Chapter 14: Reference Groups and Family

CONSUMER BEHAVIOR AND MARKETING STRATEGY

by

J. Paul Peter & Jerry C. Olson

Fifth Edition

Irwin McGrawhill Companies

Copyright 1999 

United States

Spending on Kids

Marketing to young children under the age 5 (infants, toddlers, and preschoolers) was a big business in the mid 1990s. In 1995 there were about 24 million kids under the age of 5, up from 20 million in 1980. This increase in the number of young children was a second baby boom created as the massive group of baby boomers had babies later in life.

Spending on children was a rapidly growing sector of the American economy, of course, not all families could afford to spend Livishly on kids, but many could and did. Many kids were born to dual career families with both money to spend and guilt to motivate those purchases. Many parents were older with larger incomes (the number of children born to women over age of 30 quadrupled since 1970). In addition, many families were smaller, making it easier for parents to indulge fewer children. Grandparents were a factor, too. People over 65 had the highest level of discretionary income of any age group, and with fewer grandkids than other generations, they could afford to indulge. One retailer estimated that grandparents generated 25 percent of its baby business.

For parents with the funds and motivation to buy, there were lots of choices. One New York mother spent over $5,000 in one year on clothes for her two children under age 5. Another mother said, “The girls’ clothes just melt your heart. Since she’s been born, I’ve hardly bought anything for my self. I’d rather spend on her. “A mother who had her first child at 32 explained, “By the time they have that first child, people like me are so caught up. These babies are so coveted that nothing is good enough. “Such sentiments are enough to fuel $25 billion per year in spending on clothing and other items for kids under 5.

To meet this growing need, many new merchants entered the kids market. Once children’s wear was handled nearly exclusively by the large department stores such as Macy’s, Sears and Saks, but many such stores reduced their children’s offering in the face of strong competition. Gap identified the trend early with their GapKids stores, the fastest-growing segment of the $3.7 billion Gap company. In 1995 Gap operated over 300 BabyGaps special departments within GapKids stores that sold miniaturized versions of denim jackets, T-shirts, and leggings for little kids. Even Ralph Lauren got into the business with a clothing line for infants and toddlers, including a $62 cotton cardigan and a linen dress for $275.

The latest trend, seen in some wealthy families, is to dress toddleraged  kids in clothing from big name designers of adult clothing. Consider a $250 black motorcycle jacket from Versace, or $99 designer jeans by Moschino, or Nicole Miller’s $150 cocktail dress, all designed for children aged three to five years old. Where do kids wear such clothing? Parents say they buy the clothes for special occasions, such as parties, church, bar and bas mitzvals, but some kids wear these clothes to school. Comments made by some mothers include: “It’s a parent’s way of wanting to do better for their children, “or” I can afford it, so why no?” As this market grows, other big name designers are scrambling to get in Hermes of France and Armani of Italy among them. 

Others businesses such as toys and travel developed to serve the growing kids market. A California claim of toy stores called Imaginarium sold educational toys in stores that were more like playgrounds than retail outlets. Imaginarium stores had two entrances, one for grown ups and the other (4 feet high) for children. A company called Discovery Zone created playgrounds in malls with chutes and ladders for small kids to climb on, balls to throw or fall into, and ropewalks to hang on. Parents could drop their kids off at Discovery Zone to burn up excess energy while they lead a quiet cup of coffee.

Source: Lisa Gubernick and Maria Matzer, “Babies as Dolls, “Forbes, February 27, 1995, pp. 78-82; Robert Berner, “Now Even Toddlers Are Dressing to the Nines, “The Wall Street Journal, May 27, 1997, pp. B1, B10.

This example shows how changes in the America family can affect marketing strategies targeted at kids or adults who buy for kids. In making these purchasing decisions, husbands and wives (mothers and fathers) influence each other’s affective responses, cognitions and behaviors. These decisions are also influenced by other people in the social environment, including relatives, friends and peers (both kids and adults are highly influenced by peer groups). In this chapter we discuss two types of social influences refrence groups and family.

Refrence groups and family are aspects of the micro social environment for consumers. Social interactions with refrence groups and family are often direct and face to face, which can have immediate influences on consumers cognitive, affective and behavioral responses to marketing strategies. For instance, the social environment created when two friends shop together can influence each person’s shopping experience, decision processes, and overall satisfaction with a purchase. As you learned in chapter 11 (see Exhibit 11.2), refrence groups and family are important in transmitting (moving) cultural meanings in the overall society, subcultures and social class to individual consumers. For all these reasons,  refrence groups and family have significant implications for marketing strategies.

Refrence Groups

Individuals may be involved in many different types of groups. A group consists of two or more people who interact with each other to accomplish some goal.  Important groups include families, close personal friends, co-workers, formal social groups (Kiwans, professional associations), leisure or hobby groups (a bowling team), and neighbors. Some of these groups may become refrence groups.

A refrence group involves one or more people that someone uses as a basis for comparison or point refrence in forming affective and cognitive responses and performing behaviors. Refrence groups can be of any size (from one person to hundreds of people) and may be tangible (actual people) or intangible and symbolic (successful business executive or sports heroes). People’s refrence groups (and single referent persons) may be from the same or other social classes, subcultures, and even cultures. Exhibit 14.1 lists several types of refrence groups and their key distinguishes characteristics. These distinctions can be combined to  better describe specific groups. For example, your immadiate co workers constitute a formal, primary, membership group. Although these distinctions can be useful, most consumer research has focused on two primary, informal groups peers and family. Issues of major importance to marketing concerning reference group influence include the following:

     1.      What types of influence do refrence groups exert on individuals?

     2.      How does refrence group influence vary across products and brands?

3.      How can marketers use the concept of refrence groups to develop effective marketing strategies?

Analyzing Reference Groups

Refrence groups are cultural groups in that members share certain common cultural meanings. For instance, peer groups of college students tend to develop specific meanings and behavior norms about appropriate clothing and peer groups of teenage boys share certain meanings about what types of athletic shoes are hot. These refrence groups can influence the affective and cognitive responses of consumers as well as their purchase and consumption behavior (“What should I wear today?”).

Exhibit 14.1

Types of Refrence Groups

Type of Refrence Group	Key Distinctions and Characteristics
Formal Primary Membership Aspirational Dissociative	Formal refrence groups have a clearly specified structure, informal group do not. Primary refrence group involve direct, face to face interactions; secondary groups do not. People become formal members of membership reference groups. People aspire to join or emulate aspirational reference groups. People seek to avoid or reject dissociative reference groups.

Marketers try to determine the content of the shared meanings of various reference groups (the common values, beliefs, behavioral norms, and so on). Then they select certain reference groups to associates with or promote their products. But marketers seldom examine the social processes by which reference groups move cultural meanings to products and from products to the consumer.

Reference groups can have both positive and negative effects on consumers. Many social groups incorporate desirable, positive cultural meanings and become associative reference groups that consumers want to emulate or be affiliated with. Other social groups and embody unfavorable or distasteful meanings and serve as a negative point of reference that people want to avoid; they become dissociative reference groups.

Types of Reference Group Influence

Most people are members of several primary informed groups and a few formal, membership groups (church, civic, and professional associations). In addition, people are aware of many secondary groups both formal and informal. Why do people use some of these groups as a reference group and not others? and How do these reference groups influence consumers affect, cognitions, and behaviors? Basically people identify and affiliate with particular reference groups for three reason: to gain useful knowledge, to obtain rewards or avoid the punishments, and to acquire meanings for constructing, modifying, or maintaining their self-concepts. These goals reflect three types of reference group influence informational, utilitarian, and value expressive.

Informational reference group influence transmits useful information to consumers about themselves, other people, or aspects of the physical environment such as products, services, and stores. This information may be conveyed directly either verbally or by direct demonstrations. For Instance, a consumer trying to decide on a purchase of running shoes or stereo equipment might seek the advice of friends who are knowledgeable about those categories. A person who is trying to learn to play tennis might ask friends to demonstrate how to serve or hit a backband shot.

Consumer tend to be more influence by reference groups if the information is perceived as reliable and relevant to the problem at hand and the information source is perceived to be trustworthy. Reference sources can be a single person as when Dave Thomas and Friends or Frank Perdue expound on the merits of Wendy's hamburgers or perdue chickens. Highly credible reference group are more likely to have informational influence on consumers. Thus some marketers hire recognized experts to endorse a product and tell consumers why it is good.

Information can also be obtained indirectly through vicarious observation. For Instance, an avid fisher may carefully note the types of equipment famous bass fishers are you sing in fishing tournament or on TV fishing shows. This is common behavior many golfers, skiers, mountain climbers and other sports enthusiasts engage in similar vicarious observations of products used by their reference groups. This is why Nike hired basketball star Michael Jordan (obviously an expert) to wear Air Jordan basketball shoes.

Information can be transmitted from reference groups to consumers in three ways. Sometimes informational influence is intentionally sought by consumers to reduce the perceived risk of making a decision or to help them learn how to perform certain behaviors. Thus most beginning sky divers listen very carefully to their new reference group of experienced skydiving instructors as they present information about how to pack a parachute or how to land correctly. Consumers who buy a new computer may seek information provided by a reference group of more experienced users who can help them learn how to use the product effectively.

In other cases information is accidentally transmitted, as when someone overhears reference group members talking about a product or observes members of a reference group using the product. A third way that information may be transferred to the consumer is when reference group members initiate the process. This can occur with enthusiastic reference group members who seek to proselytize for an activity and gain new members. For example, Rollerbladers might try to persuade others to take up the sport. Marketers might use a strategy of getting current customers to create new customers (bring along a friend for dinner and get your meal for half the price).

Utilitarian reference group influence on consumer behaviors (and affect and cognitions) occurs when the reference group controls important rewards and punishments. Consumers usually will comply with the desires of a reference group If (1) they believe the group can control rewards and punishments, (2) the behavior is visible or known to the group and, (3) they are motivated to obtain rewards or avoid punishments.

In some work groups (a formal, membership dan reference group), people are expected to wear formal business suits, Whereas other work groups encourage very casual dress (jeans and T-shirts in some Silicon Valley, California, companies). Rewards and punishments my be tangible (raises, bonuses, being fired) or psychological and social consequences may occur (admiring looks or snide remarks behind your back). Peer groups often administer such psychosocial rewards and punishments for adherence to and violation of the reference group code. Consider how your own peer reference group in college influences your dress behavior. Marketers use these factors by showing such sanctions in TV commercials (people recoiling from offensive body odor, bad breath, or the dandruff flakes on someone’s shoulder).

