Changing Trends in Households and the Implications of These Changes on Marketing Strategy - Essay Example

A Report Exploring the Changing Trends in Households and its Implications of These Changes on Marketing Strategy Outline 1. Introduction 2. Description Full nest II Statistics 3. The role of household in consumer behavior process Information gatherers Influencer Decision maker Purchaser User 4. Implications of Changing Household trends on the market 5. Recommendations 6. Conclusion Introduction Household life cycle is very important to a marketer for segmentation activities. Understanding the stages of household life cycle enables a marketer to decide on what products or services to offer and what marketing strategy to apply. There are different life cycles stages of household are: The Single people, young married with no children, full nest I with children, full nest II, Full nest III, Empty Nest I, empty nest II, solitary survivor, and solitary survivor. Consumption patterns of goods and services are different among the different stages of household life cycle. As family progresses from being single, getting married, having children and becoming grand parents involves planning and issues to do with finances. Each stage has its own needs, responsibilities and market trends. In this report I will discuss the full nest II stage the household life cycle. Description Full nest II is a stage in household life cycle for middle-aged married couple at age between 35years and 64 years. The couple has older children with the youngest child being about 6 years of age just the right age for school. There is improvement in income for the employed spouse because earning is established. Generally, there is improvement fin the family’s financial position, although it consumes more and in very large quantities. Since the family is big there is need for larger home, big car and. large-sized packages of food. Children influence consumption patterns; a computer, music lessons, sports equipment, bicycles, clothing, and so on. Most advertisers attract teenagers of these households through their advertisements. This stage of household life cycle has teenagers whose spending is discretional. Those in high school (of age 7 and 12) are interested in fitness and sports. Teenage boys of age 16 and 19 spend their money buying and watching movies, clothing, dating, vehicle and entertainment as well as dating. Girls at the same age send their money on fragrances, cosmetic and clothing. The single people and the married with no children spend their money on paying college fees or college loans while still learning how to budget and deal with financial issues. The married with children invest their money in high education funds and save for their retirement. Full Nest II with children emphasizes their spending on fees for their children’s college education. According to Australian Bureau of Statistics (2006-2007), there has been a decrease of couple families with children (Full nest II) over the last ten years. In 1997 48% of total families were Full nest II, in 2003 they were at 46% and by 2007 they had reduced to 45%. This can be explained for the increase of couple families without children of any particular age. According to the statistics number of couple families with dependent children are 217,700 with 8, 928, 000 people and 4,143,000 dependent children. Dependent children are full-time dependent students age 15-24 years or children under 15 years of age. The couple families with dependent children are 471,000 with 1,577,000 children. Majority of parents who work are those who have dependent children. The Australian Bureau Statistics shows that both couple families who had dependent children were working and increases with the age of the dependent child who was youngest in the family. This was happening in these families where 49% of families where the youngest was aged 0-4 years and 75% where the dependent child who was youngest was a full-time student aged 15-24 years. This is because children who are dependent on their parents have many needs and depend on them for everything. Full-time dependent students depend on their parents for food, clothing, college fees, transport, and shelter and so on. Both parents therefore have to be employed in order to meet the needs of their children. Consumption of everything is very high thus spending a lot of money, therefore a need to work hard in order to get more. In these couple families of dependent children both parents were employed with the mother worked full time. There was less number of parents was employed with the youngest dependent child being 0-4 years old. This increased as children grew and became more dependent as full time students at age 15-24 years. When children are young, mothers particularly tend to take time out of work to take care of their children. When the children get older, they go back to work or increase their workforce participation. Statistics show that both parents of 45% of children aged 0-2 years were employed. The number increased to 66% of age 9-12 by June, 2010 who both parents were employed. (Australian Social Trends 2010) People’s family structure and financial situations usually change as they progress through different life cycle stages. Household life-cycle stages determines the time of housing Australians choose. In early adulthood, they follow the renting pattern. While forming relationships and raising their families they move to paying off a home and purchasing. In older age they own homes without paying a mortgage (Australian Social Trends 2001). Full nest II families with dependent children live in separate houses. Young people in Australia leaving their parents’ homes choose to rent flat at the beginning or share a group house, then moving to a rented apartment as they save for their first home. Many couples in Australia buy a house and start paying part of their mortgage before their first child is born. At full nest II stage of the household life cycle, families upgrade to a house that is larger enough. This is because there are many