Predicting and Influencing Choices in Land Use, Transportation and. Housing. J Milliken Consulting October 2009

Transcription

1 Predicting and Influencing Choices in Land Use, Transportation and Housing J E N N I F E R L. M I L L I K E N, A I C P A P A - I N D I A N A F A L L C O N F E R E N C E O C T O B E R 2 2,

2 Introduction This session is designed to teach planners techniques for understanding their communities that are not commonly used in planning, but have great applicability to planning. What I am asking you to do for the next 45 minutes is to think like a marketer. You want your community to be a nice place to live, work, and do business. Citizens make consumer-like choices to pick your community over another. They also make choices to pick a certain neighborhood or home style, to take public transit or not, to support public proposals or not. By understanding more about the choices that people in your community area likely to make, you can develop projects, programs and persuasive arguments that are more likely to succeed.

3 Organization Household Life Cycle Background Examples Ideas for other ways information can be used by planners Values and Lifestyles Research Values and Lifestyles Research Background Examples Ideas for other ways the information can be used by planners

4 Part 1: Household Life Cycles

5 Why Study Households? For many subjects, the household rather than the individual is the decision-maker. Especially today, households capture more situations than family. Source: Van Imhoff (1995)

6 What do we know about Household Location Decisions? Households make location decisions based on comparing the bundles of public goods in various jurisdictions (Tiebout 1956, as cited in Epple 2007). So, people really do view your community like a consumer product, which is why you should think like a marketer. There is a strong and consistent relationship between lifecycle stage and size and type of housing unit occupied. This is supported by frequency and types of moves and reasons for moving. (McCarthy 1976) Households have incentive to change location over the life cycle. (Epple 2007) Example: School age children Sources: Epple (2007), McCarthy (1976).

7 How can we benefit? Understanding this dynamic offers the potential to improve understanding of collective choices made within communities (Epple 2007). Example: If only 1/3 of households have children, why do we design communities primarily for those that do? If we can identify differences in consumer behavior in different stages of the household life cycle, we can therefore study our household life cycles, predict the probability of certain patterns of behavior, and improve our decision making (Bauer 2008). Sources: Epple (2007), Bauer (2008).

8 What variables make up a household s life cycle? Potentially: household size, age of adults/children in households, gender, household status, marital status, employment status, and income (Bauer 2008). Du (2006) identified thirteen stages of household life cycle in the United States (shown on the following page). But - you don t have to be a statistician to use this technique (as my examples will show) you just have to think like a marketer. Sources: Bauer (2008), Du (2006).

9 Du s Thirteen Household Life Cycles Source: Du (2006)

10 Example 1: Neighborhood Study in Fishers Neighborhood is basically appealing. It has some gentle roll to the terrain and an attractive treeline. The existing homes are medium in size, not unattractive, but with more vinyl than brick. Plans are very conventional. The location is fairly convenient to new shopping and dining opportunities at Hamilton Town Center. Source: J Milliken Consulting (2009)

11 Example 1: Study of a Fishers Neighborhood Households by Type in Fishers One of the ways that the builder can take better advantage of their market opportunity 17% 32% 13% 10% 24% 4% at this neighborhood is by attracting more different types of households. The neighborhood primarily attracts families with young children. The chart at left shows that this represents perhaps 23% of the types of households found in Fishers. In order to advance sales at the neighborhood, it was recommended to attract a broader range of household types, for example households with no children, which represent 32% of area households. This could include both empty nesters as well as young couples who have not yet started a family. This can be accomplished in part by promoting the builder s ranch plans, which also have a price advantage over their competition. Source: J Milliken Consulting (2009)

12 Example 2: Neighborhood Study in Carmel Neighborhood is rather bland. Lots are fairly large, but there is not much interest to the terrain, layout or common area. The homes are rather large, predominately vinyl, and not as unattractive as in surrounding neighborhoods. The location feels somewhat remote it is on the very edge of Carmel and you drive past cornfields to get there. Source: J Milliken Consulting (2009)

13 Example 2: Study of a Carmel Neighborhood 35% 30% 25% 20% 15% 10% 5% 0% Carmel Westfield Carmel Westfield Looking at the percent of HHs by type, one can see that two of the three largest segments in Carmel are HHs w/o children the couple households (32%), and the Singles (19%). This is undoubtedly part of why the townhome market has done so well there. However, it is unlikely that these HHs would be attracted to the neighborhood under study, which has a strong image as a family neighborhood. Westfield has a greater percentage of HHs with school age children, and a much greater percentage of HHs w/young children. This may be partly because the higher prices in Carmel tend to be a barrier to entry for young families. When looking at numbers instead of percentages, Carmel has more of every type of HH. It seems from the HH data that the best strategy is to continue to market to Carmel families, but recognize that this is a smaller percentage of Carmel HHs than is perhaps generally recognized. In addition, market more aggressively in Westfield, where more young families may be looking, and let them know that there is an affordable option in Carmel at this neighborhood.

