Lifestyle Market Segmentation

Art Weinstein, Dennis J. Cahill

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781136773785
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The latest marketing guide from expert Dennis Cahillthat teaches how to effectively use lifestyle segmentation for marketing strategiesLifestyle Market Segmentation gives author and marketing expert Dennis Cahill the chance to put his nearly 30 years of marketing and teaching experience to practical useto clearly explain the process of market segmentation and its applications. This text goes beyond the obvious demographic and/or geographic categories to get at the whys of customer behaviors, carefully reviewing every facet, from theory to the exploration of applications. Step by step, this easy-to-understand book, written by the author of How Consumers Pick a Hotel: Strategic Segmentation and Target Marketing and other classic marketing books, walks readers through the process, giving real-life examples as illustration as it provides the tools to effectively market by lifestyle segment in today's competitive marketplace.Market segmentation research examines a broad range of demographic and psychographic information that can provide strategies to target both current and potential markets. This helpful guide comprehensively reveals how to gather and effectively use this crucial type of research. Lifestyle Market Segmentation consists of three main parts. The first part discusses segmentation theory and various methods for segmentation. The second part explores applications of lifestyle segmentation based on case studies. The last section focuses on ways to market products and services to the various segments discovered by the applications. This invaluable text is extensively referenced and includes several tables and figures to clarify concepts and data.Lifestyle Market Segmentation discusses in detail:

• the concept of market segmentation
  
• criteria for segmentation schemes
  
• types of nonlifestyle segmentation
  
• geodemographic segmentation
  
• psychographics
  
• the List of Values (LOV)
  
• guidelines for effective use of psychographics
  
• lifestyle target segments
  
• the Tribes segmentation scheme
  
• the Myers-Briggs Type Indicator
  
• life-stage segmentation
  
• illustrative real-life case studies

Lifestyle Market Segmentation is an enlightening resource that is certain to be used again and again, and makes essential reading for managers, educators, and students.

Section IV:

Applications

This section explores how one firm, Douthit Communicaitons, Inc., has dealt with lifestyles over the past twenty years in creating its software to produce classified ads for used cars and houses. It has been a journey of discovery that is not over yet.

Any product with large amounts of emotional content—houses and cars of course, but also food and health care—can be amenable to lifestyle analysis and segmentation. Segmentation to simply divide a market is rarely profitable, and without profitability there is no point in segmentation.

Lifestyle Market Segmentation

© 2006 by The Haworth Press, Inc. All rights reserved.

doi:10.1300/5560_14

Chapter 11

Applying Autobiographical Memory to Advertising

Webber (1998, p. 9) puts his finger on two very important points, particularly for high-ticket items. First, for many products and services, customers may make an emotional decision and then go back and justify it intellectually—not only to others, but at least as much to themselves. Second, peer or social approval has real power on some customers’ decisions to buy. How does this affect segmentation?

Sujan et al. (1993) address part of the problem of the affective nature of memory and how to transfer the affect to advertisement and brand judgments. They postulate on the basis of previous research that the retrieval of autobiographical memories changes consumers’ thought processes so that there is more focus on personal memories and their associated affect and a reduced analysis of and memory for product attribute information. In two studies of student populations (this is not one of the times when I would object to using convenience samples of students) the authors tested eight hypotheses relating to evoking autobiographical memories. Their results go far beyond “nostalgia” ads and deal directly with “Remember the last time you…?” or the age-old “slice of life” commercials that played so well and so often in the early days of television. Anything that the marketer can do to evoke memory for use and activities in the consumer’s mind rather than evoking the product itself will pay dividends as the consumer will see himself or herself using the product again. This is a return to creating habits. In their discussion of the limitations to their study and future research needs, the Sujan et al. (1993) state that the product chosen for their study (wine) “may have been particularly amenable to being linked to autobiographical episodes, and judgments of wine may be particularly influenced by available affect rather than product features”—particularly in such young wine drinkers with less sophistication and experience than their parents. But would cars not also fall into such a category? Or houses? Or food? Or most of the items that we buy and use? How affect driven is the purchase process? How attribute driven?

If Sujan et al. are correct that affect can obscure attributes, cueing the reader or viewer to autobiography first and then bringing in the features would create a more powerful advertisement for almost any product more expensive or complex than soap or chewing gum. Furthermore, Fournier and Guiry (1993) utilize preconsumption dreaming behavior in the formation of consumer “wish lists”; certainly this is an area that marketers can mine with profit. The role that advertisements can play in the dreaming is, of course, great, particularly for new-product advertising, and it has been tapped by many marketers in “product placements” in movies and television shows—venues that feed consumer dreams to begin with.