Value expressive reference group influence can affect people’s self-concepts as cultural units, reference groups both contain and create cultural meanings (beliefs, goals, behavioral norms, lifestyles). As you learned in chapter 12, people are constantly seeking desirable cultural meanings to use in constructing, enhancing, or maintaining their self concept. By identifying and affiliating with certain reference groups that express these desired meanings, consumers can draw out some of these desired meanings, consumers can draw out some of these meanings and use them in their own self-construction projects.

One group of people who buy Harley-Davidson motorcycles and associated product consists of middle and upper middle class professional people (including doctors, dentists, lawyers, and professors). Derisively called RUBS (rich urban bikers) or weekend warriors by the hard-core Harley owners (the tattooed and bearded outlaws or pseudo outlaws), many of these consumers treat the radical, hard-core hardcore Harley owners as aspiration reference group (very few RUBS will ever become hard-core bikers).

The hard-core Harley Bikers express several desirable meanings and values for the RUBS (and probably convey negative meanings to nonbikers). By identifying to some extent with the hard-core biker as an aspiration reference group, RUBS can gain some of these important meanings, including feeling of freedom (from work and family), freedom of spirit, radical independence, patriotism (Harley’s are built in the United States), and a feeling of belonging to a special, unique group. Perhaps some RUBS are also able to inspire a bit of the fear and awe (among nonbikers or owners of other brand) that the hard-core bikers relish.

These reference group meanings can influence affect, cognitions, and behaviors, including purchases of biker clothing and bike accessories. Harley Davidson recognizes these value-expressive desires and needs and markets (often through licensing) a variety of products to satisfy them, including black leather jackets “colors” (clothing with insignias and biker logos), many biking accessories and even a Harley Davidson brand of beer.

In summary, all three types of reference group influence can be accomplished by a single reference group. For instance, as a reference group for the weekend biker, the hard-core Harley Davidson bikers can be a source of information (through magazines and observation), rewards and punishments (waving back or haughtily ignoring the RUBS on the road), and subculture meanings that express one’s values.

Reference Group Influence on Products and Brands

Reference group do not influence all product and brand purchases to the same degree. Based on research, reference group influence on product and brand decisions is thought to vary on at least two dimensions. The first dimension concerns the degree to which the product or brand is a necessity or a luxury. A necessity is owned by virtually everyone (a flashlight), whereas a luxury is owned only by consumers in particular groups (a sailboat). The second dimension is conspicuous or known by other people. A public good is one that other people are aware an individual owns and uses, one for which day can identify the brand with little or no difficulty a (car ). A private good is used at home or in so that other people (outside the immediate family) would be unaware of its position or use (a hair blower).

Combine these two dimensions produces the matrix shown in Exhibit 14.2. This exhibit suggests that reference group influence will vary depending on whether the products and brands are public necessities, private necessities, public luxuries, or private luxuries. Consider wristwatches, which are public necessities. Because everyone can see whether a person is wearing a wristwatch, the brand my be susceptible to reference group influence. However is likely to be little reference group influence on whether one should purchase a watch.

Reference Groups and Marketing Strategy

 We have seen that reference groups are an important influence on consumers. Not only do members of primary informal groups affect consumer knowledge, attitudes, and values, but they also affect the purchase of specific products and brands and even the selection of stores in which purchases are made. In some cases an analysis of primary informal group influences can be used to develop marketing strategies. For example, in industrial marketing a careful analysis of the group influence dynamics among the various people who have a role in a purchase decision may be useful for determining appropriate marketing approach. Similarly, peer group influence is a major asset of firms that sell in home to groups, as in the case of Tupperware parties. In such Instances many individuals conform to the norms of the group by purchasing a few items. Occasionally marketers my try to stimulate reference group influence – a health club might offer you two months’ service free if you get a friend to sign up for a one year membership.

Exhibit 14.2

Effects of Public Private and Luxury Necessity Dimensions on Reference Group Influence for Product and Brand Choice

	Necessity	Luxury
Public	Public necessities Reference group influence Product Weak Brand Strong Examples: Wristwatch, Automobile, man’s suit	Public luxuries Reference group influence Product Strong Brand Strong Examples: Golf clubs, snow skies, sailboat
Private	Private necessities Reference group influence Product Weak Brand Weak Examples: Mattress, floor lamp, refrigerator	Private luxuries Reference group influence Product strong Brand Weak Examples: TV game, trash compactor, ice maker

Source: Adapted from “Reference Group Influences on Product and Brand Purchase Decisions, “William O. Bearden and Michael J. Etzel, Journal of Consumer Research, September 1982, p.185.

Salespeople my attempt to create a reference group influence by describing how a customer is similar to previous purchasers of the product. There was a couple in her last week much like you. They bought the JVC speakers. Salespeople could describe themselves as a reference group. Oh your two children go to East High School?  My Kids got there, too. We bought them an IBM PC to help them with their science projects.”

Chapter 13: Subculture and Social Class

CONSUMER BEHAVIOR AND MARKETING STRATEGY

by

J. Paul Peter & Jerry C. Olson

Fifth Edition

Irwin McGrawhill Companies

Copyright 1999 

United States

Wooing the Aging Baby Boomers

The 77 million so-called baby boomers (Americans born between 1946 and 1964) have become middle-aged. This large group will continue to have a disproportionate effect on the culture and economy of the United States, probably even more than they did when they were teenagers and young adults. For instance, by b1997 the 35 to 50 age group increased by 26 percent over 1987 and earned an awesome $195 billion. This group became the nation’s biggest spenders. In contrast, the number of consumers in the 25 to  34 age group fell by 9 percent and dropped $67 billion in purchasing power.

Many marketers have not understood or appreciated middle-aged consumers. But they become too large a market for most companies to large. Advertisers must learn how to appeal to these older and more mature consumers. The old approaches of portraying baby boomers as a young and energetic bunch of jeans-wearing, granola eating, rock-music, listening kids won’t work anymore.

Perhaps part of the reason Madison Avenue was late in responding to the aging trend is that many of people making crative advertising decisions are themselves pushing 40 and are not happy about it. The persuasive anxiety that many Americans have about growing older is a major impediment to creating attractive, imaginative advertising for the not so young. As one advertising executive put it, “Advertisers feel that youth is sexy and glamorous, old age is humorous and middle age is dreary,”This nation had to change and fast.

Peoples’ values and goals tend to change as they age. “Younger people like competition, showing off, looking good. Older boomers are starting to care about comfort, convinience and financial security..”

Advertisers will have to overcome their obsession with youth and create acceptable mature images that fit the self-concepts, goals, and values of not so young consumers.

By the mid 1990s, many companies were getting the idea. For instance, Clinique Laboratories (marketer of cosmetics) stopped routinely retouching photos of its models to remove wrinkles Quaker Oats replaced paunchy Wilford Brimley as brand spokerperson with
“George,” a 60 something, balding model working out in a muscle T-shirt, Saks Fifth Avenue began using attractive, silver haired models who were 50-plus, rather than the 20 year olds that used to fill its catalogs. Maturity grew in popularity as concepts such as wisdom and perspective became more important to aging baby boomers.

Levi Strauss is one company that has followed the baby boomers for three decades. It must continue to change with its market. To promote its popular Dockers line of causal slacks, it showed a group of 40 ish men sitting around and jockingly reminiscing about the good old days. The product was not mentioned until the conclusion.

According to a Levi’s executive, “Real people don’t sit around and talk about the brand of clothing they’re waering” The pants were already a hit, but sales accelerated after these ads were already a hit, but sales accelerated after these ads were shown.

In the mid 1990s marketing to the 35 to 50 year old consumer was a strong trend, as marketers caught up to the changes in an American subculture.

Source: Faye Rice, “Wooing Aging Baby-Boomers, “ Fortune, February 1, 1988, pp.67-77. Copyright Time Inc. All rights reserved . Susan B. Garland, “Those Aging Boomers,” Business Week, May 20, 1991, pp.106-12; Lisa Gubernick and Luisa Kroll, “Gray Hair is Cool, “Forbes, May 6, 1996, p. 116.

This example illustrates the marketing importance of a major subculture in the United States (and many other countries, too) and how changing demographic characteristics can be important to marketers. In this chapter we discuss two aspects of the macro social environment subcultures and social class. In chapter 11 you learned that culture, subculture, and social class, are three levels of the macro social environment. The size of these social groups is a key distinction.

Culture usually is analyzed at the level of a country or an entire society, subcultures, are segments of the society. Social class can be considered a special subculture defined in terms of social status. Subcultures and social classes are cultural groups in that their members share common cultural meanings, however, both are part of the larger society and thus are influenced by the overall culture. Thus, we would not expect middle-class Americans. Social class and subcultures are useful for segmenting markets, understanding the shared cultural meanings of large groups of consumers and developing targeted marketing strategies.

We begin the chapter by discussing the concept of subcultures. Next we describe several important subcultures found in the United States (and elsewhere in the world) and draw implications for marketing strategy. Then we discuss the concept of social class by describing the social class structure of U.S. society.

Subcultures

Subcultures are distinctive groups of paople in a society that share common cultural meanings for affective and cognitive responses (emotional reactions, beliefs, values and goals), behaviors (customs, scripts, and rituals, behavioral norms) and environmental factors (living conditions, geographic location, important objects). Although most subcultures share some cultural meanings with overall society and/or other subcultures, some of a subculture’s meanings must be unique and distinctive Highlight 13.1 describes a distinctive subculture.

Highlight 13.1

A Hidden Subculture

Although the gay subculture has great demographics, some companies have been reluctant to target the estimated 20 million homosexuals in the United States. Gay consumers tend to be younger, more afluent and better educated than average American creating a $382 billion market. A 1988 survey of readers of the eight leading gay newspaper found that the average income in gay households was $ 55,400 compared to the national average of $32,100. (A different survey found median incomes 0f $42,000 for gay households and $39,000 for lesbian households.) Nearly 60 percent of these of homosexual readers were college graduates, compared to the national average of 18 percent. Some 49 percent were in professional or managerial jobs (compared to 16 percent of the general population), 27 percent were frequent flyers (1.0 percent of the general population) and 66 percent went overseas in 1987 (14 percent of the general population).

