Identifying Consumer Types

This resource is aimed at Unit 11 of the BTEC Business course, 'Introduction to Marketing'.

Aims

For any business, having information about who your customers are, their behaviour, location, habits and so on is important in planning and marketing. The techniques now used to gather such information are very sophisticated and demonstrate the importance of the knowledge-driven economy. Having knowledge of your consumers represents some element of power!

This resource will look at the main classifications of consumer types and some of the techniques that a business might employ to gather information about their consumers.

Task 1

To start this section, think about your own family and their circumstances:

What is the combined income level of your family (i.e. the incomes of your parents/guardians where appropriate - this need only be a broad categorisation)?
Where does your family do their main grocery shopping?
How many times a month does your family go shopping for non-food items?
What are your family's five favourite non-food shops?
Does your family have an Internet connection?
Where does your family live?
What type of accommodation do you live in?
Does your family own their own home?
What is the age range of your family?
What sporting and leisure activities do your family enjoy?

The above are typical questions that any market research survey might seek to find out. It represents basic information about consumers that any business would be interested in knowing. Such information allows the business to be able to classify customers in different categories called market segments.

Image: two guitar magazines - but the target audience is quite different. To help meet the needs of the target group, the business will need to know the customers very well. How does it find out this information?

Task 2

Choose TWO products and make an assessment of the likely market segments according to the classifications above, using the table below. We have completed one for you as an example. It does not matter whether you are 100% right on this - just make an educated guess but think through the information carefully.

For a printable version of this table, please go to this page. (/educators/16-19/business/marketing/activity/consumer12.htm)

Once you have completed the table above, you will have built up some useful information about your customers that can help in developing the product and targeting the market to maximise sales and exposure. Let us use the example we have given in the table to illustrate this.

Total Guitar

Total Guitar Magazine is one of a number of titles directed at particular interest groups produced by Future Publishing. Look along any magazine racks in newsagents and many of the titles will be from this company.

Total Guitar and Guitar Techniques used to be very similar in style. Both covered a range of different guitar styles and aimed to target a market that encompassed a broad range of consumers. The magazine includes reviews of equipment and guitars, advice pages, news, reviews, articles about specific bands and transcriptions of songs for the aspiring guitarist to help them learn the instrument.

In 2003, the magazine took a subtle change in direction. It began to focus more on music that was associated with a younger audience. The emphasis was more on Slipknot and Metallica rather than Eric Clapton and Dire Straits.

Image: The consumer profile of the typical U2 fan is likely to be quite different from that of a fan of Korn or Blink 182. Total Guitar can exploit this specific market segment to help boost its sales. Copyright: Roel van der Ven, stock.xchng

The whole tone of the magazine has eventually changed to target a different audience. Its sister magazine, Guitar Techniques, still aims at the broader market range incorporating a range of different music styles but Total Guitar has moved to providing more focus on thrash metal, shred, heavy metal and so on as its basic offering.

This allows the magazine to also change the focus it has on other revenue earning elements, for example, advertising. The magazine incorporates adverts from other businesses as a means of subsidising the cost of production. By targeting a particular market the magazine is able to be more attractive to certain advertisers who are looking to capture this audience. This might include companies selling equipment, music companies wanting to promote particular CDs and DVDs, gigs, clothing, other music magazines like Kerrang, merchandise and accessories.

The style of the magazine is also tailored to the audience. It has a slightly chaotic and anarchic feel to it and the language used is designed to be in tune with the demographic of the target market. In addition, the magazine is trying to utilise the interests and lifestyle of its target market to maximum effect. Instead of producing just a CD of the transcriptions, the magazine is moving to providing DVDs which incorporate video clips to help expand the usefulness of the magazine. Providing such additional value added items is of little use if your market is not well versed in the use of such technology.

Task 3

Having outlined how Total Guitar has used the information from its target market to frame how the product is designed and delivered as an example, see if you can do the same thing for ONE of the two products you have looked at in Task 2.

