Page 101 - Marketing Management

78 PART 2 CAPTURING MARKETING INSIGHTS

CONSUMER PSYCHOLOGY Did new consumer spending
patterns during the 2008–2009 recession reflect short-term, temporary
adjustments or long-term, permanent changes? 39 Some experts
believed the recession had fundamentally shaken consumers’ faith in
the economy and their personal financial situations. “Mindless”
spending would be out; willingness to comparison shop, haggle, and
use discounts would become the norm. Others maintained tighter
spending reflected a mere economic constraint and not a fundamental
behavioral change. Thus, consumers’ aspirations would stay the same,
and spending would resume when the economy improves.
Identifying the more likely long-term scenario—especially with
the coveted 18- to 34-year-old age group—would help to direct how
marketers spend their money. After six months of research and de-
velopment in the baby boomer market, Starwood launched a “style
at a steal” initiative to offer affordable but stylish hotel alternatives
Starwood’s Aloft hotel chain to its high-end W, Sheraton, and Westin chains. Targeting an audi-
blends urban chic with affordable ence seeking both thrift and luxury, it introduced two new low-cost chains: Aloft, designed to re-
prices. flect the urban cool of loft apartments, and Element, suites with every “element” of modern daily
40
lives, including healthy food choices and spa-like bathrooms.
INCOME DISTRIBUTION There are four types of industrial structures: subsistence economies
like Papua New Guinea, with few opportunities for marketers; raw-material-exporting economies
like Democratic Republic of Congo (copper) and Saudi Arabia (oil), with good markets for
equipment, tools, supplies, and luxury goods for the rich; industrializing economies like India,
Egypt, and the Philippines, where a new rich class and a growing middle class demand new types of
goods; and industrial economies like Western Europe, with rich markets for all sorts of goods.
Marketers often distinguish countries using five income-distribution patterns: (1) very low
incomes; (2) mostly low incomes; (3) very low, very high incomes; (4) low, medium, high incomes;
and (5) mostly medium incomes. Consider the market for the Lamborghini, an automobile costing
more than $150,000. The market would be very small in countries with type 1 or 2 income patterns.
One of the largest single markets for Lamborghinis is Portugal (income pattern 3)—one of the
poorer countries in Western Europe, but with enough wealthy families to afford expensive cars.
INCOME, SAVINGS, DEBT, AND CREDIT Consumer expenditures are affected by
income levels, savings rates, debt practices, and credit availability. U.S. consumers have a high
debt-to-income ratio, which slows expenditures on housing and large-ticket items. When credit
became scarcer in the recession, especially to lower-income borrowers, consumer borrowing
dropped for the first time in two decades. The financial meltdown that led to this contraction
was due to overly liberal credit policies that allowed consumers to buy homes and other items
they could really not afford. Marketers wanted every possible sale, banks wanted to earn interest
on loans, and near financial ruin resulted.
An economic issue of increasing importance is the migration of manufacturers and service jobs
offshore. From India, Infosys provides outsourcing services for Cisco, Nordstrom, Microsoft, and
others. The 25,000 employees the fast-growing $4 billion company hires every year receive techni-
cal, team, and communication training in Infosys’s $120 million facility outside Bangalore. 41

The Sociocultural Environment
From our sociocultural environment we absorb, almost unconsciously, a world view that defines
our relationships to ourselves, others, organizations, society, nature, and the universe.
• Views of ourselves. In the United States during the 1960s and 1970s, “pleasure seekers”
sought fun, change, and escape. Others sought “self-realization.” Today, some are adopting
more conservative behaviors and ambitions (see Table 3.4 for favorite consumer leisure-
time activities and how they have changed, or not, in recent years).
• Views of others. People are concerned about the homeless, crime and victims, and other
social problems. At the same time, they seek those like themselves for long-lasting relation-
ships, suggesting a growing market for social-support products and services such as health
clubs, cruises, and religious activity as well as “social surrogates” like television, video games,
and social networking sites.