Despite their attractive demographic characteristics, companies worry about marketing directly to gays. Part of the problem is lack of information about this subculture. Identifying members of the gay subculture can be difficult, and measuring the market potential is a challenge. Marketing research can help companies learn about the gay culture, and some companies have hired research firms staffed with gay researchers to help interpret important aspects of the culture.

Another reason for reluctant marketing is the fear of having a brand labeled “gray brand.” Targeting gays involves risks for companies, including controversy and possible backlash from homophobic consumers. However, some advertisers that target gays have done well. For instance, Remy Martin, the only cognac that regularly advertises in the gay press, is the number five brand nationally and number one in the gay community.

A final problem is the lack of media such as general interest magazines (that do not contain classified personal ads) to effectively reach gays. One magazine begun in 1991. Genre, won’t  accept such ads and has picked up several national advertisers including Atlantic Records and Prentice-Hall, a publisher.

Despite reservations, many companies such as MCl, Miller beer, American Express and Perrier have begun targeting gay consumers with ads in gay magazines. The furniture retailer IKEA is thought to have aired the first mainstream TV ad (in 1994) to foature a gay relationship. The commercial showed a 30 something couple taking about their dining room table. The ad was similar to other ads in tha campaign; the difference was that both people were men. IKEA said the ad was an attempt to include gay consumers in their customer mix..

Even IBM placed ads in the gay media in 1996 announcing that it was extending health benefits to long term employees with gay or lesbian partners.

Source: Cydee Miller, “Gays Are Affluent but Often Overlooked Market, “Marketing News, December 24, 1990, p.2; Joan E. Rigdon, “Overcoming a Deep-Rooted Reluctance, More Firms Advertise to Gay Community, “The Wall Street Journal, July18, 1991, pp. B1, B8; Cyndee Miller, “Top Marketers Take Bolder Approach inTargeting Gays, Marketing News, July 4, 1994, pp.1, 2; and Michael Wilkie, “Big Advertisers Join Move to Embrace Gay Market, “Advertising Age, August 4, 1997, pp.1,10.

Major demographic changes occuring in the United States and other countries make the analysis of subcultures more important then ever. For instance, the U.S. population is aging (in 2000, the median age will be 36, three years older than in 1990). Also many societies are becoming more culturally diverse partly through increased immigration of people from other cultures. About 20 percent of Americans were members of minority groups in the early 1980s: by 2010, this will climb to about 30 percent. The overall culture in the United States is influenced by these different subcultural groups, each with unique perspectives and cultural meanings. To understand this diversity, marketers identify subcultures and try to develop marketing strategies to adress their needs.

Exhibit 13.1

Types of Subcultures

Demographic Characteristic	Examples of Subcultures
Age Religion Race Income level Nationality Gender Family type Occupation Geographic region Community	Adolescents, young adults, middle age, elderly Jewish, Catholic, Mormon, Buddhist, Muslim Black, Caucasian, Asian Affluent, middle income, poor destitute French, Malaysian, Australian, Canadian Female, Male Single Parent, Divorced/No Kids, Two Parents/Kids Mechanic, Accountant, Priest, Professor, Clerk New England, Southwest, Midwest Rural, Small Town, Suburban, City

Marketers have used a variety of mostly demographic characteristics to identify subcultures. Exhibit 13.1 lists several demographic characteristics used to classify people into subgroups and gives examples of subcultures. These subcultures are not mutually exclusive a person can simultaneously be black, middle class, a male and a resident of the northwestern United States with a moderate income. Marketers can combine demographic distinctions to identify smaller and more narrowly defined subcultures (affluent balck consumers living in the South). 

Analyzing Subcultures

As with cultural analysis, subcultures can be analyzed at different levels. Subcultural analysis is often done in stages. First, a broad subcultures is identified based on some broad demographic characteristic (black Americans, elderly Japanese, middle-income Italians). Then, depending on the marketing purpose, this broad group can be further segmented into subcultures based on other demographic characteristics (affluent middle income, or poor Americans; elderly Japanese who are healthy versus those who are ill; middle-income Italians living in large cities or small towns). If necessary the segmentation process could continue, creating ever smaller and more precisely defined subcultures.

Careful research and thoughtful analysis are necessary to develop a clear understanding of subcultures. Consider, for instance, the confusion about the so called yuppies (young urban professional). Originally a narrow subcultural group, yuppies gradually came to mean rich, selfish youths and because of intense media attention through 1980s, became virtually synonymous with the baby boomer generation. However, the best estimates counted only about 4 million yuppies, a mere 5 percent of the baby boomers.

Subculture analysis can follow the same approach as cultural analysis discussed in Chapter 12. Typically, marketers examine the content of the subculture by describing the cultural meanings shared by members of the subculture (especially their values and lifestyles). It is much less common for marketers to examine the cultural processes by which cultural meanings are moved from the external world of the subculture to products and services and on the people in the subculture.

In analyzing a subculture, marketers seek to identify the typical characteristics, meanings, and behavioral tendencies shared by people in those groups. Despite sharing some qualities, however most subcultures are quite diverse. The media tend to characterize members of a subculture in the same way (blacks are poor ghetto residents; elderly people are doddering and ill), but this can be a major mistake in developing marketing strategies. Members of a black or erderly subculture are likely to be quite different. For example, marketers have identified a subgroup of “young” elderly people called “Opals,” who think and act younger than their years, have money to spend and healthy enough to do so. In sum, it is difficult to identify a typical person in a subculture.

The task for marketers is to determine what level of analysis is appropriate for the problem (how fine should the distinctions be?) and develop marketing strategies for that level. Consider Maybelline’s strategy in developing the cosmetic line Shades of  You for women with dark skin. The company recognized that women of color (mostly blacks and darker skinned Hispanics) have different skin tones and thus need different cosmetics. For instance, blacks have about 35 different skin colors compared to about 18 for whites. Maybelline spent considerable effort and money developing the proper formulas for 12 shades of liquid makeup and 8 blushes. Sold in drugstores and supermarkets at the lower end of the price scale, the product was almost immediately a hit with dark-skinned women.

Geographic Subcultures

Americans like to think of their country as a melting pot, but the mass American market is a myth for many product categories. In different parts of the country the physical environment (topography, climate, natural resources) and social environment (economics, population demograohics, lifestyles) are quite different, and these factors affect the culture and buying behavior. In reality the United States is a polycultural nation, a mosaic of submarkets and subcultures. In some ways, Boston and Houston are as different as Hamburg (Germany) and Milan (Italy).

Marketers may find it easier to accept Europe and Latin America is separate regions than to recognize Arizona, Texas, and Lousiana as different markets. For example, product ownership varies widely across the nation. Consumers in California own a much higher percentage of foreign cars than their counterparts in the Midwest or South. Very few brands enjoy uniform sales across the country. Many national brands get 40 to 80 percent of their sales in a core region, but they are specialty brands (with lower market shares) in other areas of the country. In the mid 1990s, for instance, Ford pickups were the favorite in a number of northwestern states, whereas Chevy pickups dominated in many southern states. Wonder Bread sells best in New York (for reasons unknown), whereas snack nuts sell best in Portland, Maine. Seattle leads in sales of healthy foods such as Cheerios and is also tops in Hershey’s chocolate bars. Coping with this diversity requires attention to regional subcultures.

Exhibit 13.2

The Eight Nations of the United States

There are many ways of analyzing the United States in terms of geographic subcultures. In one creative approach, Joel Garrean divided the North American continent into nine geographic areas that be labeled the “nine nations” of North America U.S. marketers concentrate on the eight areas shown in Exhibit 13.2 Garrean argued that a variety of environmental factors including economic, social, cultural, political, topographical and natural resource factors combine to form these nine areas. The exhibit also summarize the “personalities” of these areas.

Despite criticisms, this framework may be useful for some products and services in developing specific marketing strategies to appeal to consumers in each area. For example, preferences for and consumption of various beverages vary dramatically in different geographic areas of the Unired States and analysis of cultural differences in these regions may help determine which beverages can be marketed most effectively.

Borderland Regions

As we emphasized in Chapter 12, cultural and subcultural differences do not always coincide with national (or other artificial) boundaries. Consider the so called borderlands along the 2,000 mile border between Mexico and the United States. About 5.2 million people (35 percent Hispanic) live in 25 borderland counties in California, New Mexico, Arizona and Texas that have grown about 30 percent since 1980. Another 3 million people live on the Mexico side. The borderlands constitute a geographic subculture with significant marketing potential.

Consider the area called Los Dos Laredos (the two Laredos) Laredo, Texas, and Nuevo Laredo, Mexico. Although separated by the Rio Grande River, residents on both sides give little thought to the border as they freely cross the bridges to shop, work, and enjoy themselves. A bank official puts it this way: “We are not the United States and we’re not Mexico. We’re different, we think we gather the best of both cultures. “According to one citizen. “We’re more like Minneapolis and Saint Paul than the U.S. and Mexico, because we are the same people.”

The borderlands are an important regional market even though the overall demographics are downscale (people have lower than average incomes). The U.S. side is swelled by thousands of Mexican citizens who cross the border to work and spend their pesos. Although some shopping areas are bordertown tacky, Laredo’s new retailing centers contain chain stores like Wal-Mart, Sam’s Club, and HEB of California. Successful marketing strategies recognize the Hispanic culture as the major influence in the borderlands. For instance, many of the signs and store names are in Spanish, prices are often given in both pesos and dollars and most stores accept either currency. Because Hispanic families tend to be large, grocery stores tend to stock big sizes, including 50 pound sacks of rice.

Age Subcultures

Age groups can also be analyzed as subcultures because they often have distinctive values and behaviors. However, marketers must be continue about segmenting consumers based on their actual age. Many adult American consumers think of them selves as to 10 to 15 years younger than they really are. Thus, their behaviors, affect and cognitions are more related to their psychological age than their chronological age. Consider this statement from an 89 year old woman:”I might be 89 years old, but I feel good. I feel like I could fly the coop. I do I feel younger, like I’m going to live a long time.” This suggests marketers should analyze subjective or “cognitiveage” (the age one thinks of oneself as being) rather than chronological or actual age. Many different age subcultures can be identified and analyzed, but we will discuss only three here: teens, baby boomers and the mature market.