Market Information

Gathering information on customers to provide a profile of the likely characteristics of the segment has grown in sophistication in recent years. In addition to the information that is available via primary market research, there are a growing number of secondary sources of information. An obvious one is The National Census. This is carried out every 10 years and provides a wealth of information for businesses to use. (http://www.statistics.gov.uk/census/)

In addition to this, there are a number of organisations that will provide detailed information about markets and particular products and services. One of the most well known of these is Mintel (http://reports.mintel.com/). If you wanted to find out some information about the market for adult soft drinks in the UK then Mintel has a report that will tell you virtually everything you need to know about that market. Alas, this sort of information comes at a price and you will have to pay nearly £1,000 to get it. For a business, however, this sort of money can represent a very cost effective way of getting detailed information about its market and its product.

Want to know more about the market for people who consume soft drinks or the bagged salad market? For a price you can find out plenty! Copyright: Selma Yalazi, stock.xchng

There are other sources that have developed to provide business information. Up My Street (http://www.upmystreet.com/) provides a range of information on local neighbourhoods. This information might be used by an individual wanting to check out property prices, local restaurants, schools and so on. Businesses will provide information targeted at particular post codes to facilitate contact between the consumer and the business.

For example, if I wanted to check out electricity or gas suppliers in my area, whether I can access broadband, digital TV, information about home insurance and so on, I can enter details about myself via their Web site and be directed to a particular business that can offer the things I am looking for.

Businesses can also buy information from specialists in the field. Experian (http://www.experian.co.uk/) compile information about credit worthiness of individuals along with all manner of details about customers and their characteristics. By using the expertise that Experian has, a business can find out who their customers are, their behaviour and buying patterns, and all the factors we identified in the list above. In so doing, the business can make informed decisions about promotion campaigns, investment in advertising and marketing to maximise the return on the investment - in other words, generate maximum sales revenue in relation to the cost involved.

Companies in the field of knowledge generation and information transfer know a vast amount about us as individuals and as groups. Businesses can buy this information to help their marketing strategies and planning. Copyright: Simon Brander, stock.xchng

Experian has developed a product called Mosaic that helps identify market segments. The product classifies 24 million households in the UK into 11 groups, 61 types and 243 segments. You can get some idea of the depth of the detail involved by going to the Mosaic UK homepage (http://www.experianbs.com/Content.asp?ArticleID=566) and selecting the link to the Mosaic UK group and type descriptions.

A similar organisation providing information is CACI. CACI have developed what is called a geodemographic tool called ACORN (http://www.caci.co.uk/acorn/) to help businesses get information about, and understand, their consumers. ACORN classifies 1.9 million UK post codes and generates 287 different lifestyle variables that a business can use to profile its customers.

You can get some idea of how it works by using the trial facility. I entered my postcode into ACORN and found out, amongst other things, that people in my postcode area have a higher than average likelihood of using a PC, are more likely to use online shopping, highly likely to use a PC for home finance and have a laptop! I could have gone into more detail not only about PC usage but also about credit cards, holidays, insurance, eating out, cars, etc. etc.

Task 4

Select one of the products you identified in the table in Task 2 above. Use the ACORN trial facility to build up a profile of the target customers that you identified in relation to your local area.

Example:

By using the lifestyle and demographic topic sections from ACORN, I can tell that there is a tendency for my area to have a higher than average proportion of people in the 45 - 64 age range; there is a much higher than average likelihood that the people in my post code area will have a degree or higher qualification; that they are likely to be Christians as opposed to any other religion and that they are more likely to have a household structure that includes two non-pensioners and dependent children. I can also tell that people in my area are more than likely to spend more than £250 on credit cards per month and are likely to have a family income in excess of £50,000 per year!

Build up a profile of the typical customer in your area by using all the categories in the lifestyle topic and all those in the demographic topic. Do this by taking the highest and lowest average figures quoted. You can then get something like this:

Consumers in my area are most likely to be Christians and least likely to be Sikhs, they are most likely to be in the 25-45 age group and least likely to be in the 0-4 age group; they are most likely to have a family income of £45,000 and above, and will tend to donate money to charities associated with animals and so on.

You could present this in the form of a table with 'most likely' on one side and 'least likely' on the other.

Having done this, write a short report of 500 words analysing the relevance of the market in your area to the product you have chosen. Your report should include a recommendation about whether this area represents one that should be targeted by the business in its marketing strategy or not and why.

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