Beyond Design. By Sandra J. Keiser and Myrna B. Garner. PowerPoint developed by Elizabeth Law

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1 Beyond Design By Sandra J. Keiser and Myrna B. Garner PowerPoint developed by Elizabeth Law

2 Copyright 2009 Fairchild Books All rights reserved. No part of this presentation covered by the copyright hereon may be reproduced or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, or information storage and retrieval systems without written permission of the publisher. ISBN: GST R

3 Consumer Chapter 3 Beyond Design

4 Chapter Objectives Understand evolution of markets from production focus, marketing focus, and consumer focus Discuss data sources used to segment market-place Understand tools available for researching target markets 4

5 Chapter Objectives Examine how product developers define target markets Examine how marketers communicate with their target market Recognize current consumer trends in U.S. and global marketplace 5

6 The Consumer-Producer Relationship Central to product development Relying only on demographic and psychographic classifications not enough Consumer is more pragmatic, less spontaneous, and less brand loyal Marketplace increasingly diversified Innovation, creativity, and service are required to connect with consumers 6

7 The Consumer-Producer Production Era Relationship Product output was limited Goal of most companies to increase production in order to keep up with demand Evolved into sales era 7

8 The Consumer-Producer Sales Era Relationship Businesses manufactured and sold product without first determining consumers wants and needs Up to sales force and advertising to convince consumers they needed products 8

9 The Consumer-Producer Marketing Era Relationship Companies research consumer preferences and appeal to preferences through advertising Input gathered from consumers used to make decisions on design, price, distribution channels, and promotions Competition to produce products grew and supply began to exceed demand 9

10 The Consumer-Producer Marketing Era Relationship Late 1970s into 2000s Wave of business mergers and acquisitions created conglomerates with large marketing and product research and development departments Create demand by saturating market through advertising (i.e. Calvin Klein) 10

11 The Consumer-Producer Marketing Today Relationship Firms spend large $ on advertising to create consumer demand Consumers immune to heavy-handed advertising and have access to tools to block ads (TiVo, spam blockers) Consumers create buzz by Internet research and seeking out other consumers with similar tastes 11

12 The Consumer-Producer Today s Consumer Relationship Balances career with family; young people, men more involved with shopping Seeks discounts when available but may be willing to pay more for better quality, personal service, newest item Expects to find what they want with minimal time and energy but don t want to look like cookie-cutter clones 12

13 The Consumer-Producer Relationship To develop consumer intimacy, a developer must: Develop an individual knowledge of consumers Create environment where consumers come first Create organizational structure where innovation and imagination are rewarded 13

14 The Consumer-Producer Relationship Entering consumer era Producers provide products tailored to consumer preferences As consumers invest time in teaching a company about their preferences, they form a partnership which will ultimately give company competitive advantage 14

15 Consumer Analysis and Market Segmentation Target market well-defined customer group to which a business wants to sell Necessary to find out as much about consumers as possible Capture and use of consumer data will be the competitive weapon of the future; focus on core customer 15

16 Consumer Analysis and Market Segmentation Market segmentation Breaking down markets into increasingly smaller, welldefined markets Niche market A market that appeals to a narrowly focused target customer 80/20 principle 20% of customers typically account for 80% of sales for a product 16

17 Demographics Statistics about a given population Used to reach target market effectively by learning about preferred customers Federal Census of Population publication can be broken down by zip code to enable companies to distribute and sort products 17

18 Demographics Demographic Age Gender Marital status Family size Income Spending habits (CPI) Occupation Education Religion Ethnicity 18

19 Sources of Demographic Data Census Data Local Chamber of Commerce Claritas 19

20 Applications and Limitations of Demographic Data Available by region/city, county, state, and zip code, providing snapshots of specific populations Allows developers and retailers to assort product to specific regions Used by chain stores entering new market; guides stocking of store, editing advertising Limitation too broad for small markets, specialized product categories, quickly dated 20

21 Psychographics The study of social and psychological factors that influence consumer lifestyles Social aspects of lifestyle reference groups, life stage, and activities Psychological aspects personality, attitudes, level of class consciousness, and motivation 21

22 Psychographic Tools Factors difficult to measure because they are subjective Obtained from actual reports or by data mining apply computer programs to data from credit applications and purchase history 22

23 Psychographic Tools Marketing tools VALS segmentation system LifeMatrix Monitor MindBase Behavior Graphics All use different assumptions and psychological profiles to sort consumers 23

24 Generational Cohort Groups Cohort Groups - each generation characterized by its own unique set of values and behavior; shared life experiences in formative years Generational marketing - study of the values, motivations, and life experiences, influencing how they spend and save money 24

25 Generational Cohort Groups Insert Table

26 Generational Cohort Groups A product and marketing approach that reaches one generation may be ineffective with another Generational characteristics evolve as each generation matures through different life stages Retailers and product developers must make adjustments to stay relevant 26

27 Market Research Tools Quantitative research objective methodology in which data are collected about a sample population and analyzed to generalize behavioral patterns Qualitative research more subjective and relies on methodology such as observation and case studies in which experiences are recorded as a narrative to describe observed behaviors 27

28 Environmental Scanning Interpretation of political, economic, demographic, social, and psychographic forces as they affect consumers motivation to buy Free online newsletters track articles in publications and provide hyperlinks 28

29 Point-of-Sale (POS) Data Use of software, scanners, and universal product code (UPC) to capture data regarding style, size, and color Information shared throughout the supply chain by electronic data interchange (EDI) 29

30 Point-of-Sale (POS) Data Success depends on accurate data entry-- referred to as data integrity Data enables product developers to analyze performance of products down to individual stock keeping unit (SKU) by store and time period 30

31 Data Profiling and Data Mining Data profiling gathering, assembling, and collating data about people in databases Data mining Computer analysis of data to identify, segregate, categorize, and make decisions Data profiling and data mining are valuable tools in developing automatic replenishment and attribute replenishment systems 31

32 Data Profiling and Data Mining Data warehouse collected from transactions over time can be used to predict patterns, trends Can customize store merchandise assortment to ensure better sell-through at full price 32

33 Engaging the Consumer Video Documentation Focus Groups Surveys - systematic gathering of information (sample group) Online surveys most common; increasing concern about cookies, but least expensive data collection Options - questions at purchase point, gift 33

34 Style Testing Allows retailers, consumers to view early prototypes and offer opinions Group of buyers from biggest retail accounts Buyer input over the Internet Marketing firm that collects consumer profiles who give out samples to a select group Laboratory stores or test stores Fall transition season and resort season 34

35 Style Testing Wear-testing - variation of style testing Important research tool, especially in active sportswear, where performance is key Adidas Sponsors athletes who wear its apparel and uses them in catalog shoots; then they evaluate collection item by item Also relies on employees for wear-testing 35

36 Marketing to Consumers Print advertising Screen-based marketing Product placement Celebrity exposure Word-of-mouth marketing creating buzz Causes and special events 36

37 Marketing to Consumers Innovative retail formats pop-up stores temporary stores opened to showcase new product or format, or to introduce a new brand or retailer Direct selling bypasses retailers 37

38 General Consumer Trends Time as a commodity Fashion independence Comfort Importance of fit Masstige convergence of mass market and prestige retailing Casual dress Wear-now clothing 38