February 1997 No. 4Using Lifestyle to Analyze Market PotentialBill Pinkovitz
Analyzing consumer lifestyles (psychography) means examining the way people live rather than where they live (geography) or their age, income, or occupation (demography). Lifestyle analysis is based upon a person's activities, interests and opinions. People of the same age, income, and occupation, who live in the same area, purchase a wide variety of goods and services. Lifestyle differences are used to help explain why one 40 year old married, white, male attorney with two children buys a Lincoln Towne car while another attorney of the same age, income, and family situation purchases a Porsche Turbo. Activities include work and leisure activities. Interests are comprised of a wide range of priorities including family, home, and community. Opinions include peoples' opinions about themselves, others, politics, and the future. Research has demonstrated that each of these affects consumer behavior. Knowing more about your potential customers' lifestyles will help you understand them and thus, serve them better. Several market research firms provide lifestyle data. Each has developed lifestyle classifications that describe different market segments. For example, The Lifestyle Market Analyst (LMA), published by SRDS, uses interests as the basis for differentiating market segments. Interests, as defined by LMA, include a wide variety of activities: Bicycling, fishing, grandchildren, gambling, dieting, motorcycles, and bible reading. LMA combines lifestyle, demographic, and geographic data to provide comprehensive profiles by Market, Lifestyle, and Consumer Segment. Each profile provides comprehensive demographic information about the defined market segment. It also includes a list of the top ten lifestyle interests for the market and a ranking and index for sixty lifestyle interests. Market Profile information is reported by geographic areas known as Designated Market Areas (DMAs). DMAs are defined by Nielsen Media Research. They consist of TV or broadcast market areas. The Lifestyle Profile provides the same demographic profiles and lifestyle information for each of the sixty lifestyle interests. The Consumer Segment Profile reports the information by consumer segment (i.e. 18 to 34 years old with annual incomes of $30,000 to $49,000). For example, the Green Bay-Appleton Market Profile reveals that residents within this DMA are much more likely to have a high school diploma, a blue collar job, or two incomes. They are less likely to be self-employed, have a college degree, or have an American Express card. The Market Profile also includes a list of the top ten lifestyle interests for the Green Bay-Appleton market.
The Lifestyle Profile section includes the following top ten lifestyles interests for Hunting/Shooting participants:
A sample of the demographic information contained in the Lifestyle Profile reveals that: Two-thirds of Hunting/Shooting participants are married; almost 70% own their home; and over half are between the ages of 25 and 44. Similar demographic and lifestyle information is included in the Consumer Segment Profile portion of LMA. Another vendor, Claritas' Prizm Lifestyle Segmentation demographic, geographic, and lifestyle data model divides consumers into sixty-two lifestyle profiles. Each profile includes demographic and lifestyle characteristics. The profiles include urban, rural, and suburban households. For example, the category Empty Nests in Aging Industrial Cities comprises 1.8% of the population. Most are 65+ years old. They have a high school education and own a single family home. They walk for exercise, have a J.C. Penny charge card, buy 35 mm cameras, listen to early morning radio, and read home and garden magazines. How can you use this type of information? Peoples' interests, opinions, values, and priorities affect their behavior as consumers. The more you know about your customers and potential customers, the better you will be able to understand how to attract them and keep them. Lifestyle data will not provide complete answers to your marketing questions. However, it can provide an important piece of the puzzle. Lifestyle data is most useful when combined with other market data (i.e demographic, geographic, consumer expenditures, industry trends). Combining lifestyle data with other types of data is now relatively easy. Several vendors offer software that combines and displays different types of data in a geographic format. These Geographic Information Systems(GIS) provide the means to match lifestyle profiles to a defined geographic area The ability to map lifestyle data using GIS makes it possible to combine a variety of data to analyze markets and market potential. |