The Teen Market

The American teenage population has been gaining affluence and fluctuating in size. In the mid 1980s there were about 26 million people in the United States aged 13 to 19. This number decreased to about 25 million in the mid 1990s and will increase to about 27 million by the year 2000. Teens are important not only because they have a major influence on household purchases, but also because of their own discretionary purchasing power. Teenagers spent over $95 billion in 1992.

Highlight 13.2

Is the Liquor Industry Advertising to Teens?

If you pick up a copy of Spin magazine (or Rolling Stone, or Vibe, or Detalls), you will find many ads for liquor or beer, aven though substantial numbers of the readers of these magazines are under 21 years of age (50 percent of Spin readers; 44 percent of Allure readers). Moreover, the styles of many of these ads seem designed to appeal to teenagers. Many ads use cartoon like figures and sport a sort sophomoric, teen lingoan ad for Jose Cuervo urges consumers to “surf that lizard!” Many of the ads seem to be takeoffs of the controversial Joe Camel character used in cigarette advertising until 1997, when it was retired.

Certain liquor products seem designed to appeal to teenagers, as well as young adults. Consider some of the new alcohol products introduced to the U.S. market in 1997. Several were lemonade-flavored drinks containing about 4 percent alcohol. These drinks have about the same punch as beer, but the alcohol flavor is masked so well that they can be chugged like soda. These so called alcopop drinks are big in Australia and Britain. Two Dogs Lemon Brew was created in 1993 by Australian Duncan MacGilivray, who was trying to find a use for a truckload of lemons. Another concoction is Hooper’s Hooch, made by the British company, Bass PLC. In the United States, both Miller and Anheuser-Busch have tested their versions, but had not yet introduced them as of 1997. 

Similar product development efforts to appeal to young people are occuring in other countries. For example, Family Frost, an East German company, introduced an alcoholic, beer flavored popsicle in 1996. Earlier attempts to do the same thing had their days in the limelight, but have since faded. Wine coolers were once a bit in the 1980s, whereas Zima, a clear malt beverage that was recently popular, has lost its fizz.

The sweet lemonadelike brews are priced about the same as beer and seem to be directed at younger people (teens?) who are more used to consuming soda than hearty beers. Criticism of these beerlike products and their advertising was swift. For instance, in1996, California lawmakers introduced an unsuccessful bill to ban all alcohol ads containing cartoons.

Do you think the beer companies behaved ethically in manufacturing and promoting these flavored, beerlike products?

Sources: David Leonhardt, “How Big Liquor Takes Aim at Teens, “Business Week, May 19, 1997, p. 92; David Leonhardt and Heidi Dawley, “A Little Booze for the Kiddles, “Business Week, September 23, 1996, p. 158.

Several studies have found that teenagers do a large portion of grocery shopping for the family. Estimates are that from 49 to 61 percent of teenage girls and 26 to 33 percent of teenage boys frequently perform this task. In addition, about 60 percent of teens help make the supermarket shopping list, and 40 percent select some of the brands to be purchased. It is no wonder that brand name food marketers advertise in magazines such as Seventeen.

Brand loyalty has also been found to form early among teenage shoppers. In a survey of women ages 20 to 34, at least 30 percent said they made a brand decisions as a teenager and continued to use the brand to the present. Sixty four percent said they looked for specific brands when they were teenagers. Thus, a final reason this market is so important for many products and services is the potential is to develop brand loyalty that may last a lifetime. However, marketing certain products to teens, such as ciggaretes or alcoholic beverages, is highly controversial as Highlight 13.2 describes.

Baby boomers are those people born between 1946 and 1964. There are about 68 million people in this group about a third of the U.S. population. This group is in its mid 30s to early 50s and its prime earning and spending years. The baby boomer market is the largest and most affluent in history and will have a major economic impact for the next 45 years (see the opening example). In 1982 dollars, the 35 to 44 age group spent $870 billion in 1995, well over twice as much as that age group spent in 1980. Within the next decade or so, baby boomers will account for about half of all discretionary spending.

Although the baby boomer subculture is extremely diverse, some general characteristics have been identified. The group is characterized as having a blend of “me-generation” and old fashioned family values and as strongly influencing the values of other groups. A study by the Cadwell Davis Partners ad agency found that many people who aren’t baby boomers feel as if they are. Baby boomers emphasize health and exercise and have reduced their consumption of cigaretes, coffee and strong alcoholic beverages. Forty-six percent of this market has completed college and two thirds of baby boomer wives work, compared with about half the wives in the rest of the population. In terms of products, this group emphasizes quality and is far less concerned with bargain hunting than their parents were.

Baby boomers have a strong impact on markets for housing, cars, food, clothing and cosmetics and financial services. For instance, nearly one fourth of boomers are single, creating strong markets for vacations and convenience packaged goods. In addition, although they are having fewer children per household, the sheer size of the boomer group led to an increase in births in the early 1990s a “baby  boom echo.” Boomers who are new parents are especially attractive to marketers. Given the large incomes and small family sizes of this group, spending per child is likely to be the largest in history. Markets for children’s products have expanded accordingly. Toy sales, for example, are expected to increase more than twice as fast as the population of children for whom they are intended. Other markets, such as child care services and computer software for tots, may double in the next few years.

The baby boomer market, then is the most lucrative and challanging marketers have ever seen. Many firms have designed new products and redesigned  and repositioned old ones for this market. Wheaties used to appeal to kids as ”the breakfast of champions”; now its promoted to adults with such slogans as “what the big boys eat.” Commercials for Snickers candy bars show adults rather than children eating this candy for a snack. Crest and other brands have introduced toothpaste formulas to fight plaque, an adult problem. Levi Strauss has redesigned its jeans to give a little extra room in the seat to accommodate “booming boomer bodies” (see Highlight 13.3). Even Clearasil, traditionally an antiacne medication for teenagers, has developed Clearasil Adult Care to appeal to the growing number of baby boomer adults with skin problems.

Highlight 13.3

Jeans Keep Up with the Baby Boomers

The baby boom generation created the boom market for jeans manufacturers. When the boomers were teens in the 1960s, jeans became the universal emblem of youth and rebeilion (as is still the case around the world), and jeans sales increased dramatically.

As the boomers aged, manufacturers such as Levi Strauss have adapted their marketing strategies to keep pace with the changing demographics. Although Levi’s key market is still 14-24 years old men, this age group is shrinking, while the huge group of baby boomers is reaching middle age. Thus Levi’s and other manufacturers have developed products to appeal to the boomers and to fit their changing bodies. 

The so called jeans generation still likes jeans (partly as a symbol of youth), but the style and fit they seek has changed. As waist sizes have increased more 36s and fewer 32s Levi Strauss has introduced new products such as the highly successful Dockers line, made to fit the middle aged man’s body. According to John Wyek, director of strategic research at Levi Strauss, “The point is to make products that are relevant. And making relevan products for the ‘me’ generation has been easy. We have 70,000 different products – different styles, colors, silhousettes, sizes and fabrics so that our customers have the choice they’ve become accustomed to.” Levi Strauss is keeping its eye on other changes in subcultures. For instance, the number of Hispanics in the 14 to 24 age group will increase 40 percent in the 1990s. Levi’s has created a Spanish language campaign targeted at Hispanics, who account for 12 percent of Levi’s annual sales. Levi Strauss produced an ad campaign for 501 button fly jeans (directed by Spike Lee), targeted at the core market of 14-24 year old men, that ran on MTV and late night television programs. Yet another ad campaign was targeted at women. Print ads designed to emphasize the comfort and fit the Levi 500 and 900 product line showed silhouettes of women in many shapes and sizes.   

Over the years, Levi’s has done well with boomers, but the company did not keep up with teenagers. This lack of focus on the younger consumer resulted in a precipitous drop in market share from 33 percent in 1990 to about 19 percent in 1997. The company completely missed the wide leg jeans fad of 1997-98, and had to play catch up with other companies such as Tommy Hilfiger and Ralph Lauren at the high end and Sears and Penney’s at the low end. Its research indicated that teens “loved” the Levi’s brand but didn’t think it was “cool” any more (“Levi’s are more appropriate for our parents”). In 1998, Levi’s dramatically increased marketing expenditures for teenagers, especially for promoting the Silver Tab line, with a baggier fit designated by kids ad the hippest Levi’s clothes.

The trick for Levi Strauss is to market its products to all these diverse groups in a way that does not erode the overall value or equity of the Levi brand the theme of “Levi-ness.” The goal is for each group to fell that “Levi’s are for me.”

Sources: Cyndee Miller, “Jeans Marketers Look for Good Fit with Older Men and Women, Marketing News, September 16, 1991, pp.1, 6; Bickly Townsend, “Beyond the Boom: An Interview with John Wyek, “American Demographics, June 1989, pp. 40-41; and Linda Himelstein”Levi’s Is Hiking Up Its Pants, “Business Week, December 1, 1997, pp.70-75.     

The Mature Market

As America ages (similar trends occur in other indrustrialized countries such as Japan and most European countries such as Japan and Most European nations), marketers have recognized the economic importance of the mature market, defined as consumers over the age of 55. Because the mature market is quite diverse, marketers often consider smaller subcultural groups based on narrower agr ranges, such as older (55-64), elderly (65-74), aged (75-84) and very old (85 and over). The mature market is one of the most rapidly growing subcultures in American society. In 2000 there will be 35 million consumers over 65, up from 30 million in 1987. Nearly 80 percent of the current U.S. population is expected to live until their late 70s. At present about one in four Americans is older than 50; by 2020 about one-third will be. Between now and 2020 the number of people aged 50 or older will increase by 74 percent (as baby boomers continue to age), whereas the number under age 50 will increase by only 1 percent. In 2020 there could be as many as 58 million elderly (over 65) or as few as 48 million, according to the U.S. Census Burean. The exact number of older Americans expected in 2020 is hard to predict; it all depends on the mortality rate, especially gains made against specific diseaseas such as a heart ailments, cancer and stroke.

The next century will see huge increases in demand for products and services for older consumer, including adult day care, home health care, prescriptions and over the counter drugs, medical care of all types and foods low in cholesterol, sugar, salt, restaurants, recreational vehicles and hotels and motels. Recognizing that extended families will be larger, theme parks such as Six Flags Great America have created packages for grandparents, parents and grankids as a group. Older people will be better educated than previous generations, which will create increased demand for educational programs, books and news.

