A new way to understand consumer psychology. Anne-Marie Wong, 31, a pediatrician, and Yanik Wagner, 38, a photographer, both live in Manhattan's Greenwich Village neighborhood, just two blocks apart. They share many similar patterns of consumer behavior - both use Colgate toothpaste, own iMacs (one graphite, one tangerine), drink Starbucks coffee, belong to health clubs, and use the Internet several hours a week. To a marketer examining their brand preferences and lifestyles, their consumer profiles would be very similar, and they would be prime targets for identical product pitches and marketing messages.
However, while Wong's and Wagner's consumer profiles are alike, they are, of course, two unique individuals. In fact, when you dig below their superficial spending patterns, it becomes readily apparent that they have widely divergent lifestyles, political and social beliefs, outlooks on life, and reasons for choosing the brands they do. Because of these differences, each responds to marketing messages in a different way. For a marketer wooing them for a particular product or service, it would be more effective to approach them as individuals, not consumer clones.
This is one of the challenges facing traditional consumer segmentation systems, which group people together by demographics, geography, and consumer behavior. "Really getting into the mind of the consumer is obviously the `holy grail' of marketing," says J. Walker Smith, president of Yankelovich Partners Inc. And Smith believes he has come up with a unique tool for marketers in their quest to get inside the consumer mind: Yankelovich's new psychographic segmentation system, called Monitor Mindbase.
There are numerous commercial segmentation tools available to marketers today - the latest EPM Consumer Segmentation Survey lists 60 - which slice and dice the American public into a multitude of classes, categories, and clusters. Segmentation has become somewhat of a cottage industry among market researchers, and the introduction of a new one could be yawn-inducing. However, Mindbase is premised on the idea of segmenting individuals by values, attitudes, and mindsets, rather than by geography, demographics, consumption patterns, and brand preferences. In essence, the program sets the ambitious goal of uncovering the underlying psychology of consumer behavior, on an individual level, in an actionable, database-compatible format. It does this by segmenting people into categories of consumers with varying degrees of materialism, ambition, orientation to family life, cynicism, openness to technology, and a host of other elements.
Marketers have used specialized segmentation techniques to find the most fruitful target audiences since Jonathan Robbin, the founder of Claritas Inc., created the PRIZM (Potential Rating Index for ZIP Markets) clustering system in 1974. Robbin, considered the father of geodemography, grouped people who had similar demographics and lifestyles into neighborhood clusters, on the theory that "birds of a feather, flock together."
A slew of similar programs have popped up to compete with PRIZM - such as CACI's Acorn and SRI's VALS - all based on the premise that people in the same zip code or neighborhood tend to buy the same products, prefer similar brands, and use the same media. VALS (Values, Attitudes, and Lifestyle Survey), like Mindbase, strives to segment consumer psychology, but does so only on a larger neighborhood basis, while Mindbase reaches the individual household level. Smith points out that, "While two families on the same block may appear similar based on demographics, their perspectives of the world around them will influence how they respond to messaging." Understanding these perspectives on an individual level can provide important insight into how and why one person will respond to a particular message while others in the same geographic segment do not.
In creating Mindbase, Yankelovich examined four years of in-depth data on American values and attitudes from its annual Monitor survey - a comprehensive study of American opinions on topics such as government, health, sex, business, and religion, which it has carried out since 1971. From this data, Yankelovich identified eight major consumer groups with shared life attitudes and motivations. These eight groups were further divided into 32 distinct sub-segments for greater differentiation and clarification. "We conduct 2,500 interviews a year for Monitor, which is one of the last door-to-door surveys in America," says Doug Haley, chief knowledge officer at Yankolovich. "Each survey lasts about 2 1/2 hours, so we have really gained some deep insights into the American psyche, and consumer mindset."
Haley believes that while databases devised on a geographic or consumer behavior model are highly valid, "there is an increasing diversity in values among people who live closely together." Further, knowing that someone is a frequent consumer of a product or service doesn't explain the story behind their purchase pattern, and understanding this motivating factor is a key benefit of the new segmentation system. Geographic models can be successful in locating prime targets, while this psychological model can provide guidance in tailoring the right message to the right audience. For this reason, Yankelovich encourages use of Mindbase in conjunction with other segmentation systems, such as PRIZM.
Three of the eight main groups created by Mindbase are predominant among Generation Xers: Up and Comers, Young Materialists, and Stressed by Life. Boomers comprise the New Traditionalist, Family Limited, and Detached Introvert segments. The Renaissance Elders and Retired From Life groups constitutes the elderly population. Mindbase distinguishes many important psychographic differences among the groups (see chart for in-depth segment descriptions).
