This article will provide an overview and analysis of the history and current relevance of the consumer demographics movement, and related practices, such as psychographics, in market research. Business applications of consumer demographics will be discussed. In addition, the issue of globalization's effect on consumer demographics, and market research in general, will be covered. The phenomena of global consumers, global brands, and consumer ethnocentrism will be introduced.
Keywords Consumer Demographics; Consumer Ethnocentrism; Global Brands; Global Markets; Globalization; Market Research; Psychographics
Economics: Consumer Demographics
Consumer demographics, which include categories such as age, ethnicity, gender, income, mobility, education, and social class, are considered to be predictors of consumer behavior, habits, and patterns. For example, variances in customer gender and income predictably result in higher sales in certain markets and lower sales in others. Consumer demographics are generally considered to be either antecedent or non-antecedent in nature. Antecedent demographics, such as gender, race and nationality, refer to socio-developmental processes that may influence an individual's intellectual and emotional responses to consumer choices. Non-antecedent demographics, such as student-status, home-ownership status, and political affiliation, refer to identities added during the lifecycle.
The field of market research uses consumer demographic data, and related tools, to accomplish the following value-added processes (Claxton, 1995, ¶1):
- "Identify meaningful new market segments."
- "Fit products to individual needs more closely."
- "Build better relationships with the many facets of today's complex consumer."
Consumer demographics, as a tool or a statistical grouping, are part of a larger effort to study and gather information about the consumer. Areas of related consumer study include consumer behavior, consumer characteristics, lifestyle attributes, life-cycle consumption, market segmentation, target demographics, psychographics, and consumer price knowledge. Market researchers use polls, surveys, and tracking technology to gather demographic data.
Consumer demographic data is an important tool used by marketers and advertisers in the brand-making process. Marketers create brand through a two-step process: marketing mix and marketing implementation. Marketing mix refers to the process of researching customers and "formulating the policies for new product and service developments, distribution channel choice, pricing strategy, marketing communications, and customer servicing. Marketing implementation refers to the process of delivering products and services to consumers, and involves such activities as production, supply chain management, logistics, employee training and motivation, advertising and promotions, and sales and after-sales service" (Gelder, 2004).
Consumer demographic data is gathered in the private and public sectors alike. Multinational corporations, such as Citibank and Coca Cola, depend on consumer demographic profiles to target segments of the population with appropriate advertising campaigns and estimate consumption and distribution needs. Non-profits such as the Association for Consumer Research exist to advance consumer research, in areas such as consumer demographics, and facilitate the exchange of information among members of academia, industry, and government. Government agencies, such as the U.S. Department of Labor's Bureau of Labor Statistics, collect consumer demographic data on the U.S. population. The Bureau of Labor Statistics collects consumer demographic data on thirteen standard characteristics such as income quintile, income class, age, size, composition, number of earners, housing tenure, type of area, race, Hispanic or Latino origin, region, occupation, and education. The Bureau of Labor Statistics creates the Consumer Price Index, which is a measure of the average variation over time in the prices paid by urban consumers to buy a market basket of consumer goods and services in order to quantify urban consumption of food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.
Consumer demographics, and market research in general, is increasingly important in the new global economy. Consumer demographics, in the global market, are a tool used by applied market researchers and corporations to maintain or increase market share. Controlling market share, which refers to the fraction of industry sales of a good or service controlled by a certain company, is becoming increasingly competitive in the global marketplace.
The following section will provide an overview and analysis of the history and current relevance of the consumer demographics movement in market research. This section will serve as a foundation for later discussions of the business applications of consumer demographic and the rise of global consumers and global brands.
History of Consumer Demographics
The study and use consumer demographic data as a marketing and advertising tool began in the early twentieth century. Studies of consumer behavior began at the same time as mass-circulating, advertising-sponsored magazines. Consumer information became crucial currency in advertising and media industries of the early twentieth centuries. From 1910-1940, weekly magazines, such as "Ladies' Homes Journal,""Woman's Home Companion,"and "Harpers Bazaar," promoted their magazines to advertisers as being representative of a certain kind of consumer. Magazines and publishers established research departments to collect data on the income and demographics of their audience. Magazine surveys, in which readers were asked to report information on family size, occupation, size of home, gardens, domestic help, car type, meal planning, leisure time, and food preparation, became common. These surveys were transmuted into reports on consumer demographics, behavior, and purchasing patterns.
During the 1930s, the growth in radio broadcasting facilitated the growth of national consumer rating research and the development of a standardized consumer typology, called the ABCD system, used to differentiate households according to income. Income data was thought to provide associated information about lifestyle and politics. The ABCD consumer income typology included the following categories.
- A: Homes of substantial wealth
- B: Comfortable middle class homes
- C: Industrial homes of skilled trades people
- D: Homes of unskilled laborers
The ABCD income system influenced the development of the Cooperative Analysis of Broadcasting (CAB) survey approach and the Nielsen ratings index. The ABCD, and its later incarnations, allowed for standardized and targeted marketing efforts. The ABCD system's popular use in market research declined in the years following World War II. In the years following WWII, American society changed in three major ways:
- Creation of consumer culture: Post WWII years were characterized by a rise in the standard of living, new materials and designs, shopping malls, and new appliances.
- Popularity of television: Post WWII years were characterized by the ubiquity of television in American households. The rise in the popularity of television transformed American media consumption habits and patterns. Television became the main conveyor of advertising messages.
- Focus on lifestyle: Post WWII years were characterized by the emerging awareness of lifestyle. The rise of consumer culture and new media culture created new focus on youth culture and leisure time.
In responses to these three changes or shifts in American society, market research grew in size and sophistication. In the 1950s and 1960s, market research expanded in an effort to gather more and better information about consumer behavior. During the 1960s, market researchers began to abandon the idea (as typified in the ABCD income system) that demographic data was the only or most important measure of consumer patterns or predictor of consumer behavior.
Market researchers began to conduct consumer motivation research which was characterized by the notion that...
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