Traditionally, marketers have ignored the mature market, perhaps because it was assumed to have low purchasing power. However in addition to its sheer size, the economic character of this market deserves careful consideration. Although many of the members of this group no longer work, they often have considerable discretionary income. Unlike younger groups, members of mature markets are ussually free of most of the financial burdens associated with child rearing, mortgages and furnishing a household.

Given these differences, per capita discretionary income is higher for the mature group than for any other age group about 50 percent of the nation’s total. In 1980, for example, for those aged 55 to 59, per capita discretionary income was $3,500; for those aged 60 to 64, per capita discretionary income was $3,700; for those aged 65 and over it was the highest of all $4,100. These figures compare quite favorably with the approximately $2,000 in discretionary income available to people aged 30 to 39. 

It is also important to recognize how the mature market is changing. In 1985 only 9 percent of the elderly bad a college degree and only 44 percent had graduated from high school. By 1995 the share of older people with college educations rose to more than 12 percent, and at least one fourth had some college. Thus, the mature market is becoming more educated and likely will have even greater incomes. Increases in income will also come about because many of those in tomorrow’s mature market will benefit from pension and retirement plans.

Finally, because many people in the mature market subculture are retired, they have more time to enjoy entertainment and leisure activities. Although this market has historically spent more money on food for home consumption than away from home consumption, restaurants now cater to them with senior citizen discounts, early bird dinners, and menus designed for the tastes and requirements of older people.

The elderly represent a significant market for skin care products, vitamins and minerals, health and beauty aids and medications that ease pain and promote the performance of everyday activities. In addition, they are a significant market for condominiums in the Sambelt states, time share arrangements, travel and vacations, cultural activities and luxury items given as gift to their children and grandchildren. Overall, then the mature market subculture represents an excellent marketing opportunity that will become even better in the future.

Developing marketing strategies that appeal to consumers in the mature market is more difficult than it looks. Few companies are experts at it. Many marketers have inaccurate perceptions of this large and diverse group, including persistent images of frail, stubborn and indigent people who, if not confimed to bed, are tottering around on canes. Yet only 5 percent of Americans over 65 are institutionalized. People are staying healthy and active much later into their lives than ever before.

Some ads are beginning to use themes and models that older consumers can identify with. No longer depicted as weak and doddery, older people are shown doing the things they do in real life; working, playying tennis, falling in love and buying cars. McDonalds, for instance, was a forerunner in this style with its “Golden Years” spots that showed an elderly man and woman meeting for lunch at McDonald’s and an elderly man on his first day of work at McDonald’s.

Ethnic Subcultures

In the past two decades the ethnic makeup in the United States has changed dramatically. In 1980 one of every five Americans was a member of a minority group. In 1990 one in four Americans claimed to have either Hispanic, Asian, African or Native American ancestry. The increases were unequal across ethnic subcultures because of different immigration patterns and birth rates. For instance, the Asian subculture grew 80 percent during the 1980s, compared to increases of 4.4 percent in the white population, 14 percent for blacks and 39 percent for Hispanics. Increases in these minority subcultures are expected to continue so that by 2010 about one-third of American children will be black, Hispanic, or Asian.

Marketers must recognize that ethnic diversity is not distributed equally across the United States. The most ethnically diverse regions in the country are in the Southwest and the South; the least diverse are in the Midewest, where the proportion of whites may exceed 90 percent. The most ethnically diverse country in the nation is San Francisco with approximately equal proportions of whites, blacks, Hispanics and Asians. New York City and Los Angeles are highly diverse cities. Following we discuss the three major ethnic subcultures in the United States black, Hispanic and Asian.

Highlight 13.4

Cluster 31 Black Enterprise

Cluster 31, or Black Enterprise, is a subcultural group created through statistical analysis by Claritas Corporation.Claritas PRIZM system groups all of the U.S. ZIP codes and cencus tracts into 40 clusters or segmensts based on various demographic characteristics. It ranks the clusters by size and affluence and gives each one a catchy name. Black Enterprise is made up of relatively affluent black consumers. It ranks eleventh in affluance and comes closest to describing a black middle class.

In 1988, there were about 420,000 household in cluster 31 neighborhoods around the country. They were more likely to be college educated and hold white-collar jobs. They were more likely than average to sall, drink scotch, buy classical music, smoke menthol cigarettes, belong to a book club and travel by rail. These black consumers were very unlikely to buy country music, a pickup truck, or camping equipment or to go swimming frequently. Cluster 31 adults spend heavily on clothes, read magazines at above average rates, and watch less television than average. In many cases, these affluent blacks make choices similar to affluent white consumers, buying station wagons, using Visa cards once a month,  and making three or more stock transactions per year.

Source: Brad Edmondson, “Black Enterprise,” American Demographics, November 1989, pp.26-27.

The Black Subculture

The black or African-American subculture is the largest minority group in the United States, with some 34 million  people and about 7 millioon families (about 13 percent of the total population), a market worth about $469 billion annually. African Americans are a highly diverse group. Although many black Americans are poor, two thirds are not. More than 13 percent of black families had incomes exceeding $50,000 in 1988, up from 8 percent in 1980. However, the number of very poor black families (incomes under $5,000) also grew during this period, from 10 to 12 percent. Although the 17 million relatively poor blacks concentred in densely populated urban centers are more visible in the media, 8 million blacks live in suburban neighborhoods.

Economic conditions for blacks vary considerably in different metropolitan areas. For example, about one fourth of blacks in Washington, D.C., are affluent, compared to only 1 in 25 in Miami. In San Francisco 1 in 10 blacks is affluent and more than half are middle class. Middle class blacks may have more in common with middle class whites and Asians than lower class blacks. The diversity in the African-American subculture suggests marketers should further segment the black market based on factors such as income, social class, or geographic region. Highlight 13.4 presents an example of such a subsculture.

Increasingly, marketers are targeting African-Americans with special products and marketing strategies. For example, Tyco, Hasbro, and Mattel are all marketing ethnically correct dolls designed for the black market (10 percent of U.S. children under 10 are black). Mattel’s dolls, Shani (Swahili for “marvelous”) and her two friends, Asha and Nicelle, have different skin tones, hairstyles and facial features that reflect the diversity of black women. Some marketing strategies directed at the black subculture have been highly controversial. In 1990, for instance, following intense public pressure, the R. J. Reynolds Tobacco Company withdrew plans to test-market a new cigarette, “Uptown,” that was targeted at black smokers. In 1991 the G. Heileman Brewing Company succumbed to public pressure and canceled plans to market a high alcohol malt beer, “PowerMaster,” to low income, inner city black consumers.

The Hispanic Subculture

According to recent statistics, approximately 29 million Hispanic live in the United States (about 11 percent of the total population). Hispanics are people with Spanish speaking ancestry from such nations as Mexico (by far the largest group in the United States), Puerto Rico, Cuba, and various countries in Central and South America. When combined into a single Hispanic subculture, these people account for about $348 billion in purchasing power. 

Hispanics are distributed unequally across the United States, with most living in the border states of Texas, California, Arizona, and New Mexico (each state has a Hispanic population exceeding 500,000). The top six Hispanic U.S. cities are New York (mostly Puerto Ricans and Dominicans); Miami (Cubans); Los Angeles, Houston, and San Antonio (Mexicans); and Chicago (a mix of all). In these regions the Hispanic subculture has a significant effect on the overall culture.

The Hispanic subculture is diverse, and reaching Hispanic consumers effeciently anf effectively can be difficult. Some Hispanics are third or fourth generation U.S. citizens and are well assimilated into American culture, they can be reached by traditional U.S. media (TV, radio and magazines). Other Hispanics retain much of their original culture and may speak mostly or only Spanish. To oversimply, marketers can identify three broad segments (subgroups) in the Hispanic subculture only Spanish speaking bilingual, but favoring Spanish; and bilingual, but favoring English.

Using Spanish in ads can be an effective way to reach all three groups. Recently developed Spanish language media (special TV channels, newspapers and magazines) make it easier than ever to reach to the Hispanic market. For instance, de Hoy, targeted at Hispanic women who speak English as a second language and have children at home. Several large companies have placed ads in Spanish in the magazine, including Procter & Gamble, American Airlines, Kraft. AT&T, and Kinney Shoes. Successful advertising campaigns tend to use large and coloirful ads that combine the American dream with the traditional values of the Hispanic extended family.

In 1987 U.S. companies spent about $500 million on marketing strategies directed at the Hispanic market. Yet the largest Hispanic advertiser, Philip Morris, allocated only $13.3 million to Hispanic advertising less than 1 percent of its total ad budget. Many companies would like to develop marketing strategies targeted at the Hispanic market, but getting good information about Hispanics needs, values, and beliefs is difficult. Companies must decide whether to develop one general marketing strategy for all Hispanics or adapt the strategy for each segment of the Hispanic subculture. Coors, for instance, opts for the adaptive, tailor made approach, showing ads with a rodeo theme in Houston but not in Miami. Goya Foods developed different products for Miami (Cubans prefer black beans) and New York (Puerto Ricans like red beans).

Marketing to domestic subcultures requires a careful analysis of consumers affect, cognitions, and behaviors. For example, a telephone company tried to target the Hispanic market by employing Puerto Rican actors. In the ad, the wife said to her husband, “Run downstairs and phone Mary. Tell her well be a little late. ”However, this commercial ignored Hispanic values and behaviors. For one thing, Hispanic wives seldom order their husbands around; for another, few Hispanics would found it necessary to phone if they are going to be late, because being late is expected. Similarly, Coors ads featuring the slogan “Taste the high country” were not effective with Mexican-Americans, who could not identify with mountain life. The Spanish language Coors ads were modified to suggest that mountains were a good source of beer, but one did not need to live in the mountains to enjoy it. The new slogan in its English translation became “Take the beer from the high country and bring it to your high country wherever it may be. 

Asian Subculture

Although only about 3 percent of the population in 1997, Asian-Americans are the most rapidly increasing ethnic group in the United States. The population of people with Asian ancestry increased 80 percent in yhe 1980s (largely because of increaesed imigration), growi8ng from 3.8 million 1980 to about 7 million in 1989 to about 10 million in 1997, and have a purchasing power of about $110 billion. Asian-Americans are concentrated in a few areas of the country where they have an important influence on the pverall culture. Most Asians (56 percent) live in the West, particularly in California (13 percent of Californians will be Asian in cities (three quarters of the 3 million Californian Asians will be Asian in the year 2000). Asian-Americans are highly urbanized, with 93 percent living in cities (three-quarters of the 3 million Californian Asians live in the Los Angeles basin or the San Francisco Bay area). 

