Marketing to a New Consumer

ABSTRACT - Recent changes in lifestyles and consumption patterns have led to market dysfunctions throughout Western countries. Networking, off-price retailing, and other phenomena indicate an ambivalence, in the young upscale segment, toward the mass production/consumption system.



Citation:

Francoise Simon-Miller and Philip Kotler (1985) ,"Marketing to a New Consumer", in SV - Historical Perspective in Consumer Research: National and International Perspectives, eds. Jagdish N. Sheth and Chin Tiong Tan, Singapore : Association for Consumer Research, Pages: 201-205.

Historical Perspective in Consumer Research: National and International Perspectives, 1985     Pages 201-205

MARKETING TO A NEW CONSUMER

Francoise Simon-Miller

Philip Kotler

ABSTRACT -

Recent changes in lifestyles and consumption patterns have led to market dysfunctions throughout Western countries. Networking, off-price retailing, and other phenomena indicate an ambivalence, in the young upscale segment, toward the mass production/consumption system.

This paper analyzes at first major demographic and psychographic changes in the marketplace, and derives from them a new consumer typology. Strategies for segmentation, product design, distribution, and promotion are then presented, together with a social accounting framework designed to meet contemporary market needs.

INTRODUCTION

For over a decade, American and European manufacturers have faced disruptive changes in consumer life styles and consumption patterns. Consumers have -been discarding stereotyped roles at a faster rate than manufacturers have acknowledged. Manufacturers have failed to recognize the shift from traditional consumer behavior patterns set in a dynamic economy to untraditional consumer behavior patterns operating in a slower economy. This is the essence of market discrepancy or dysfunction as defined by Alderson (1465).

Market dysfunctions result in part from ambiguities in the marketing concept itself. While marketing scholars have postulated exchange as the core concept in the marketing process (Alderson, 1965; Kotler, 1972, 1984; Bagozzi, 1975), anthropologists have emphasized the link between consumption and power (Douglas and Isherwood, 1979). Lindblom linked both approaches by defining the exchange relationship as one of deliberate control, where each party offers a benefit in order to induce a response. Not merely a method for reshuffling possessions, exchange is a method for controlling behavior (Lindblom, 1977). It is the perception of this attempted control which has contributed to the loss of legitimacy which the mass production system has incurred in the eyes of many consumers.

The marketing concept posits the identification of consumer wants and needs and the satisfaction of these in the form of goods, where wants are the link between needs and goods. The problem is that wants are directly influenced by the marketing system, through mass promotion and display. Some consumers attempt to free themselves from the needs-wants-goods chain by exercising the .1 non-goods" option, made possible by an active self-determination of needs in specific groups such as the "voluntary simplicity" movement.

Yet a truly harmonious producer/ consumer relationship would rest on the concept of partnership, where consumers and producers would actively promote each other's economic growth and social development. For Peter Drucker, the function of marketing was to create customers: supply creating its own demand. In order for authentic exchange to stand at the core of the marketing process, reciprocity would have to exist: demand would create its own supply. Current reality is still far from it.

In this paper, we will tackle two problems: first, the interpretation of the major changes in consumer behavior and their causes; and second, the implications of these changes for the formulation of producer marketing strategies.

THE EVOLUTION OF THE CONSUMER MARKETPLACE

A number of important shifts are taking place in the economic-demographic makeup of Western society, leading to consumer lifestyle changes and the evolution of new consumer and product typologies.

Economic and Demographic Changes

Current consumer studies paint an ambiguous picture of our demand structure. Consumer futurists are predicting a dual-class society consisting of the Affluent and the Average (Sheth, 1983). Those of pessimistic inclination see the coming of age of the baby boom generation as the management of disappointment. Originally from affluent parentage, the baby boomers have become economically disadvantaged by the competition of their own numbers (Jones, 1980). For the first time since the 1950s, American per capita disposable income declined in real terms in 1981; private consumption as a proportion of macroeconomic demand also declined from 48% in 1960 to 43% in 1979 (Poser, 1983).

Lifestyle Changes

Current consumer frustrations are underscored in Levy's work on consumer mythology. He f ound a typical Paradise Lost aura to the stories he collected, which suggest a nostalgia for the Golden Age of Consumption (Levy, 1983). Current alienation patterns relate to the massification of production and consumption. Whereas both were originally located within the family in agrarian societies, production moved into factories and consumption moved out with the growth of retailing. This is equivalent to a two-stage depersonalization process. At first, people no longer identified with what they produced, but rather with what they consumed. Then, as consumption itself became massified, individuals sought to differentiate themselves by subverting or bypassing the system.