14 How do I apply this to my situation? Study the make-up of household life cycles in your community. Any surprises? Think of your community as a product. What does it have to offer the various household life cycles? Is there anyone you want to attract more? Or less? How could you change your product your community to do so? Is there anything about your community that you now see as unlikely to change, based on its household life cycles? Be realistic. Is there an issue in your community that you have been trying to explain, or something you want to promote? Now that you know about your community s household life cycles, does this make you consider changing your strategy?

15 Potential implications for housing & land use Don t expect households with children to opt for higherdensity living, unless they can t afford anything else. In this case their decisions will be based on cost more than lifestyle. Households without children may be more likely to opt for higher-density living, but remember than if there is only wage-earner, they too may be constrained to lower-cost examples versus higher-priced lifestyle offerings. If you need to sell people on higher-density living, focus on providing: Some sort of space for private outdoor living Storage space

16 Potential implications for transportation Don t expect households with young children to take public transit. They are carrying too much baggage (literally). At best, one parent may be able to take public transit while the other drives. But this may only be occasional, if that parent needs a car for work one day or has to pick up the kids due to a schedule conflict. Remember that even for households without children, one of the best things about a car is the space to stash your stuff (briefcase, gym bag, groceries). The distance people have to carry things at either end of their transit trip is critical.

17 Part 2: Values and Lifestyles

18 What is it? Values and Lifestyles research is a type of psychographic segmentation system. It goes beyond standard demographic descriptors, like age and income, and the assumptions that we might make about them. For example, just because a householder is years old and makes $50,000-60,000 per year, what does this really tell us about them? Instead, it describes the underlying motivations that drive people s decision-making. So, if the aforementioned householder is a Striver, they will make very different choices than if they are a Maker.

19 VALS TM VALS is proprietary to SRI Consulting Business Intelligence. Originally developed by Stanford Research Institute in 1978, at that time it included three basic lifestyle groups needs-driven, outer-directed, and innerdirected. VALS has evolved to includes eight different lifestyle groups based on two dimensions: Self-orientation Resources Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

20 Description Self-orientation: Principle-oriented, having set views Status-oriented, influenced by other views Action-oriented, seeks activity, adventure, and variety Resources: Resources: Includes education, income, intelligence, health, energy level, and eagerness to purchase. Resources tend to increase from youth to middle age and decline afterwards. Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

21 VALS Framework Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

22 So, what do these mean? Innovator Sophisticated change leaders, receptive to new ideas & technologies. Thinker Content, educated, seeks information to weigh decisions, likes durability and functionality. Achiever Goal-oriented with regard to career and family. Seek premium products that demonstrate success to peers. Nothing too different. functionality. peers. Experiencer Active, spend time on sports and recreation and casual social gatherings such as barbecues. Believer Striver Maker Traditional, conservative, slow to change, likes familiarity. Trendy, spend a lot on entertainment and the latest styles. Emulators. Prefer value to luxury and buy basic products. Enjoy constructive, hands-on activities like crafts or woodworking. Survivor Narrowly focused lives, may feel powerless, buy for value and tend to seek more security through loyalty to brands. Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

23 How does VALs compare to other psychographic segmentation systems? First, it s much more simple. Some of those systems have dozens of psychographic types. How do you get your head around them all? Even if there are only a dozen in your area, how do you develop and implement a dozen different strategies? Second, there is a simple, underlying logic to the VALs framework that matches what I have observed about people in countless focus groups and interviews. Third, it s inexpensive.

24 VALS Types for Indianapolis MSA compared to US Total 18% 16% 14% 12% 10% 8% 6% 4% Percent of Population 2% 0% Innovator Thinker Believer Achiever Striver Experiencer Maker Survivor US 10% 11% 17% 14% 12% 13% 12% 12% Indianapolis MSA 11% 12% 16% 16% 10% 13% 12% 9% Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

25 VALS Types for Hamilton County compared to Indianapolis MSA 30% 25% 20% 15% 10% Percent of Population 5% 0% Innovator Thinker Believer Achiever Striver Experiencer Maker Survivor Indianapolis MSA 11% 12% 16% 16% 10% 13% 12% 9% Hamilton County 24% 20% 7% 22% 5% 13% 5% 3% Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

26 VALS Types of Selected Cities and Towns in Hamilton County 35% 30% 25% Innovator 20% Thinker Believer Achiever 15% Striver Experiencer Maker 10% Survivor 5% 0% Carmel Fishers Noblesville Westfeld Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

27 Example 1: Neighborhood Study in Fishers Neighborhood is basically appealing. It has some gentle roll to the terrain and an attractive treeline. The existing homes are medium in size, not unattractive, but with more vinyl than brick. Plans are very conventional. The location is fairly convenient to new shopping and dining opportunities at Hamilton Town Center.

