conservative, practical consumers.  Thinkers look for durability, functionality, and value in the products that they purchase.

Like Thinkers, Believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. Many Believers express moral codes that have deep roots and literal interpretation. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong.  As consumers, Believers are predictable; they choose familiar products and established brands. They favor U.S. products and are generally loyal customers.

Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self-discovery.  With many wants and needs, Achievers are active in the consumer marketplace. Image is important to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-saving devices.

Strivers are trendy and fun loving consumers. Because they are motivated by achievements, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't ever seem to have enough of it to meet their desires (which can become viewed as needs for them). These consumers prefer stylish trendy products that give the appearance of the lifestyle of people with greater material riches. Many Strivers see themselves as having a job rather than a career, and a lack of skills, education and focus often prevents these consumers from moving ahead.  However, Strivers are active consumers, because for them shopping is a social activity and an opportunity to show off to people in their circle of influence their ability to buy. Strivers are as impulsive as their financial circumstance will allow them to be, sometimes to their own economic demise.

Experiencers are consumers that are primarily motivated by self-expression. These are younger, enthusiastic, and impulsive consumers. Experiencers will quickly become enthusiastic about new opportunities, but are equally quick to cool it they cannot get what they want soon, or after they have experienced the "high" once or twice. As such, these consumers will seek variety and excitement, savoring the fresh, the "offbeat", and the risky. Their energy (remember that energy is s resource) finds an outlet in exercise, sports, outdoor recreation, and social activities.  They are avid consumers and are willing to spend a high proportion of their income on fashion, entertainment, and socializing activities.  Their buying behavior reflects an emphasis on looking good and having trendy things.

These consumers, like Experiencers, are motivated by self-expression. Makers express themselves and experience the world by working on it - building a house, raising children, fixing a car, or canning vegetables - and have enough skill, education and energy to carry out their endevours successfully. These consumers are highly practical people who have constructive skills and value self-sufficiency and independence. They usually live within a traditional context of family, practical work, and physical recreation and have little interest in what lies outside that lifesyle.  Makers are suspicious of new ideas and large institutions such as big business. They are respectful of government authority and organized labor but are often resentful of government intrusion on individual rights. Makers are motivated by the accumulation of material possessions other than those with a practical or useful purpose. Because they prefer value to luxury, they buy basic products that meet their needs on a daily basis.

When sales are trending down, conducting a VALS Study is a great way to find new customer segments to sell to.  It is also a great way to understand how to create messaging for these specific customer segments.

Tuesday, October 2, 2012

Marketing 101: Social Factors Affecting Consumer Buyer Behavior

In my last post I examined the cultural factors influencing consumer buyer behavior.  Cultures, subcultures and cultural trends all shape the Model of Consumer Buying Behavior.  Another major part of consumer buyer behavior is the element of Social Factors.  Human beings are social. They need people around them to interact with, and to discuss various issues in order to reach to better solutions and ideas. We all live in a society of some form, and it is very important for individuals to adhere to the "laws" and social "regulations" of a community.  These Social Factors typically consist of the consumer's small groups, their family, and their social roles and social status.

First let's examine Groups.  For the marketer, a social group is defined as having two or more people who will interact to accomplish individual or mutual goals - one of which is usually purchasing a good or service to meet a need or desire. The reality is that a consumer's behavior isn't influenced my just one group; it is influenced by many different groups.  We refer to these groups as Reference Groups.

Reference groups influence the consumer by serving as direct (face to face) or indirect points of comparison or "reference" in building a consumer's behavior and attitudes.  In a reference group with direct influence, several individuals may be a part of the consumer's purchase decision. The typical roles of these individuals are:

The Initiator
The Initiator is the individual that first suggests or thinks of the idea of buying a product or service.

The Influencer
The Influencer is the individual whose view or advice influences the consumer's buying decision.  This person is sometimes also referred to as the Opinion Leader.  The Influencer is usually has special skills or knowledge, personality or other characteristics that will exert social influence on other members of the group. The role of the Influencer or Opinion Leader has taken on a whole new meaning and emphasis with the advent of social media platforms.

The Decider
The Decider is an individual with power and/or the financial authority to make the choice regarding which product to buy.  This is usually the consumer, but it can also be another person.

The Buyer is a person who conducts the buying transaction.  This is also usually the consumer, but it can be another person as well.