The Asian subculture in these regions requires special marketing attention for many companies. Grocery stores in Koreatown in Los Angeles stock large bags of rice near the checkout counter where stores in middle America put the charcoal. Understanding how Asian-American consumers make purchase decisions is critical to the success of many products. One study found that country of origin and length of time in this country are critical factors in how how consumers make purchase decisions. For instance, Vietnamese Americans are more likely to adhere to the cultural model in which the man makes the decision for any large purchase, whereas women in Japanese households tend to have more influence on their husbands.

Asian-Americans are a prime market because they are more affluent than any other racial or ethnic group. In 1997 the median income of an Asian American house hold was $43,200 compared to $38,800 for whites, $24,900 for Hispanics and $23,900 for African-Americans. Asian income levels are high for two reasons: (1) The education level is high (35 percent of adults have completed four or more years of college, compared to 22 percent of white Americans), and (2) more Asian-Americans live in married couple households with two wage earners.

It is tempting to think of Asian Americans (and other minority subcultures) as a single, homogenous market, but this subculture is highly diverse. Some Asians are well integrated in American culture, whereas others live in Asian communities and maintain much of their original culture, including their languages. Because Asian people come from several distinctive cultural background Japan, China, Southeast Asia, and the Pacific Islands many marketers further segment the Asian community into subcultures based on language or nationality. MCI, for instance, developed such effective print ads targeted at recent immigrants from Hong Kong and Taiwan that the company had to hire additional Chinese speaking operators to handle the influx of calls. Implementing such targeted marketing strategies is possible in communities where specialized media (newspapers, magazines, radio) can reach Asian subcultures.

Gender as a Subculture

Despite the modern tendency to downplay differences between men and women, there is ample evidence men and women differ in important respects (not only physically). For instance, women may process information differently from men and seem to be more “generous, more nurturing, and less dominating than men. For some marketing purposes, gender differences may be significant enough to consider the marketing purposes, gender differences may be significant enough to consider the two sexes as separate subcultures. For instance, research has found that  women treat possession differently than men do. Ownership and possession of products is seen by some men as a way to dominate and exert power over others, discriminate themselves from others (status differentiation), and even engage in subtle forms of agression over others. Women, in contrast, tend to value possessions that can enhance personal and social relationships. Compared to most men, most women seem to value caring to controlling, sharing to selfishness and cooperating to dominating. Many marketers may find it useful to develop different marketing strategies for the male and female subcultures.

In the late 1990s, more marketers began to see women as a distinctive subculture and key market segment. Women control approximately 60 percent of U.S wealth and influence more than 80 percent of all purchases. Moreover, some 25 percent of working, women bring home bigger paycheck than their husbands. This led Tom Peters, well-known business author, to declare, “Women are opportunity No. 1. In some market changes over the past quarter century have been dramatic. For example, women constituted only about 1 percent of all business travelers in 1970, but they accounted for roughly 50 percent in 1997. Recently, executives were surprised to find that 60 percent of customers at a do it yourself building  supplies chain were women and about two thirds of PC purchases for the home were made by women. Today, woman either make or greatly influence most purchasing decisions and companies that do not recognize this are headed for trouble. In response, the Westin hotel chain has developed strong marketing relationships with women by including irons and full length mirrors in the rooms and by having a respectful attitude in the restaurants (ask the women to taste the wine), among other things.

Income as a Subculture

It is possible to consider level of income as a subculture, because people at different income levels tend to have different values, behaviors and lifestyles. Typically, however income is used further segment a subculture defined on some other characteristic (age, ethnic group, region). Many myths and misconceptions about income distribution in the United States can confuse marketers. For instance, if you think the lower income households are dominated by minorities, you are wrong most poor Americans are white. Affluence doesn’t necessarily increase with age either. 

Marketers often divide American households into three income categories downscale (under $25,000 income per year), upscale (over $50,000 per year), and middle income ($25,000 to 50,000 per year). Demographic characteristics of these income groups illustrate one reason to stay in college and graduate: There is a very strong relationship between college education and income level. Nearly half the upscale adults have completed four years of college, but only 10 percent of downscale adults have done so. Nearly half (46 percent) of American households are downscale. Although the upscale subculture constitutes an excellent market for high quality luxury goods, only one in five households falls into this category. The mass market is downscale, which partially accounts for the large success discount retailers such as Wal-Mart. American marketers have found that the downscale market  can be very profitable. Highlight 13.5 presents another strategic approach to income segments.

Acculturation Processes

A process of acculturation begins when a person from one culture moves to a different culture or subculture to live and work.  Acculturation refers to how people in one culture or subculture understand and adapt to the meanings (values, belief, behaviors, rituals, lifestyles) of another culture or subculture. Consumer acculturation refers to how people acquire the ability and cultural knowledge to be skilled consumers in different cultures or subcultures.

Highlight 13.5

Income as a Subculture: Two-Tier Marketing

Did you know that there are two different types of Winnie the Pooh (the cute stuffed bear friend of Christophar Robin in the classic books by A. A. Milne)? The Walt Disney Company, which owns the rights to Milne’s characters, carefully markets Pooh to two different income segments. The original line drawn  figure of Pooh that appears on fine china, pewter spoons, and pricay kids stationery is sold in upscale specialty shops and fine department stores such as Nordstorms. Another Pooh, a plump, cartoonlike bear wearing a red T-shirt, adorns plastic key chains and bedsheets and appears in animated videos. These products are sold in Wal-Mart stores and discount drugstores. Only in Disney’s own stores do the two Poohs appear together.

Disney is not an aberration; many other marketers are adopting a similar “two tiered” strategy. This is because the middle class that once seemed to include almost everyone is not growing in numbers or in purchasing power. In contrast, the two extremes of the income distribution are growing. Over the past 20 years, real incomes of the wealthiest fifth of the population increased by 21 percent, whereas wages for the lower 60 percent have stagnated or even dropped. These changes make it attractive for a company to adopt either an upscale or downscale approach to marketing, although a few companies, like Disney, can target both income segments. Lester Thurow, an economist at M.I.T., put it this way, “The $4 restaurant meal is doing all right and the $50 meal is doing all right. The $20 meal is in trouble.”

In the past, many of America’s biggest brands focused on the middle market. For example, Levi’s and Ivory soap seemed to reflect the idea that a reasonably good product, properly packaged and promoted, could be sold to almost anyone. But this approach no longer seems to work in many categories. Take income trends discussed above mean that fewer people can afford a new car (especially since the median price of a car increased by 22 percent in constant dolars just during the 1990s). In 1997, the wealthiest 20 npercent of the population accounted for over half of all new car sales, up from 40 percent in 1980. This helps explain why the market for low mileage used cars was booming in the mid 1990s. Many folks wanted to buy a nice, high quality product, but couldn’t afford the cost of buying new. Nearly new was affordable.

Source: Two-Tier Marketing, “from the March 17, 1997 issues of Business Week by special permission copyright by The McGraw-Hill Companies.

Acculturation processes are important in the modern world. Many societies face the problem of assimilating large numbers of immigrants from rather different cultural backgrounds into the host culture. For instance, in the United States, the Hispanic and Asian subcultures grew rapidly during the 1980s.

Acculturation is also important for people who move to different regions within the same country and must adapt to different subcultural meanings. In the United States, one of six Americans moves each year. However, two thirds of these moved within the same country (the median distance moved is only 6 miles), and the subcultural changes  in most of these moves are probably not great. In contrast,about 10 percent of Americans move to a different region the country (most of these people are college graduates), and they are likely to face some acculturation problems as they learn a new regional subculture. Finally, acculturation is important for marketing managers who must try to understand the cultural meanings of consumers in different societies and subcultures than their own.

The degree to which immigrants, movers, and marketers became acculturated into a new culture or subculture depends on their level of cultural interpretation the ammount and types of social interactions they have with people in the host culture. Social contact with people in other subcultures can occur through direct, personal experiences at work, while shopping, or in living arrangements.

Social experiences also may be indirect or vicarious, as in observing other people from a distance or on television. Some Americans might lack a cultural understanding of people in other societies and subcultures because much of their social contact with such people has been shallow and indirect. Many Americans learn about other cultures and subcultures largely through vicarious observation of subcultural portrayals in the mass media (movies, television programs, books, news media). When people have the opportunity for deeper cultural interpenetration (through work experiences or living in proximity to other types of people), they tend to become more throughly acculturated.

When people come into contact with a new culture or subculture, they may go through four stages of acculturation corresponding to four levels of cultural interpenetration. In the honeymoon stage people are fascinated by the exotic foreign culture or subculture. Because cultural interpenetration is shallow and superficial, little acculturation occurs. Tourists traveling to various regious of the United States may experience this stage.

If cultural interpenetration increases, people may enter a rejection stage, where they recognize that many of their old behaviors and meanings may be inadequate for acting in the new subculture. Some people may develop hostile attitudes toward the new subculture and reject its key values and meanings. Cultural conflicts are maximal in this stage.

If cultural penetration continues and deepens, people may reach the tolerance stage. As people learn more cultural meanings and behaviors, they may begin to appreciate the new subculture, and cultural conflict will decrease. Finally, in the integration stage, adjustment to the subculture is adequate, although acculturation need not be complete or total. At this stage people are able to function satisfactorily in the new culture or subculture, which is viewed as an alternative way of life and is valued for its good qualities.

Consider the acculturation problems faced by immigrants who come to the United States with their own cultural meanings and values and must adapt to the different cultural meanings of America society. One study of immigrants from India found that transitional objects such as Indian clothing, jewelry, special furniture, movies, photographs and music were highly valued as reminders of their home culture. Educated immigrants might tend to become more acculturated because their high education levels lead to greater cultural interpentration. Many Hispanics tend to maintain their cultural values and traditions, and full acculturation may take three or four generations. But even long-term resident Hispanic-Americans, Asian-Americans, four generation. But even long-term resident Hispanic-Americans, Asian-Americans, or African-Americanas may never completely incorporate all of the values, meanings, and behaviors of American culture.