Dissatisfied consumers have led the growth of the off-price segment of the clothing industry; it is estimated at $7 billion in sales in 1982 and growing at a 35% compounded annual rate (Morrison, 1983). The most prevalent bypass tactic is now, by far, the do-it-yourself approach. A 1979 Gallup poll showed that 33 million Americans grew their own food, and home health care items such as self-diagnostic kits have grown from a $500 million a year business in 1970 to $2.5 billion in 1981, with expectations to reach $10 billion by 1990 (Yankelovich, 1981).

These variations in consumption style exist vertically within Upper America. This New Class spreads across socio-economic substrata and correlates more with culture than with income. As a lifestyle segment, it can be defined as a cross-class value-sharing group In the artifactual Western communication system, values were traditionally transmitted by choice between goods. They may now be reflected by choices between goods and non-goods. The new "plainstyle" is a form of parody display which focuses on things one does not have (such as a big car, a television set) more than on things one has. Reverse ostentation is what motivates the purchase of second-hand jeans or Lacoste shirts without the logo.

Consumer Typology

The result of all this is a changing consumer typology. McGregor first differentiated a Type X individual (passive, resistant to change, and in need of control) from a Type Y (active, responsible, self-directed). William Ouchi developed a hybrid Type Z combining features derived from a homogeneous, stable, collectivistic system and those derived from an individualistic, dynamic framework. This organizational typology has also been applied to consumers. Mitchell and McNulty (1981) have drawn a double hierarchy scheme which shows an evolution from a common "need-driven" and "belonging base" to a split between inter- and outer-directed stages and, finally, to an "integrated" stage. Integration, however, neglects the emergence of conflict among consumers. Cathelat's typology (1982) is more nuanced; he has traced four "socio-styles" in France for the past ten years: The Utilitarians represented 7080% of the population in 1946 and dropped to 15%; the Young Turks dropped from 35% in 1974 to 14% in 1982; the Realigned have grown from 48% in 1974 to 51% in 1982; and the Displaced are now more than 20% of the population. The Displaced have a Janus-like profile, outwardly playing the social game, but inwardly individualistic and non-conforming. This segment has now emerged across Western countries; it constitutes a "Third Wave" group which might be distinguished along several dimensions from the first and second waves of consumer types.

TABLE

Product Typology

In the same way as consumer typology has evolved over the past two decades, product typology has undergone changes along two dimensions: intangibility and status.

The first major shift occurred from the tangible to the intangible, first in products, then in product attributes. The new prestige goods are intangible: space, time, sensation, information, well-being, and play.

Comparing the value preferences of "self-expressives" against "mains t reamers," a 1979 study of almost 3,000 working Americans showed that 71% of the first group preferred to spend dollars for travel than for possessions, whereas only 52% of the mainstream group did (Yankelovich, 1981).

Time is now also marketable as a product, as well as an attribute. If the food service industry is rapidly catching up with the retail food business, it is because it markets time -- giving back to consumers the time otherwise spent in shadow work, i.e. any labor, such as food transportation and preparation, by which a purchased commodity is transformed into a usable good (Illich, 1982).

As a product attribute, time offers the paradox of being positive as well as negative. Timesaving devices are doing well, but so are time-consuming items like do-it-yourself accessories. One may explain this paradox by differentiating outside labor and home work. Since home work and leisure time are both satisfiers, the two key positive variables are time saving resulting in freedom from labor, and home production resulting in power. In the food consumption category, for instance, the two key product attributes are these intangibles: time-saving labor reduction and time-consuming personal work involvement.

TABLE

The do-it-yourself phenomenon is therefore not strictly a function of economic necessity; it is related to the emergence of home production as a power gesture on the part of the consumer. In this context, the product itself is less important than the corresponding dynamic usage experience.

In the same way as consumer preferences have shifted on the tangibility axis, they have moved along the shopping status dimension. The traditional distinction between convenience, shopping and specialty goods has blurred as some shopping goods have taken on characteristics of convenience goods. Brand proliferation has led to a 31-flavor world which has in turn triggered a "back to basics" reaction. Mass-produced automobiles have shifted from shopping goods to semicommodities, as is shown by the Japanese basic lines.

A Needham, Harper and Steers study classified products according to their "earth values" (simple, durable, inexpensive) or their "feather values" (showy, ephemeral, expensive, indulgent) (Jones, 1980). In order to address this hybridization of taste, goods may be restructured horizontally into two major groups: commodities and specialties. This structure no longer relates to product class, but to product value; a car, for instance, if it is perceived as a serial object, is invested, with earth values which turn it into a semi-commodity; in order to keep a specialty status, it would need to be perceived as a model object, invested with feather values -- a one-of-a-kind item such as an antique.

The same restructuring affects the traditional convenience goods; food has undergone an extreme split between generic items on one hand, and "designer food" on the other (gourmet items sold in specialty shops promoted through word-of-mouth and requiring special shopping trips).