An article evocatively titled “Ask Not What the Brand Can Evoke; Ask What Can Evoke the Brand?” (Holden and Lutz, 1992) echoes the Sujan et al. article. Most research on memory and brand choice has assumed that the brand is available to be chosen. Holden and Lutz propose that it is necessary to examine the associations that led to retrieval of the brand instead of the brand that led to the associations. In addition, whereas brand evaluation focuses on what is evoked rather than on the cues, research on brand evocation needs to focus on the cues. What evokes a Ford Taurus in a consumer’s mind? What evokes a Mercedes? A Colonial Revival house? Kentucky Fried Chicken? If we can find out the cues, we can present the consumer with an advertisement that evokes the product without having to be obvious or crude about it.

Ideally the customer should not be aware of why the advertisement so speaks “Taurus;” however, the ad should not even suggest a car so similar to the Taurus as its identical twin, the Mercury Sable. This is not manipulation of the consumer but rather making the advertising an integrated whole that fits together and is aimed at one segment (or a few) and is designed to send other segments away, in both cases with consumers not really knowing why. This is the wholeness of psychographic segmentation, the promise of using what we know to lead consumers in a direction that they want to go in the first place—in other words, using segmentation to live up to the promise of the Marketing Concept’s selling people what they want to buy.

Lifestyle Market Segmentation

© 2006 by The Haworth Press, Inc. All rights reserved.

doi: 10.1300/5560_15

Chapter 12

The Tribes:

A New Psychographic Scheme

After a period of using commercially available segmentation schemes, Douthit Communications, Inc. (DCI), had become dissatisfied with changes in the scheme and with the support it was getting from research provided by the vendor. The decision was made in late 1990 to develop a proprietary scheme for residential real estate similar to the syndicated scheme it was currently using. American LIVES was retained and conducted a random-sample mail survey of the Denver, Colorado, real estate market (American LIVES, 1991); Denver was then and still is one of the bigger markets for DCI’s Homes Illustrated division of homes-for-sale magazines, as well as the headquarters of ReMax, Inc., a major national real estate brokerage firm. The survey sampled Denver housing sales for the previous eighteen months. Of 1, 153 valid names and addresses of recent house buyers acquired from a mailing list service to whom surveys were mailed, there was a return of approximately 500 questionnaires, for a 43 percent response rate. American LIVES deemed the response rate adequate for all the statistical analyses to be performed for its segmentation study.

The survey asked questions never before systematically examined in a real estate context, although some had previously been asked in research performed for DCI. The questionnaire was jointly developed by DCI personnel and American LIVES, although it was not tested before it was fielded. The instrument was eleven pages long (much too long according to all the rules of thumb in the marketing research field—the return rate is astronomical in the face of this fact), and it explored many unclear items that American LIVES hoped would lead to shorter questionnaires in future studies. The American LIVES survey is unique in that it covers the house-search process, desire for house features, and use of the house by different segments, house style analyses, and values and demographics (the LIVES analysis proper—Lifestyle, Interests, Values, Expectations, and Symbols of the house buyer).

The questionnaire was designed with several kinds of questions that, when taken together, give a rich basis for the analysis and segmentation:

• Why they moved
• The house search process
• Type, size, and price of house
• How they sold their previous house
• Intentions for the next time they sell a house
• Preference for new or previously owned house
• Attitudes toward realtors and their quality of service
• Information and services used in the house search
• Preferences for neighborhood and area features
• Preferences for exterior and interior features
• Different uses for rooms
• Values, lifestyles, and demographics

The LIVES segmentation model follows two principles (American LIVES, 1991). First, all people organize their lives around their values and lifestyles. Different groups in the population employ very different values and lifestyles; the use of the values and lifestyle measures gives very stable market segments that are based on what anthropologists and sociologists call subcultures. Second, consumers try to make their lives more meaningful and consistent in terms of a few basic ideas. The segmentation scheme does not have to come up with a large list of descriptors of peoples’ ways of life, for some ideas are more basic than others. If this sounds somewhat like the VALS segmentation principles discussed earlier, perhaps it is because one of the developers of the LIVES scheme worked for VALS while Arnold Mitchell was still alive. Perhaps that also helps to explain why the LIVES scheme seems to make sense.