An important aspect of the acculturation process is proficiency in the language of the new culture. Ability to speak English obviously influences the level of cultural interpenetration that an immigrant can achieve in the United States. For instance, Hispanic immigrants who live and work in Spanish speaking neighborhoods, surounded by similar people, may penetrate little into American society and may become only partially acculturated. Immigrants with more education are more likely to speak English and can obtain better jobs, which in turn, allows for greater cultural penetration and enables them to become more completely acculturated. Interestingly, immigrants who join families already living in the United States tend to be more passive and penetrate less deely into American culture than the more innovative family members who were the first to come to the United States.

Social Class

An expert in social class research has made the following observations:

There are no two ways about it: Social class is a difficult idea. Sociologists, in whose discipline the concept emerged, are not of one mind about its value and validity. Consumer researchers, to whose field its use has spread, display confusion about when and how to apply it. The American public is noticeably uncomfortable with the realities about life that it reflects. All who try to measure it have trouble. Studying it rigorously and imaginatively can be monstrously expensive. Yet, all these difficulties nothwithstanding, the proposition still holds: Social class is worth troubeling over for the insight it offers on marketplace behavior of the nation’s consumers.

We agree with these observation concerning both the problems and the value of social class analysis. For our purposes in this text, social class refers to a national status hierarchy by which groups and individuals are distinguished in terms of esteem and prestige. Coleman recommends that four social class groups be used for consumer analysis in the United States upper; middle, working, and lower class. Exhibit 13.3 describes these groups and identifies some marketing implications for each.

Identification with each social class is influenced most strongly by one’s level of education occupation (including income as a measure of work success). But social class is also affected by social skills, status aspirations, community participation, family history, cultural level, recreational habits, physical appearance and social acceptance by a particular class. Thus, social class is a composite of many personal and social attributes rather than a single characteristic such as income or education. The social classes can be considered as large subcultures because their members share many cultural meanings and behaviors.

Although the members of each social class share distinct values and behavior patterns to some degree, each of the four major groups can be further differentiated. Although there are a number of similarities in values and behaviors within groups in a given class, there can be vast differences in family situations and income levels among subgroups.

For instance, families in each social class can be further classified as relatively over privilaged, average, or underprivilaged. Overprivilaged families in each social class are those with incomes usually 25 percent to 30 percent above the median for the class, who therefore have money left over to seek forms of a better life preferred by the class. However, because these families continue to share values, behaviors and associations with other members of the class, they typically do not move to a higher social class. The average families are those in the middle income range who can afford the kind of house, car, apparel, food, furniture and appliances expected by their social class peers. Finally, the underprivilaged families have incomes that fall at least 15 percent below the class midpoint and therefore must scrimp and sacrifice to be able to purchase the proper products for that class.

Exhibit 13.3

Social Class Groups for Consumer Analysis

Upper Americans (14 percent of population). This group consists of the upper-upper, lower-upper and upper middle classes. They have common goals and are differentiated mainly by income. This group has many different lifestyles, which might be labeled postpreppy, conventional, intellectual, and political among others. The class remains the segment of our society in which quality marchandise is most prized, special attention is paid to prestige brands,  and the self image ideal is “spending with good taste.” Self-expression is more prized than in previous generations and neighborhood remains important. Depending on income and priorities, theater; books; investement in art; European travel; household help; club memberships for tennis, golf and swimming and prestige schooling for children remain high consumption priorities.

Middle class (32 percent of population). These consumers definitely want to “do right thing” and buy “what’s popular” in print media. Increased earnings result in better living, which means a “nicer neighborhood on the better side of town with good schools.” It also means spending more on “worthwhile experiences” for children, including winter ski trips, college educations, and shopping for better brands of clothes at more expensive stores. Appearance of home is important because guests may visit and pass judgment. This group emulates upper Americans, which distinguishes it from the working class. It also enjoys trips to Las Vegas and Physical activity. Deferred gratification may still be an ideal, but it is not so often practiced.

Working class (38 percent of population). Working class Americans are “family folk” depending heavily on relatives for economic and emotional support, such as tips on job opportunities, advice on purchases, and help in times trouble. The emphasis on family ties is only one sign of how much more limited and different working class horizons are socially, psychologically, and geographically compared to those of the middle class. In almost every respect, a parohial view characterizes this blue collar world. This group has changed little in values and behaviors despite rising incomes in some cases. For them, “keeping up with the times” focuses on the mechanical and recreational, and thus, ease of labor and leisure is what they continue to pursue.

Lower Americans (16 percent of population). The men and women of lower America are no exception to the rule that diversities and uniformities in values and consumption goals are to be found at each social level. Some members of this world, as has been publicized, are prone to every form of instant gratification known to humankind when the money is avalaible. But others are dedicated to resisting worldly temptations as they struggle toward what some believe will be a “heavenly reward” for their earthly sacrifices.

Sources: Excerpted with permission from Richard P. Coleman, “The Continuing Significance of Social Class to Marketing, “Journal of Consumer Research, December 1983, pp.265-80.

Social class and relative standing within a class are important sources of consumers beliefs, values and behaviors. Most of the people an individual interacts with on a day to day basis are likely to be members of that person’s social class. Family, peer groups, and friends at work, school and in the neighborhood are all likely to be of the same social class. These people teach the individual appropriate values for the class as well as behavior ions that are acceptable to it. This process can occur either through direct instruction (“You don’t have a chance anymore unless you go to college”) or vicariously (an individual sees neighborhood friends going to college, graduating and purchasing new cars).

At a conceptual level, social classes are useful for investigating the process by which consumers develop their characteristic beliefs, values and behavior patterns. For example, the upper class may welll be socially secure and not find it necessary or desirable to purchase the most expensive brands to impress other people. Middle class people, on the other hand, often engage in such conspicuous consumption. As Highlight 13.6 shows, even homeless people (perhaps the lowest social class in American society) engage in consumption behavior.

Highlight 13.6

The Lowest Social Class?

The Homeless in America

For a variety reasons, homeless men and women crowded many American cities during the 1980s and 1990s. Estimates in 1987 of the homeless population ranged from over 3 million to a more likely 600,000. Without a home and seldom with a job, the homeless are at the bottom of the social class hierarchy. However despite their very low socioeconomic status, homeless people are consumers. They exert considerable physical and cognitive effort performing various consumption behaviors finding a place to sleep, getting food to eat, acquiring simple possessions (warm clothing), keeping their meager possession safe. In a real sense, these consumption activities constitute a full time job.

One intensive study of the homeless learned much about this distinctive subculture or social class. For instance, most homeless individuals do have a few posssessions are scavenged from trash cans or abandoned cars and builldings, and some are purchased (hot meals are especially valued). Often individuals will exchange possessions using barter. Some homeless persons will earn a small income doing odd jobs or, most frequently, by recycling (selling empty bottles or scrap metals). Others may work sporadically as day laborers or by washing car windows at intersections.

Maslow’s Need Hierarchy identifies the basic needs of homeless people food, water, shelter and security.

By definition, all homeless people lack a house or apartment, but some do have housing of their own. These can range from vacant buildings or abandoned automobiles to makeshift (self-constructed) shelters on vacant lots built fom abandoned building materials to partially protected areas such as bridges and tunnels that can provide useful shelter.

The consumer product most often purchased by homeless people is food. But food can also be obtained from charitable shelters, by finding “road kill” meat and by scaveging food from dumpters. Some homeless persons become skilled at scavenging food, for instance, by checking the dumpters of fast food restaurants soon after closing.

Clothing is particularly important in the winter, and homeless people will try to accumulate layers of clothing to provide protection from the cold. Multiple layers of clothing also provide protection from attack (beatings and rape). Clothing is often scavenged, although charity distribution centers can be a good source.

Another need is personal hygiene and health care. Satisfying these needs is difficult for homeless people, partly because of their restricted access to water. Homeless people find it difficult to wash themselves and btheir clothes. Shelters are useful for these purposes. Of course, virtually no homeless individuals have any health insurance. Thus, they are likely to seek medical attention from emergency rooms or free clinics. One homeless person deliberately gets arrested when he is depressed or sick to get medical attention in jail.

Finally, tools of various sorts are important possessions for many homeless people. Shopping carts are useful to carry their possessions (to keep them from being stolen). Tools that aid in scavening parts from cars or buildings are valued (screwdrivers, flashlights, tire irons).

Source: Ronald Paul Hill and Mark Stamey, “The Homeless in America: An examination of Possessions and Consumption Behaviors,”Journal of Consumer Research, December 1990, pp. 303-21.

Social Class versus Income

The social class concept aids in the understanding of consumer values and behavior; it is also useful for market segmentation and prediction of consumer behavior. However, there has long been a controversey as to whether social class or income is the better variable for use in consumer analysis. Advocates of each position master a number of arguments for the superiority of their favorite variable and point out a variety of methodological and coneptual problems with the other one.

Recently, consumer researchers have recognized that each variable has it advantages and disadvantages; and the choice between using social class, income, or a combination of the two depends on the product and the situation. For example, Shaninger offers the following tentative generalizations:

  1.Social class is more relevant than income for areas of consumer behavior that do not involve high dollar expenditures but do reflect underlying differences in lifestyle, values, or home maker roles not captured by income (e.g., using imported or domestic wines). Social class is superior for both method and place of purchase of highly visible, symbolic and expensive objects such as living room furniture.

  2.Income is generally appropriate for understanding purchase of major kitchen laundry appliances and products that require substantial expenditures but are not status symbols within the class.

  3.The combination of social class and income is generally superior for product classes that are highly visible, serve as symbol of social class or status within class and require either moderate or substantial expenditures (such as clothing, automobiles and television sets).

  In sum, determining whether social class, income, a combination of these, or other variables are most useful in a particular situation requires a careful analysis of the relationship between the product and the consumer. In other words, consumer affect and cognitions, behaviors and the environment must be analyzed to develop appropriate marketing strategies.

  Wooing the Aging Baby Boomers

  The baby boomer example describes an important change occuring in the subcultural social environment of America. Similar large scale changes are occuring in the social environments of many other cultures. The example also identifies some economic reasons marketers must pay attention to this change in consumers.

  Wooing the Aging Baby Boomers

  The baby boomer example describes an important change occuring in the subcultural social environment of America. Similar large scale changes are occuring in the social environments of many other cultures. The example also identifies some economic reasons marketers must pay attention to this change in consumers.

