Written Reports

In
Principles of Marketing

Submitted by: 12 – ABM A

Martinez, Jude Lareza, Angela

Ramboyong, George Edmar Mirabite, Shaira

Cabalquinto, Erika Requiz, Patricia

Del Vale, Medji Salamanque, Jane Carla V.

Submitted to:

Roland Amistoso
 Chapter 3
Lesson 1: Market Segments and Consumer Behavior

This chapter covers the matter of market segmentation and how consumer behave, whether the
may be individual consumers or institutions that are looking for industry partners.

Clear Scalp Shampoo: Powering up an Undeserved market segment

Unilever’s Clear became a successful shampoo product almost immediately upon it's launch (capell
2008). It was accomplished by focusing primarily on what was a relatively quiet and complacent
market segment: dandruff control for men. In an industry where nearly brands focused on woman,
this became a strategic opportunity for significant growth Clear was launched with an aggressive
marketing campaign that caught P&G by surprise. The products suddenly rekindled interest in the
segment, reenergizing it, and giving men the kind of masculine shampoo that they have been
searching for.

Factors that Affect Consumer Behavior

The way that we perceive, react, or are affected by products and services is a function of a host
of factors. The following are factors that tend to have an effect on consumer behavior.

Culture - culture, sub-culture, and social classes. This refers to the general or overall culture of a
group of people.

Social Factors - reference groups, family , roles and status. This is all about the norms of
behavior among even smaller groups, namely the social groups where a consumer belongs to.
 Personal Factors - age, life cycle, occupation and economic circumstances. Aside from external
social factors, the demographic of the individual also affect the manner by which product and
services are viewed and treated.

Psychological Factors - motivation, perception, learning, beliefs and attitude. This is how
individual behaves is a very intimate thing. It is the result of how we are raised, who we interact
with, what our histories are, and much more.

Culture, for one can heavily affect product design and marketing. Often, because we believe so
strongly in the wisdom of our "crowd," we do not even bother to step back to asses whether or
not our beliefs are in fact sound.

Income vs. Socio-Economic Class

Income is a personal demographic factor and Socio-Economic Class (SEC) is a social

factor.

Income - is a factual numbers. It answers the question of "How much do you earn? or How
much is your household family income?"

Socio-Economic Class (SEC) - is an indicator of the kind of group that consumer feels he or she
belongs to. It is a social factor in the sense that it reflects the consumption reality that individual
strongly believes in.

For the longest, Socio-Economic Classes have been typically defined as follows:

A Prime the wealthiest class

AB upper income class
Upper C upper middle class
Broad C broad middle class
Lower C lower middle class
DE lower classes

Here are some examples on how the different socio-economic classes typically behave
and how products and services adapt to them:

• The wealthier the SEC class, the greater the need for personal space. Larger houses, less
crowds, and greater appreciation of open spaces and "negative space" (blank areas) characterize
the more premium clients. Malls are attract lower income groups, on the other hand l, encourage
very high traffic because they make money through volume rather than through high profit
margins.

• Products that target the broad market are advertised in Filipino, while products that cater to the
more upscale markets are in English.

• For fast moving convenience goods to reach the mass market, distribution channels have to be
extensive and neighborhood-driven, as well as focusing on public markets and convenience
stores.

In 2012, the Marketing and Opinion Research Society of the Philippines (MORES)
endorsed the migration from the previously mentioned letter-based classification for SECs (that
has been very commonly used in industry) in favor of a new model that classifies Philippine
consumers into nine classes, from 1 (lowest spenders) to 9 (highest spenders). The model reveals
the Philippine population distribution by spending class as follows: (Bersales et al. 2013)

Under this new classification, E will approximately correspond to class 1, while D will
approximately correspond to classes 2 and 3. The middle class take up the bulk of the scale, with
Upper C being approximately class 8 while class 9 approximately corresponds to the traditional

This new scaling, however, does have its limits. For one thing, it does not (yet) segregate
the "ultra rich" from the "rich" in class 9, whereas the behaviors of these two groups are very
different.
AGE vs. LIFECYCLE

Age is just a number, whereas where consumers currently are in their lifecycles pretty
much determine what products and services they will likely spend on.

The following are the generally accepted lifecycle stages:

Bachelor Stage young, single, and independent

Newly Married Couples young, no children, also known as DINKs (double income,
no kids)

Full Nest I families with children, with youngest child six years or
older

Full Nest II families with children, youngest child six years or older

Full Nest III families with dependent children

Empty Nest I older married couples, no children living with them

Empty Nest II older married couples, retired and no children living with
them

Solitary Survivor I older, no family, and supporting self

Solitary Survivor II older, no family, and retired

For instance, Bachelors will likely spend a lot on personal effects such as portable
electronic devices and clothes. Newly Married Couples will tend to spend a lot of furnishing
their homes, dining out, and travel. But ones they evolve into a Full Nest, they will tend to
prioritize spending for the children, such as clothing, education, and cut spending on items that
they used to buy. Meanwhile, the Empty Nest stage typically sees the couple suddenly flush with
newly disposable income because they are no longer supporting their children and this leads to a
resurgence in personal spending, including sports cars (for the men) and personal pampering (for
the women).