28 Example 1: Neighborhood Study in Fishers Top VALs types in Fishers: Opportunity for this neighborhood: Achievers (27%) are primarily motivated by achievement. Image is important to them and they favor products that demonstrate success to their peers. Brand is important. At the same time, they are fairly conventional, value stability, and are basically satisfied with the status quo (since this tends to generate approval from others). Also, since they desire approval from others, they value collective experiences like work and family. This means they have busy lives and appreciate products and services designed to make their busy lives a little easier. The builder probably attracts a fair number of Achievers, because the brand conveys conventional and respectable values. But neither the brand, product nor community truly give the impression of status, in the sense that the buyer would feel their purchase demonstrated a high level of achievement to their peers. The builder could make a better impression on this group with a more upgraded image for the community, including the product and community brand. Also, some simple product features that make life easier might be an inroad with this consumer, especially those features typically found in higher-status homes. Thinkers (20%) are motivated by abstract ideals such as quality, tradition and honesty. They are thoughtful consumers and tend to seek out information in the decision-making process. They look for value, durability, and functionality in the products they buy. They are open to consider new ideas, but predominately respect existing social practices and institutions. Thinkers are more likely than some other buyers to sit out the current market downturn, and are probably persuaded well by reassurances such as price guarantees. Because of their emphasis on quality, tradition and durability, they probably prefer brick homes, and may be discouraged n neighborhoods where this is not predominate. Experiencers (15%) tend to be young, and their ample enthusiasm quickly shifts with the trends. They appreciate both the challenge and the emotional impact of active pursuits such as exercise, sports, outdoor recreation, and social events. Their purchases need to help them look good to their peers by having cool stuff. While some Experiencers may lack the desire to settle down in a home, if we consider their age they probably make up a good portion of the first time buyers we do see in the market. Even better, they are more likely to prefer a new home vs. resale, provided that it feels new. To capture this buyer it s important to highlight opportunities for socializing and recreation both inside and outside the home. Sources: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

29 Example 2: Neighborhood Study in Carmel Neighborhood is rather bland. Lots are fairly large, but there is not much interest to the terrain, layout or common area. The homes are rather large, predominately vinyl, and not as unattractive as in surrounding neighborhoods. The location feels somewhat remote it is on the very edge of Carmel and you drive past cornfield to get there.

30 Example 2: Neighborhood Study in Carmel Top VALs types in Market Area, and relationship to this neighborhood: Innovators are the #1 segment in Carmel and the #3 segment in Westfield. Located at the VALS chart, Innovators embody characteristics of all three basic motivation styles. When thinking about their primary drive, their name says it all they want to innovate. Thus, it is difficult to see an Innovator being attracted to such a traditional community as this neighborhood, no matter how nice it is. Carmel s many Innovators are buying in the Village of West Clay and in the many new townhome developments in the area. Achievers are the #3 segment in Carmel and the #2 segment in Westfield. Achievers want their peers to approve of them. They would like their home and neighborhood to be impressive, relative to local norms. In Carmel, that s a pretty high bar. At the same time, they are fairly conventional, value stability, and are basically satisfied with the status quo (since this tends to generate approval from others) i.e., they don t want anything that s too different. Having the right products and brands are more important than saving money. Right now, it would be difficult to call this an impressive neighborhood, given the high standard of excellence in the area. A higher elevation level should be introduced, which should both be brick and impressive. Also, a more impressive entrance on 146 th St. is called for, since that s the main entrance for the models. However, it may be advisable to steer traffic from south, since it makes the neighborhood feel like part of a more impressive area. This require some investment of additional models or specs so the model area doesn t feel like such an outpost. Another advantage of this is that the appearance of construction momentum is particularly important for this group, since if my peers are buying here I should too. Source: VALS TM, SRI Consulting/Business Intelligence (SRIC:BI),

31 How do I apply this to my situation? Study the make-up of VALS types in your community. Any surprises? Think of your community as a product. What does it have to offer the various VALS types? Is there anyone you want to attract more? Or less? How could you change your product your community to do so? Is there anything about your community that you now see as unlikely to change, based on its VALS types? Be realistic. Is there an issue in your community that you have been trying to explain, or something you want to promote? Now that you know about your community s VALS types, does this make you consider changing your strategy?

