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| | | | | Psychodemographics and Behavioral Economics |
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Behavioral economics
Behavioral economics and behavioral finance are closely related fields which apply scientific research on human and social cognitive and emotional biases to better understand economic decisions and how they affect market prices, returns and the allocation of resources. The fields are primarily concerned with the rationality, or lack thereof, of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory.
Academics are divided between considering Behavioral Finance as supporting some tools of technical analysis by explaining market trends, and considering some aspects of technical analysis as behavioral biases (representativeness heuristic, self fulfilling prophecy).[1]
Behavioral analysts are mostly concerned with the effects of market decisions, but also those of public choice, another source of economic decisions with some similar biases.
Psychodemographics
Psychodemographics are the counter part to demographics. Demographics contain an empirical analysis of the population within our primary and secondary trade areas. They evaluate how many people, how much money, and how much growth is expected to take place in a specified area. Psychodemographics within our primary and secondary trade area, however, indicate the lifestyles of the demographics contained earlier in this analysis. In essence, psychodemographics allow us to better understand who our consumer is, where they are coming from, what they are looking for, and how they look for it.
While this is not an exact science, we feel that the combination of demographic, psychodemographics, and competition analyses will provide us with a platform to go into the marketplace and articulate a comprehensive story about our consumer.
Source: Positioning
Segmentation - Targeting - Positioning
Eureka Facts, the Smart Marketing Information.
Psychographics classify consumers by their values and lifestyles. Though psychographic classifications are now abundant, among the best known are VALS 2 and LOV. Psychographic studies range from the general profiling of lifestyles to the product specific segmentation based on psychographic elements. Psychographic variables are classified into three categories: product attributes, lifestyle attributes, and psychological attributes.
The study of lifestyles is largely explained in terms of the AIO's: attitudes, interests, and opinions. These are a reflection of a mix of economic, cultural and social values. Values in turn are largely shaped by early lifetime experiences. Among the strongest forces forming values are the triad of institutions (family, religion, and school), media, and government (Gunter 1992). The use of psychographics is important not only as a consideration during the initial segmentation but as an important element for the segment evaluation and marketing mix formulation phases of the STP process. "Although typically used more in advanced analysis than initial segmentation studies, psychographics can be very useful in identifying and explaining the behavior of markets. For example, although the market for cars can be defined in geodemographic terms, psychographically a researcher may be able to identify many reasons or motives underlying car buying behavior which could help to design a more effective promotional and marketing strategy" (Gunter, B. & Furnham, A., 1992, p. 64).
Benefits sought
The second group of variables used to segment consumers includes all those related with the benefits and needs they seek to fulfill and the nature of their demand for different products and services. It also encompasses value preferences such as quality, price, style, image, etc.
Behavioral Measures
The third category of segmentation variables is behavioral measures. It includes product usage and actual behavior such as buying patterns, usage data, channel, ownership, quantities, brand loyalty, attitudes, etc.
Source: Segmentation
Demographics
Demographics data refers to selected population characteristics as used in government, marketing or opinion research, or the demographic profiles used in such research. Note the distinction from the term "demography" (see below.) Commonly-used demographics include race, age, income, disabilities, mobility (in terms of travel time to work or number of vehicles available), educational attainment, home ownership, employment status, and even location. Distributions of values within a demographic variable, and across households, are both of interest, as well as trends over time. Demographics are frequently used in economic and marketing research.
Demographic trends describes the changes in demographics in a population over time. For example, the average age of a population may increase. It may decrease as well as certain restrictions may be in place, for instance like in China if the population is high.
The term demographics as a noun is often used erroneously in place of demography, the study of human population, its structure and change. Although there is no absolute delineation, demography focuses on population structure, processes and dynamics, whereas demographics is most often used in the fields of media studies, advertising, marketing, and polling, and should not be used interchangeably with the term "demography" or (more broadly) "population studies".
Demographic profiles in marketing
Marketers typically combine several variables to define a demographic profile. A demographic profile (often shortened to "a demographic") provides enough information about the typical member of this group to create a mental picture of this hypothetical aggregate. For example, a marketer might speak of the single, female, middle-class, age 18 to 24 demographic.
Marketing researchers typically have two objectives in this regard: first to determine what segments or subgroups exist in the overall population; and secondly to create a clear and complete picture of the characteristics of a typical member of each of these segments. Once these profiles are constructed, they can be used to develop a marketing strategy and marketing plan.
Generational cohorts
A study by William Strauss and Neil Howe, in their books Generations and Fourth Turning, looked at generational similarities and differences going back to the 15th century and concluded that over 80 year spans, generations proceed through 4 stages of about 20 years each. The first phase consists of times of relative crisis and the people born during this period were called "artists". The next phase was a "high" period and those born in this period were called "prophets". The next phase was an "awakening period" and people born in this period were called "nomads". The final stage was the "unraveling period" and people born in this period were called "heroes". The most recent "high period" occurred in the 50s and 60s (hence baby boomers are the most recent crop of "prophets").
The most definitive recent study of US generational cohorts was done by Schuman and Scott (1989) in 1985 in which a broad sample of adults of all ages were asked, "What world events over the past 50 years were especially important to them?"[2] They found that 33 events were mentioned with great frequency. When the ages of the respondents were correlated with the expressed importance rankings, seven distinct cohorts became evident. Today the following descriptors are frequently used for these cohorts:
* Depression cohort (born from 1912 to 1921)
Memorable events: The Great Depression, high levels of unemployment, poverty, lack of creature comforts, financial uncertainty
Key characteristics: strive for financial security, risk averse, waste-not-want-not attitude, strive for comfort
* Pre 'World War II cohort' (born from 1922 to 1927)
Memorable events: men leaving to go to war and many not returning, the personal experience of the war, women working in factories, focus on defeating a common enemy
Key characteristics: the nobility of sacrifice for the common good, patriotism, team player
* World War II cohort (born from 1928 to 1945)
Memorable events: sustained economic growth, social tranquility, The Cold War, McCarthyism
Key characteristics: conformity, conservatism, traditional family values
* Baby Boomer cohort #1 (born from 1946 to 1954)
Memorable events: assassinations of JFK, Robert Kennedy, and Martin Luther King, political unrest, walk on the moon, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights movement, environmental movement, women's movement, protests and riots, experimentation with various intoxicating recreational substances
Key characteristics: experimental, individualism, free spirited, social cause oriented
* Baby Boomer cohort #2 (born from 1955 to 1964)
Memorable events: Watergate, Nixon resigns, the cold war, the oil embargo, raging inflation, gasoline shortages
Key characteristics: less optimistic, distrust of government, general cynicism
* Generation X cohort (born from 1965 to 1979)
Memorable events: Challenger explosion, Iran-Contra, social malaise, Reaganomics, AIDS, safe sex, single parent families
Key characteristics: quest for emotional security, independent, informality, entrepreneurial
* Generation Y cohort also called N Generation (born from 1980 to 2001)
Memorable events: rise of the internet, September 11 attacks, cultural diversity,two wars in Iraq
Key characteristics: quest for physical security and safety, patriotism, heightened fears, acceptance of change, technically savvy, environmental issues
Source: Demographics
50 Psychology Classics
Barron's EZ-101 Study Keys: Psychology
Buying Trances: A New Psychology Of Sales and Marketing |
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