The sociocultural environment
It is absolutely essential for organisations serving consumer markets, directly or indirectly, to understand the sociocultural environment, since these factors fundamentally influence the customer’s needs and wants. Many of the factors discussed here will be looked at again in Chapters 3 and 4, and so this is a brief overview of the demographic and sociocultural influences on marketing thinking and activities.
The demographic environment
Demographics is the study of the measurable aspects of population structures and profiles, including factors such as age, size, gender, race, occupation and location. As the birth rate fluctuates and as life expectancy increases, the breakdown of the population changes, creat- ing challenges and opportunities for marketers, particularly if that information is taken in conjunction with data on family structure and income.
One demographic group of great interest to marketers is what is known as the ‘grey market’, consisting of the over-55 age group which represents around one-quarter of the population of most EU countries (Euromonitor, 2001). Their numbers are increasing, and because of better health care and financial planning, a significant proportion are able to indulge in high levels of leisure-oriented consumption, especially as they are likely to have paid off any mortgage or similar long-term debt, and are not likely to have dependent chil- dren. ‘Generational marketing’, for organisations seeking to appeal to this target age group, requires a fundamentally different perspective on the part of advertisers, according to Shannon (1998). Attitudes are changing. For example, research into the over-50s in Germany revealed that rather than thrift and self-denial, the growing emphasis is on enjoy- ment through consumption. To communicate effectively to this age group, the focus now has to reflect attitude and lifestyle rather than reinforcing an age-based stereotype.
Clearly, the size of a household combined with its income is also going to be a fundamental determinant of its needs and wants, and its ability to fulfil them. Data from Euromonitor (2001) suggest that most European countries are experiencing a pattern of decline in the average household size. Again, marketers need to be mindful of these changes and to adapt their offerings accordingly. A significant increase in the proportion of single-person house- holds will affect a whole range of marketing offerings, for example solo holidays, smaller apartments, pack sizes and advertising approaches and family stereotypes.
What is also important is the level of disposable income available (i.e. what is left after taxes have been paid), and the choices the household makes about saving and/or spending it. Table 2.1 shows how the spending of disposable income varies across Europe.
Clearly, housing is a fundamental cost, but the proportion of income it takes varies widely across Europe, with the Greeks and Portuguese spending the lowest percentage on housing. Looking at the food column, however, it is in the less affluent economies, such as those of Greece and Portugal, that people are spending relatively more on food as a percent- age of their total expenditure. In some of the other categories, the Irish spend a higher proportion than anyone else on tobacco while the Dutch spend more on health care; the Germans like their home comforts, with a higher than average spend on household fuels and household goods and services; the Spanish obviously like eating out while the Finns seem to enjoy their alcohol! Of course, patterns of expenditure will be dictated to some extent by national income levels and relative prices.
Such spending patterns are not fixed: they will vary not only because of changes in the demographic and economic structure of the household, but also because of sociocultural influences, discussed in the next subsection. A further factor which cuts across both demo- graphic and sociocultural issues is employment patterns, specifically the number of working women in a community and the rate of unemployment. This influences not only household income, but also shopping and consumption patterns.
Sociocultural influences
Demographic information only paints a very broad picture of what is happening. If the mar- keter wants a really three-dimensional feel, then some analysis of sociocultural factors is essential. These factors involve much more qualitative assessment, can be much harder to measure and interpret than the hard facts of demographics and may be subject to unpre- dictable change, but the effort is worthwhile for a truly marketing oriented organisation. One thing that does evolve over time is people’s lifestyle expectations. Products that at one time were considered upmarket luxuries, such as televisions and fridges, are now con- sidered to be necessities. Turning a luxury into a necessity obviously broadens the potential market, and widens the marketer’s scope for creating a variety of products and offerings to suit a spectrum of income levels and usage needs. Televisions, for example, come in a vari- ety of shapes, sizes and prices, from the pocket-sized portable to the cheap, small set that will do for the children’s bedroom, to the very large, technically advanced, state-of-the-art status symbol with plasma screen and digital connectivity. This variety has the bonus of encouraging households to own more than one set, further fuelling the volume of the market, particularly as improvements in technology and production processes along with economies of scale further reduce prices.
Broadening tastes and demands are another sociocultural influence, partly fuelled by the marketers themselves, and partly emanating from consumers. Marketers, by constant inno- vation and through their marketing communications, encourage consumers to become bored with the same old standard, familiar products and thus to demand more convenience, variety and variation.
Fashions and fads are also linked with consumer boredom and a desire for new stimulation. The clothing market in particular has an interest in making consumers sufficiently discon- tented with the perfectly serviceable clothes already in the wardrobe that they go out to buy new ones every season. For some consumers, it is important for their social integration and their status to be seen to have the latest products and the latest fashions, whether it be in clothing, music or alcoholic drinks. Nevertheless, linking a product with fashion may create marketing problems. Fashions, by definition, are short-lived, and as soon as they become widespread, the fashion leaders are moving on to something new and different. Marketers therefore have to reap rewards while they can, or find a means of shifting the product away from its fashionable associations.
More deeply ingrained in society than the fripperies of fashion are underlying attitudes. These change much more slowly than fashion trends and are much more difficult for the marketer to influence. It is more likely, in fact, that the marketer will assess existing or emerging attitudes and then adapt or develop to fit them. As can be seen in Figure 2.2, there are a number of areas in which changes in societal attitudes have influenced marketing approaches. Each is discussed below.
Environmental issues
Environmental issues have been of major concern in recent years, and this area has caused consumers to think more critically about the origins, content and manufacturing processes of the products they buy. Consumers, for example, want products made with the minimum of pollution and are looking for the reassurance, where applicable, that they come from renewable resources. Many paper products now carry notices stating that they are made of wood from managed forests that are replanted after harvesting. In the same spirit, con- sumers are also demanding that unnecessary packaging is eliminated and that packaging should be recyclable.
Animal welfare
The issue of animal welfare is linked with environmental concerns, and shows itself in a number of ways. Product testing on animals has become increasingly unacceptable to a large number of vocal consumers, and thus there has been a proliferation of cosmetics and toiletries, for example, which proclaim that they have not been tested on animals. Cosmetics retailer, The Body Shop, has, for example, been at the forefront of positioning itself overtly on this issue, reassuring concerned customers about its own products and pub- licising the worst excesses of animal testing.
Another area of animal welfare which has captured the public imagination is that of intensive farm production methods. Public outcry against battery egg production, for exam- ple, opened new marketing opportunities for free range eggs, since consumers wanted the alternative and were prepared to pay for it. Similarly, outdoor-reared pork and organic beef are starting to appear in supermarkets. Pressure groups are becoming more adept at using advertising and promotional techniques to activate public opinion.
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