The User is the person (or persons) who will actually use the product or service that has been bought.

It is important to note that very often consumers are influenced by reference groups that they do not belong to.  We will sometimes refer to these groups as aspirational groups.  One example of an aspirational group would be the olympic team of the consumer's country.  The consumer may aspire, due to the success of the team members, to "be like them."  This may lead them to buy many of the same products that the team members may be endorsing, so that they can move towards their goal of acquiring many of the same traits of those group members.  Aspirational groups can exert a lot of influence over a group of consumers, and their potential to help a marketer increase sales should not be ignored.

Family Groups
Family Groups are usually considered to be the most important “buying” organisations within a given society.  Marketers are most interested in the roles and influence different members of a family group on a large variety of products and services a consumer may buy.  Over time the buying roles of the traditional husband-wife model relationship have been changing. In most societies, the wife is usually the primary buyer for the family unit, primarily in the product categories of food, household products and clothing. However, with more women entering into full-time work, and more men becoming telecommuting, traditional family roles are changing.  The challenge for the marketer is understanding how these societal changes affect demand for their products and services, and how the messaging mix might need to be changed to attract male rather than female buyers in a given product category (or vice versa).

Another factor to consider in Family Groups is the stage of life of its members.  Married individuals tend to show strong desires towards buying products and services which would benefit not only them but also the members of their family group. A consumer who has a spouse and child at home usually will buy for them rather than spending on themselves. An consumer entering into marriage would be more interested in buying a house, a car, and other household items such as furniture and decorating products.  Every consumer will usually go through a common set of stages of life, and will show a different buying mindset in each stage.  For a common male consumer this tends to look like:

  • Bachelorhood: Trends towards alcohol, electronics, vehicles, mobile technology (Spends Lavishly)
  • Newly Married: Trends towards purchasing a home, car, furnishings. (Spends sensibly)
  • Family with Children: Trends towards purchasing products to secure the well-being of his family’s future.
  • Empty Nest (Children getting married)/Retirement/Old Age: Trends towards medicines, health product categories, and products that are part of an increased lifestyle and income level.

Social Status
One aspect of social status is a consumer's economic status.  Marketers take into consideration the social class of the consumer when tailoring messaging to them.  A social class is a relatively "permanent" and ordered division in a society whose members share similar values, interests, and behaviors.  These classes have their own distinct reference groups, and often reference groups in some classes will influence consumers who are members of a different social class. Different social classes will tend to desire different categories of products as part of their consumer buyer behavior.  For example, an upper middle class consumer will tend to spend more of their disposable income on "luxury" items, whereas a consumer from middle to lower income groups will tend to purchase items that are required for their own survival over day-to-day comfort.

In the United States, there are four distinct class groups:
Upper Class (3%)
- Upper Uppers: The social elite who live on inherited wealth.  They are philanthropic, own many homes, and send their children to the best schools.
- Lower Uppers: Consumers who earn high income through great ability.  They are active in social and political culture groups, buy expensive homes, educations and vehicles.

Middle Class (44%)
- Upper Middles: Professionals and corporate managers who don't have a high family status or unusual levels of wealth.  They believe in higher education, and they want the "better things in life".
- Middle Class: "Average" income white and blue collar consumers who live in the better part of town.  They buy products to keep up with current trends.  They want to be in a nice home in a nice area and send their kids to quality schools.

Working Class (38%)
- They lead a working class lifestyle at any income level, education level, or job.  They usually will depend on relatives for economic and emotional support, for purchasing advice, and for assistance in rough times.  Family is the most important reference and cultural group.

Lower Class (16%) 
- Upper Lowers: These are the working poor.  Their living standard is just above the poverty line, and they actively strive to advance to a higher class of life.  Often they do not a great education or skills, and they are often poorly paid for unskilled work and tasks.
- Lower Lowers:  These are the visibly poor in society.  They are poorly educated and unskilled.  They are usually out of work and depend on the government for assistance most of the time.  They are in the middle of a day-to-day existence.

It is the marketer's job to not ignore any of the reference groups of our target markets.  We must be constantly researching and identifying these groups, because they will expose people to new lifestyles and behaviors, and change their attitudes and influence the consumer's self-image.  Reference groups are a vital component of our marketing campaigns.

In my next post I will examine other types of social factors.  After that I will look at the VALS Lifestyle Classification System.