Whereas the traditional specialty status depended largely on price and prestige brand identity, the new status relates to marginality and authenticity. Whereas the core concept of mass consumption was accumulation, the modified concept is collection -- art collection being the epitome of a marginal consumption system.

This relates to the simultaneous existence, in the contemporary marketplace, of three overlapping waves of consumer types. Whereas First Wave consumers are still accepting of the mass market system, the second wave is rebellious and the third wave has developed a need for differentiation which moves it toward non-mass outlets. Although it may be a numerical minority, the Third Wave group has a monetary power which warrants a strategic restructuring of goods.

TABLE

STRATEGIES FOR THE NEW CONSUMER

In order to reach effectively the Third Wave consumers, companies must undergo changes of the same magnitude as those observed in the marketplace. The implications of the emergence of Third Wave consumers for marketing strategy are explored below along the dimensions of market segmentation, product design, distribution strategy, promotion, and organization design.

Market Segmentation

Social values are clearly an increasingly determining factor in segmentation. The traditional first-order variable -- income -- does not indicate motivation. The same good might be perceived as either a commodity or a specialty within the same income range by groups with different value systems. Following value-based segmentation, the most effective strategy may not be "nichemanship." This type of micro-segmentation entails diseconomies of scale which hinder the cost-effectiveness necessary for commodity goods. A more appropriate approach may be to adopt a dual targeting strategy -- following world segments which allow economies of scale for commodity goods, as Levitt has shown (1983), but also following local variations in demand for specialty goods.

Product Design

Product development itself should be driven by societal R&D, i.e. long-term research geared to understand and fulfill a deep-seated need rather than answer or create a superficial want. General Foods, for instance, is researching metabolic processes in order to modulate them as the basis of a series of foods controlling weight. Once the product is designed around an actual, new benefit serving a true market need, there is less reason for the psychological differentiation approach which led manufacturers to be accused of consumer manipulation.

Remarketing for intangibility is also a new strategic requirement. For intangibles, as Levitt showed (1981), one must create surrogates for tangibility; in the case of an insurance policy, a consumer needs to be reminded of benefits in more positive ways than with a premium notice.

Marketing research should be undertaken as a true mutual interest analysis, and not, as is often the case, as a confirmation of R&D findings and management perceptions.

Distribution Strategy

Cooperative retailing and relationship management are key factors in this area. They are shown in the successful door-to-door strategy of Avon or Mary Kay cosmetics, where the representative presents herself as a beauty consultant and not as a salesperson, and strives to build a long-term relationship with her clients. Since her territory is often her neighborhood, social networks reinforce sales connections.

Relationship management applies to almost any distribution situation. Software purchases, for instance, have turned into a nightmare for many consumers. Quality and complexity vary widely. Many companies will not deal directly with the end user, which has led to the emergence of new services offering customer support through telephone consultations, newsletters, and product reviews.

A true strategic advantage for any producer would be to shift from being market responsive, as these software manufacturers are, to being market cooperative.

Promotion: Demassifying and Networking

In the same way as direct contact is appreciated by consumers who might feel alienated by mass retailing, the use of demassified media may enhance a promotion campaign. While the combined aggregate circulation of the top 25 U.S. magazines dropped by 4 million from 1970 to 1977, there has been an explosion of mini-circulation weeklies, special interest books or "shoppers" that serve specific local communities (Toffler, 1980).

Networking may also be an effective communication tool in the contemporary environment. A study of the search behavior of people who recently moved showed that they used information from friends and personal sources more than any other source in rebuilding shopping patterns (Dickson and Wilkie, 1978).

Customer relations and product publicity are what may trigger a critical shift f rom consumer compliance to consumer commitment. Traditional brand loyalty is simply a weak form of consumer involvement, and as such, is subject to easy change. Whereas brand loyalty is merely the passive acceptance of a good, the strong form of involvement is actual commitment, i.e. the inner motivation, not only to adopt, but to promote.

When large scale promotion is needed as part of a campaign, message execution should also be tailored to consumer perceptions. Specialty items may still support a partly persuasive message, but commodities require an informational message which may not even be product-related. General Motors' customer information series focuses on safety, alcoholism and recently on a Third Party Arbitration program in which the company abides by the rulings of volunteer community arbitrators in consumer disputes with dealers.

Organization Design and Evaluation

Small-scale organizational advantages may be reached within multinationals in several ways. New Venture units strive to reintroduce spontaneity and change -- a major feature of innovation in the industrial age - into a post-industrial, codified and constrained framework. Some companies reconceptualize what they are by officializing the concept of an intrapreneur (or in-house entrepreneur) as a factor of revitalization.