Understanding these mindset segments can be very helpful in crafting the creative in advertising, direct mail, and other targeted marketing material. For example, a cross-selling opportunity for a financial-services product can be improved by understanding the type of message each recipient will best respond to. "While saving for college is considered an obligation for the Family Limited segment, it's more of a pleasurable reward for having successful kids for those in the New Traditionalist segment," says Smith. "This obviously would affect how you should market an educational investment product."
One of the key attributes of Mindbase is its ability to use third-party data, from providers such as Acxiom or Experian, to glean which Mindbase segment each customer in a client database falls into. For example, one Yankelovich client who tested Mindbase earlier this year was a regional bank, which was introducing of a new set of investment products. After overlaying a set of third-party data onto the bank's client list, Yankelovich used that information to categorize each client into a Mindbase segment. It found two prime targets for the mailing: New Traditionalists and Detached Introverts.
Both groups had frequent bank interactions and above-average transaction values. Taking into account their Mindbase characteristics, New Traditionalists were targeted with a message emphasizing the presence of local experts who could manage the investments of busy customers. Meanwhile, Detached Introverts received a message highlighting the ability to access balances and manage transactions via computer. The test found that using this targeted messaging resulted in a 2 to 4 times better response rate than a control sample of random bank customers with similar transaction activity, depending on the creative material used in the mailing.
According to Kirk Boothe, a principal at IBM's Business Intelligence Financial Solutions unit, "Ten percent of a bank's customers provide 120 percent of their profits." Finding this group by data mining and segmentation is critical. "In the near future, every business will be a database business," predicts Smith. "This was a trend anyway, but it has only been intensified by the Internet," where every business can be conducted on a national or global scale.
Internet businesses are marketing to consumers they have little or no first-hand knowledge of, and customer intelligence is vital to understanding their needs and desires. Consumers who are subject to an increasing number of marketing messages every day, will filter out any messages that do not appeal to their basic attitudes and mindsets. Understanding not only past purchase behavior, but the values and self-perception of your target consumer, could be an essential aspect of capturing their attention and disposable dollar.
The Eight Major Mindbase Segments Generation X. Young, single, no children. Average incomes. Ambitious, optimistic, and social. Receptive to new technology. Socially conscious, style-conscious, and novelty-seeking. Perceive themselves as intelligent, creative, attractive, and funny. Do not view themselves as neighborly or old-fashioned. Ideal targets for products and services which offer something new.
Generation X. Young, single, no children. Average incomes. More men than women. Believe money and success equal happiness. Low level of social consciousness, highly self-focused, don't enjoy socializing. Perceive themselves as adventurous and attractive, not practical, spiritual, or open to new ideas. Highly stressed and style-conscious. Enjoy shopping. Prime targets for products and services that make them feel important and successful, as well as fun and stylish.
Generation X. Young, mostly female, often unmarried, parents with lower incomes. Have a strong desire for novelty to help escape stress of daily life. Enjoy spending time with family and friends, watching movies, and playing games. Receptive to new technology but cynical about changes it brings. Perceive themselves as family-oriented, funny, and attractive, but not practical or old-fashioned. Good targets for products and services which offer to reduce stress and escape from reality.
Boomers. Married, with high incomes but low levels of materialism. Conservative, family- and community-oriented. High levels of social consciousness and low levels of cynicism. Enjoy nesting, reading, crafts, and gardening. Perceive themselves as old-fashioned, neighborly, and responsible. Receptive to new technology and comfortable with high levels of media consumption. Excellent target for products and services that help them maintain control of their well-ordered lives.
Boomers. Married with children. High incomes. Intense focus on family life, which impedes their social and community consciousness, as well as independent activities. Do not like novelty or technology, and are disinterested in style. Cynical. Do not perceive themselves as ambitious, creative, adventurous, or attractive. Can be reached in messages with a family focus, in mediums such as family-programming and children's cartoons.
Boomers. Usually male, with no children. Average incomes. Inactive, not social, do not care about style. Not socially conscious or novelty seeking. Neither community-oriented nor focused on self. Have very few interests. Do not perceive themselves as self-confident, creative, spiritual, or funny. Somewhat cynical. Are considered a less-desirable consumer group.
Older, with average incomes but financially comfortable. Active seniors for whom family and community are very important. Socially conscious and old-fashioned. Open to new technology; many outside interests. Perceive themselves as spiritual, neighborly, self-confident, and open to new ideas. Not materialistic but somewhat style-conscious. Ideal target for products and services that help them maintain their health, financial security, and family ties.
Older. Not attracted to novelty and highly cynical about modern life. Care little for style or material goods. Perceive themselves as neighborly and old-fashioned, but not intelligent, creative, spiritual, or funny. They are overwhelmed by information. Enjoy gardening and game shows. Hold little appeal to marketers as a target.
Source: Yankelovich Partners, Inc.