32 Potential implications for transportation Since VALs types can be used to predict the choices people will make, they can be used to develop alternative forms of persuasion based on the predominate types of citizens in your community: Principle-oriented Principle-oriented Status-oriented Action-oriented For example, if you are trying to promote the use of public dollars for mass transit, you might develop different arguments for the basic types, as shown on the following slides.

33 Example of a Transportation Case for the Status-Oriented Did you know that Indianapolis is the only city in the top 20 cities that doesn t have a mass transit system? Research shows that businesses making location decisions may discount Indianapolis is this respect.

34 Example of a Transportation Case for the Principle-Oriented Mass transit is important to ensuring that all citizens have equitable access to jobs and housing choices. Research shows that the proposed system is the most efficient in terms of public resources.

35 Transportation Case for the Action-Oriented Imagine being able to board the (catchy name) and leave your car behind. Take it to work and use the time to read, text or catch up on your Zs. Take it to Colts games or concerts and never worry about parking or traffic. When you return, stop for a bite to eat or pick up a couple items at the local store, conveniently located in the Village Center surrounding your stop.

36 Potential implications for housing and land use Since VALs types can be used to predict the choices people will make, they can be used to develop alternative forms of persuasion based on the predominate types of citizens in your community: Principle-oriented Principle-oriented Status-oriented Action-oriented For example, it is useful to consider what might be the housing and land use preferences of each group, as seen on the following slides.

37 Examples of Housing and Land Use Preferences of the Status-Oriented Achievers are interested in showing others what they have achieved. Carmel City Center is a manifestation of achievement. In a residential context, Achievers want to have a home that will be impressive RELATIVE TO THE SOCIAL CIRCLE THEY ARE IN (not necessarily what we all would consider impressive). It might be larger than average and with a more impressive exterior. They are more likely to value brand names. They would like their communities to emulate what they have seen in their travels, as long as it s not too different.

38 Examples of Housing and Land Use Preferences of the Principle-Oriented Principle-oriented individuals may be more likely to believe in the importance of equity and support programs that improve equity among citizens, for example annexation or certain tax proposals. They also are financially conservative, and will need to be convinced that proposals are a good value. However, they are be savvy enough to define value broadly, as what you get for your money. Thus, they can be convinced to pay more for improvements that improve durability (like high quality materials) or functionality.

39 Examples of Housing and Land Use Preferences of the Action-Oriented Action-oriented individuals will appreciate public amenities such as parks and trails. When it comes to retail environments, they are more likely than other groups to appreciate the environment of the lifestyle center compared to a typical development. Depending on the personal preferences, they may be more likely to prefer urban or rural environments. Their homes are likely to be on the small side but with enough space devoted to entertaining indoors and out.

40 Summary of how to use VALs to influence decisions in housing and land use If you want to encourage new forms of housing or land use, sell it to the Innovators, who are early adapters. If you want to address the status-oriented, remember they want to look impressive to their peers. If you want to address the principle-oriented, be very prepared with your arguments and address concepts like the greater good, value, functionality, and durability. If you want to address the action-oriented, appeal to their desire for unique experiences, tactile experiences, and socializing. If you find that you have more Survivors than you realized, then realize that probably no one is addressing their needs.

41 Works Cited Bauer, M. (2008). Household Life Cycles & Life Styles: An Extended Replication Study based on German Socioeconomic Panel Data. Du, R.Y. and Kamakura, W.A. (2006). Household Life Cycle and Lifestyles in the United States, Journal of Marketing Research, Vol. 43, pp Epple, D.; Romano, R.; and Sieg, H. (2007). Household Life Cycle Location Choices and the Dynamics of Metropolitan Communities. National Science Foundation. McCarthy, K. (1976). The Household Life Cycle and Housing Choices. Santa Monica, CA: The Rand Corporation. SRI Consulting/Business Intelligence (SRIC:BI) (2009). VALS. Retrieved at SRI-BC wesbsite on October 15, 2009 from: Van Imhoff, E.; Kuijsten, A.; Hooimeijer, P.; and Van Wissen, L. (1995). Household Demography and Household Modeling. New York: Plenum Press.

42 About the Speaker Jennifer L. Milliken, AICP is Owner/Principal of J Milliken Consulting, which integrates principles of planning and market research to help clients make informed decisions about land use and real estate. Jennifer s areas of expertise include: realistic assessment of demographic, social and economic trends; inclusive and comprehensive methods of public participation; development strategic positioning and marketing recommendations for communities and real estate developments; and developing planning and zoning solutions that address the needs of diverse stakeholders. Jennifer is also active in the Indiana chapter of the Urban Land Institute and is currently managing that organization s annual Real Estate Trends survey.