American LIVES then produced the segmentation that was tied specifically to Denver and yet could also satisfy DCI’s strategic needs for the Homes Illustrated magazine markets as well as its software for writing real estate classified advertisements, which is sold under various names at different times. The primary applications of a LIVES segmentation are in a wide variety of business whose products are complex or expensive, symbolically loaded, a key part of someone’s lifestyle, reflective of what is most meaningful in consumers’ lives and sold differently to different groups. Examples of products or service that this approach would work well for include cars, consumer electronics, and vacation travel. Houses also obviously fit the bill. The returned questionnaires were analyzed along the underlying dimensions of what is most important in the lives of the house buyers; five subcultures, which where christened “Tribes” for ease of communication, were discovered: Winners, Authenticks, Wannabes (now called “Trenders”), Heartlanders, and Maintainers (called “Up-keepers” for a number of years but rechristened in 2004 “Self-Sufficient”¹).

Winners represented 23 percent of the market and were the most upscale group in the survey. Seventy-six percent of the Winners were managers and professionals, 68 percent had incomes in 1990 over $50,000 (versus 38 percent of those surveyed) and 21 percent had incomes over $100,000, and 50 percent had attended or completed graduate school. The median age was thirty-eight years, the same as those surveyed, and 60 percent were male. This group was highly status and success oriented; they were business conservatives. This group dominated the high-priced house market for both new houses and resales. They liked all the status features in a house and liked to have a luxury look in as many rooms as possible. They wanted a “Big House,” a trophy house in a mature, status neighborhood.

Winners are the most visible buyers in the real estate market. Realtors and home builders are extremely familiar with this segment because they most identify with Winners. Winners focus their attention on self, work, and family, in that order. They are knowledgeable and savvy house buyers who know what they want and want to buy it efficiently. They are materialistic to a fault and technologically aware. Their house needs to reflect their sense of themselves: stylish and good-looking. They want to see a large variety of styles and front elevations and want a lot of choices in what they buy—houses and otherwise. In some cases, neither the neighborhood nor the outlook matters to Winners; all that matters is the house itself. Even houses with views of rail yards and landfills, if they are priced high enough and are big enough, will sell to Winners (Hagerty and Kim, 2004).

Authenticks represented 18 percent of the market; they were the second most upscale group. Fifty-three percent were managers and professionals, and 45 percent had 1990 incomes over $50,000; 27 percent attended or completed graduate school. Half of Authenticks are men. This group is dominant in the “preowned-house-in-an-established-neighborhood” market. Their house is expected to be a nest, hidden away from the world, with no big statement to the street or any status or luxury features inside or out.

Authenticks are individualists, for all their broad social concerns, so their tastes are more personal than those of other groups. They care more about being unique than they do in owning what is unique. They are well educated, creative, and self-confident. They are psychologically sophisticated, with a low tolerance for being “sold to”; many hate builders and realtors and feel that these people are dumb and have poor taste and the wrong values to deal with Authenticks. Their house is a way for them to show their creativity, so they want a house that they can invest with their own personal touch and their own meanings and values.² Family is less important to Authenticks, and this often shows in their house choices—their values in general are nontraditional.

Heartlanders represented 21 percent of the market. This is the oldest Tribe, with a median age of forty-one years; almost one third of Heartlanders were over fifty. Partly because of their age, they dominated the empty-nester market. Their income was average ($35,000), their education level slightly lower—high school with some college. Heartlanders were 35 percent male. The median price of their house was right on the median of the sample, but they had more equity built up in the house, partly because of their age but also partly because they were less apt to refinance to withdraw cash from the house for other purposes and less apt to move. They wanted to be in built-up, very-accessible parts of the city, but the neighborhoods must be safe and secure, because this Tribe is very concerned about crime on the street. A “plain-vanilla” house would do—simple, comfortable, and practical, with no status features. Their notion of a house is extremely conventional and conformist: they will reject all of the innovative features that attract the Authenticks, partly because they are new but also partly because they hold the Authenticks and their values in contempt.

Heartlanders are conformists who lack broad social concerns, with very little personalization of taste. They are traditionalists who do not feel comfortable in the modern world, who want their path through life to be narrow, well lit, and well posted by authority figures whom they respect. They long for a nostalgic, idealized image of the way things were in small towns around 1900; when Csikszentmihalyi and Rochberg-Halto...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Dedication
• About the Author
• Contents
• Foreword
• Preface
• SECTION I: Nonlifestyle Issues
• SECTION II: Lifestyle Issues—Prizm, Lov; And Vals
• SECTION III: Lifestyle Targets
• SECTION IV: Applications
• SECTION V: Other Considerations and Decision-Making Overlays
• Appendix Perceptual Mapping
• Notes
• References
• Index