Social performance now has to be closely linked to long-term profitability. Many companies who had launched in the 1970s philanthropic programs to appease consumer groups are now discovering the direct financial virtues of social responsiveness. This phenomenon follows this evolution:

TABLE

Recognizing that the financial and social well-being of a firm should no longer be separated, many companies have developed social accounting systems designed to audit the firm's degree of social integration. While social responsibility was defined as the control of a firm's outputs to match the values of its publics, social integration goes beyond this watchdog activity and includes internal structure, market cooperation and interactive consumer communications. In an effort to audit this function, General Motors issued a Public Interest Report discussing safety, ecology and South African investments. Newly-formed brokerage services now rate and promote stocks of socially-integrated companies to concerned consumers.

The set of strategies suggested here is not, of course, a mass market penetration tool. Many consumers still operate in a routinized mode which responds well to traditional techniques. However, the emergence of a world segment of 1. third wave" consumers (with a level of buying power and opinion leadership which goes beyond their actual numbers) is enough to warrant, for firms willing and able to undertake such a change, a "market focusing" strategy. This strategy assumes that the new consumer represents the vanguard of future consumption modes and that knowing how to reach him therefore ensures a company's long-term growth.

Beyond the adoption of new marketing practices, a restructuring of the firm itself is needed to keep in touch with this market -- a scaled-down, participative, venture-like organization. What is needed is. symbiosis and some degree of unplanning i.e. the reintroduction of spontaneity in marketing. Today in subatomic physics, it is widely believed that chance dominates change. In recent years many sciences like biology, sociology, epistemology and cybernetics have begun to fuse these opposites. According to Lewis Thomas, "the capacity to blunder slightly is the real marvel of DNA. Without this special attribute, we would still be anaerobic bacteria and there would be no music." In his opinion, "biology needs a better word than error for the driving force in evolution. Or maybe 'error' will do after all, when you remember that it came from an old root meaning 'to wander about looking for something"' (Thomas, 1979).

Common discovery, by producers and consumers, of a harmonious symbiotic relationship is a process which depends on a formalized cooperation, but also on the paradoxical introduction of spontaneous random activity in the research process, so that, ultimately, order may emerge out of chaos and coherent structures may be derived from stochastic and sometimes conflictual encounters.

REFERENCES

Alderson, Wroe. Dynamic Marketing Behavior. Homewood, IL: Irwin, 1965.

Bagozzi, R.P. "Marketing as Exchange," Journal of Marketing, 39, October 1975, 32-9.

Cathelat, Bernard. Barometre de style de vie des Francais. Paris: Centre de Communication avance, 1982.

Dickson, Peter R. and William L, Wilkie. The Consumption of Household Durables: A Behavioral View. Cambridge: Marketing Science Institute, December 1978, Report No. 78-117.

Douglas, Mary and Baron Isherwood. The World of Goods: Toward an Anthropology of Consumption! New York: Basic Books, 1979.

Illich, Ivan. Gender. New York: Pantheon, 1982.

Jones, Landon Y. Great Expectations. New York: Ballantine, 1980.

Kotler, Philip. "A Generic Concept of Marketing," Journal of Marketing April 1972, 4654.

Kotler, Philip. Marketing Management. Analysis, Planning and Control. Englewood Cliffs, NJ: Prentice-Hall, 1984.

Levitt, Theodore. "Marketing Intangible Products and Product Intangibles," Harvard Business Review, May-June 1981, 95-102.

Levitt, Theodore "The Globalization of Markets,  Harvard Business Review, May-June 1983, 91102.

Levy, Sidney. "Interpreting Consumer Mythology: A Structural Approach to Consumer Behavior," Journal of Marketing, 45, 1981, 49-61.

Lindblom, Charles E. Politics and Markets. New York: Basic Books, 1977.

Mitchell, Arnold and Christine McNultyt "Changing Values andLifestyles," Long Range Planning 14,April 1981, 37-41.

Morrison, Ann M. "The Upshot of Off-Price, Fortune, June 13, 1981, 122-30.

Poser, Gunter. "Macroeconomic Implications of Curtailment and Life-Cycle Change," Advances in Consumer Research, X, 1983, 163-8.

Sheth, Jagdish N. "Marketing Megatrends," Journal of Consumer Marketing, 1, 1, 1983, 5-13.

Thomas, Lewis. The Medusa and the Snail. More Notes of a Biology Watcher, New York: Viking Press, 1979.

Toffler, Alvin. The Third Wave. New York: Bantam, 1980.

Yankelovich, Daniel. New Rules. New York: Bantam, 1981.

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Authors

Francoise Simon-Miller
Philip Kotler



Volume

SV - Historical Perspective in Consumer Research: National and International Perspectives | 1985



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