   Consumers in different age categories (such as 35 to 50 boomer group versus 50 to 65) are likely to have somewhat different values, cultural meanings, and behavior patternns. Partly this is because people in these age categories grew up in different decades with different cultural experiences. However it should be recognized that these broad subcultural segments can be quite diverse. Therefore, marketers may have to use other variables to identify narrower and more precise segments. For example, the age categories could be farther broken down into ethnic, geographic, religious, or community subgroups. It is quite likely, for instance that the cultural values and behavioral norms of middle aged blacks and Hispanics are somewhat different from those of middle aged whites. Marketers could also look at different social classes within baby boomer group. Here, again we would expect to see major differences in the product perceptions, values and behavior patterns of upper, middle and lower class baby boomers.

  Marketers who have had problem selling to mature consumers (people aged 45 to 60) and the so called Generation X (people aged 20 to 37), now will be dealing with a new crop of teenagers we might call them Generation Y. These “new” teens share some values and perceptions with the cynical Generation X that preceded them, but they will be different. For one thing, there will be a lot more of them. The teen market, about 25 million in the mid 1990s, is expected to grow at twice the rate of the general population. By 2010, there will be an estimated 30.8 million teenagers, nearly a million more than the biggest year of the baby boom in the 1960s.

  The new teens will be different in many ways. For one thing, many of them are plugged into the information highway where accessing bulletin boards and surling the Internet are common. Thus teens are likely to be prime targets for high tech marketing communications. Also, teens are much more comfortable with diversity than their predecessors (by 2010, nearly one in three teens will belong to a minority). Many teens are savvy shoppers, partly because they have been shopping for years to help out in single parent and dual income families. Thus, the new teens are more seasoned consumers than previous generations.

   Summary

  This chapter discussed two macro social influences on consumers behaviors, cognitions, and affective responses subculture and social class. These social factors influence how people think, feel, and behave relative to their physical, social and marketing environments. We discussed subcultural influences in terms of geographic area, age, ethnic groups and other factors. Social class influences were discussed in terms of their roles both in explaining consumer behavior and as a strategic tool.

   Key Terms and Concepts

   Acculturation 314                               ethnic subcultures 309

   Age subcultures 304                           four stages of acculturation 316

   Baby boomers 305                              geographic subcultures 303

   Consumer acculturation 314               social class 317

   Cultural interpenetration 315              subcultures 299

   Review and Discussion Questions

   1.   Discuss how subcultures (and social class) influence how consumers learn cultural meanings (values, behaviors, lifestyles). Give a specific example.

 2. Check on the Nike Web page devoted to women’s sports and sports equipment at http://www.nike.com/girls/. Discuss how Nike seems to understand women as a subculture and how that approach has directed its marketing strategies. Contrast your analysis of Nike with another competitor such as Reebok http://www.reebok.com/.

  3.  What ethical factors should a marketer consider in developing marketing strategies targeted at particular subcultures or social classes? (What is your reaction to selling fortified wine to homeless people, cigarettes to Hispanics, or diet plans to overweight people?)

   4.    Are college students a subculture? Why or why not? How could a marketer use knowledge about this group to develop marketing strategy?

   5. Identify the age subcultures among members of your own family (or neighborhood). How do these cultural differences affect the consumption behaviors of these people for foods, personal care products, and clothing?

   6.  Define the concept of social class. What are the major social class groups in the United States (or your home country)? What are the major social class groups in the immediate community where you live? How did you recognize these social class groupings?

   7.  Select two products classes (perhaps foods, beverages, clothing, automobiles, furniture). How might each of the social classes you have identified in Question 6 respond to marketing strategies for these products?

   8.      Think of a subculture not discussed in the text and briefly describe it. Discuss marketing implications for this subculture. What product categories would be most relevant for this cultural group?

   9.      Discuss the acculturation process by describing  what might happen if you came into contact with a different subculture (say, you moved to a different area of the country or city).

  10.   Discuss the concept of cultural interpenetration in terms of the acculturation of immigrant populations in your country. What marketing opportunities do you see in this situation?

   Marketing Strategy in Action

   Hyatt and Marriott Build Retirement Housing for the Elderly

   As the number of older American increases, business are beginning to pay more attention to the diversity in this subculture. Many companies are trying to identify the needs of the elderly and develop products to meet those needs. For instance, both Mariott Corporation and Hyatt Hotels are developing retirement community products for the elderly market. Retirement communities combine retirement apartments, various services and nursing care. They offer personal living quarters in apartments, various services and nursing care. They offer personal living quarters in apartments or varying sizes, a wide range activities and entertainment, housekeeping services, food service options (a dining room for some meals and one’s own kitchen) and variying levels of on site health care, including full nursing home services for some people.

   The market for retirement communities is immense: more than 30 million Americans will be 65 older by the year 2000. However, it is a fallacy to imagine that everyone over 65 is a potential customer for a retirement community. The prime customers are in their late 70s or early 80s. Also, it is wrong to think that many elderly are feable and in need a nursing home (only 5 percent of Americans over 65 are institutionalized). Contrary to populer belief, not all elderly live alone, many elderly are married (estimated 8.3 million in 2000). The mature market is quite diverse; only the over 85 subgroup is somewhat homogeneous. Therefore, marketers must analyze the elderly subculture carefully.

    Elderly people differ considerably in how they want to live in retirement. Some want to live in a single family home, whereas others want apartments or condominiums. Some want community, social interactions and recreational amenities and others prefer solitude and independence.

   Both Hyath and Mariott conducted detailed research using focus groups and telephone and written surveys to understand these needs. One research study identified three subcultures in the elderly subcultures the “go go’s” (65 to 75, who travel, play golf and so on), the “slow-go’s” (75 to 85, still active but slowing down), and the “no-go’s” (85 and older, somewhat active but staying closer to home). The prime target customer for retirement communities is the slow go group. The go go’s will be potential customers in another 10 years and the no go’s are potential customers for the more extensive levels of nursing care.

   In the past, marketing of retirement community products was simplistic some fancy four color brochures and corporate print ads placed in magazines and newspapers. Early research generally focused on simple demographic analyses of age, income and competition. Thus, many marketers did not really understand the elderly market and how they perceive their own needs.

   There is a big affective and cognitive problem in marketing retirement communities. Typically, a consumers first response is “im not ready yet.” Most elderly consumers want to stay in their own homes and remain independent until that becomes impossible. Getting consumers to buy into a retirement community requires that they think about the unthinkable (their own mortality and falling health). This is not easy for most people. In fact, many elderly, especially among the affluent subgroup, perceive them selves as younger and more fit than they actually are.

   Marriott opened its first high rise retirement developments (350 to 400 apartments) in 1988. Its Jefferson retirement community, which opened in 1992, offers a pool, maid service, and a health club, in addition to 24 hour meals, emergercy call buttons in each bathroom and bedroom, a floor with skilled nursing care and another floor for those elderly who don’t require nursing care but need other types of daily help (in dressing themselves, for example).

    A well known industry consultant suggested that direct mail is the most effective approach for marketing retirement communities. Every month a company might send something to potential customers such as postcard invitations to some event, a letter describing some service, newsletters about the people in the retirement community or even dessert recipes.

   Mariott successfully used a direct mail promotion to generate interest in its Jefferson retirement community before it was built. It mailed brochures and information to 45,000 affluent elderly residents of the Washington, D.C., area. For a $1,000 deposit, people could reserve a $100,000 to$260,000 apartment in the not yet built luxury complex. The mailing generated a phenomenal 4 percent response rate (2 or 3 percent is considered good).

  Over the next several years Mariott plans to spend more than $1 billion constructing some 150 retirement communities like the Jefferson around the country. In each, most of the apartment units are designed for independent living, but residents have the option of receiving nursing care and other types of specialized services. Mariott also intends to build another 100 developments that offer only two living options assisted and nursing care.

   Hyatt developed its retirement community, Classic Residences by Hyatt, in 1990. Classic Residences are upscale apartment complexes that offer a similar set of services for people of retirement age. Hyatt’s initial research also showed that elderly people had a strong initial negative reaction to retirement comunities. Even people living in metropolitan areas who were exposed to a great deal of marketing information about these products  thought of retirement communities as a euphemism for the dreaded “nursing home.” Thus, Hyatt’s marketing promotions emphasize “active lifestyle” rather than “taking care of you forever.”

   Hyatt also found that many elderly people thought retirement communities were extremely expensive or they had to sign away their life savings to get into a retirement community. So Hyatt salespeople compared the costs of living in one’s own home to living in the retirement community. Most people did not realize how much they were spending to live in their own house, and this knowledge had some influence on their beliefs of “Im not ready yet.” Mariott, finding the same thing, is experimenting with different pricing strategies, including charging a lower initial payment with higher monthly rent/fees so elderly customers don’t have to use so much of their accumulated savings.

    Finally, both Hyatt and Mariott have developed other marketing strategies. In their sales presentations they include seminars about retirement planning, health issues, and motivational topics. Open houses often include entertainment to attract customers. If necessary, incentives are offered to encourage prospects to take that final step, including free rent for a few months, paid moving expenses, free interior decorating advice, or expense paid vacations.

   In sum, developing successful retirement community products and marketing strategies is largely a matter of listening to the prospects and understanding their needs and interests. Many elderly consumers know what they want, and they respond to the same types of marketing strategies used to sell other services.

   Discussion Questions

    1.      Discuss the submarkets (subcultures) within elderly subculture that are relevant for retirement communities. Discuss how social class can be combined with age subcultures to more precisely define the market segments for retirement communities. What marketing strategies would be necessary to target these different segments of eldewrly market?

   2.      Identify the key target segments for Mariott’s new health care oriented retirement communities (they offer only variying levels of health care). For the most attractive segment, identify and analyze the behaviors, affective responses, and cognitions most important in shopping for purchasing and living in such a retirement community.

   3.      Discuss the marketing strategies that Marriott could use to market its new health care oriented retirement units to the key market segments. What different promotional strategies would appeal to these subcultural groups?

   4.      The customer product relationship may be useful way think about marketing retirement communities. What aspects of this relationship should Marriott and Hyatt consider, and why? Contrast the marketing strategies Marriott and Hyatt could use to develop the customer product relationship before the purchase with the strategies they might institute after the sale to enhance and maintain this relationship.
   Source: Sally Chapralls, “Retirement Community Marketers End Their Retirement,” Marketing News, July 8, 1991, p.2; Jame Gollub and Harold Javitz, “Six ways to Age,” American Demographics,  June 1989, pp. 23-37; and Janet Novack, “Tea, Sympathy and Direct Mail, “Forbes, September 18, 1989, pp.210-11.