children in the family who depend on their parents for shelter and therefore the need for larger houses to accommodate all of them. Stages of the household lifecycle affect the way time is spent. According to Australian Bureau of Statistics (1998), mothers in full nest II families spend less time in employment compared to those without children. Those who have children less than 5 years spend around 23 hours a week doing house chores and 38 hours a week playing with children and parenting. Those with children aged 5-12 years spend 20 hours a week doing house work and 16 hours a week parenting. Over the first few years of life the amount of time children of pre-school age spend with their mother specifically decreases. Children of 4-5 years old spend on average 7 hours with their mother and 3 hours with their father on weekdays. They spend 8 minutes with their mother and 6 hours with their fathers on weekends. The reason to the decrease of time spent by mother with their children is because of employment and thus enrolling 4-5 years olds in early education or pre-school. 38% of mothers who have infants are employment while 54% of those who have 4-5 year old children are employed. 74% of 4-5 year old children attend pre-school while 22% attend child care (Baxter, Gray & Hayes 2010). Children share activities with other family members like reading story books, participate in musical activities and dance, cooking, caring for pets, and playing games outdoors. The role of household in consumer behavior process Household plays an important role in consumer behavior process. Parents determine choices for their children and most of the time it is based upon the safety of the child or for the good of the child. In the same way children influence the decision making process as it relates to the whole household as for the color of the car used by the family. The decision process of household is according to different perspectives like power, role, culture of the family, decision making stage. Each household member has a role he or she plays in the family decisions on shared resources. Gender roles are determined by culture and attitudes towards father and mother, wife and husband in the family. The perception towards these roles based on the gender affects the decision process. There are also other distinct roles played by members in the family in the buying process. They are information gatherer, influencer, decision maker, purchaser and the user. Information gatherers are those who look for information of products that are relevant to what the family needs. Information gatherers have power as they choose information that favors the alternatives they have. A family may need a car and may brainstorm on the type of the car they would like to have. The father may be given mandate to seek out more information which he has power to seek information that favors his alternative. Influencers normally don’t have power on the choice of alternatives available. However they may influence the decision to buy by asking for specific products or services or cause an embarrassing scene until their needs are considered. Children are good influencers as they ask their parents to buy them a certain favor of yoghurt they saw in an advert. Sometimes children cause embarrassing moment to demand something from their parents. They may stick to a certain shelf in the store and throw until the parents buy them what they wanted from that shelf. When children begin to gain basic communication skills they influence family decision. They would see a nice toy car and would cry out, “I want that toy car”. Children play a big part in influencing the purchase of home computers, stereo equipment and vacations. In case of a new computer they initiate the interest in it and the actual decision to buy. Children see ads on televisions which are their basis for their influence in buying special interest (Julie 2010). Decision makers are those who have the power decide whether or not to buy the service or the product. They also decide which product to buy, which brand to buy, where to buy it and when to buy it. The couple may thus jointly decide to buy the refrigerator. Purchasers are those who actually do the purchasing of the product or service. Despite the children influencing the purchase and the husband deciding, usually the wife is the one who does the actual purchase of toiletries, clothing, and foodstuffs and so on which are consumed by family members. Though the decision maker may decide on what product to buy he may not specify the type of brand to buy. The purchaser may decide to buy a different brand if the decided brand is not in the stores. Sometimes the purchase may dismiss the instructions of the decision maker deliberately or by error. This is why family decisions are subject to great conflicts. Very few families are rich and try to avoid any tension of demands on the resources of the family. Pressures that are conflicting occur in families with children (full nest II). One spouse may decide not to spend money on anything but instead save for the children education in future but the other spouse may decide to spend money on computer equipment and children school fees. Normally the situation becomes more complex when children and other relatives are involved. Sometimes members of the family get their way by bargaining. A wife may resort to let her husband buy a new car model if she can get a larger refrigerator. Sometimes family members use reasoning to get others to understand their point of views. Family members can also use power to make a decision. The father can make a decision as the man of the house; the wife can make a decision as the mother of the children, and so on. Emotions can also be used by a family member to make the decision maker decide on what she wants. The wife may resort to cry until her husband agrees to buy the refrigerator. Users are family member who consume the product or service. Children may use the bicycles while all family members may use the refrigerator, the car, and so on (Karen & Glen 1984). Other factors that affect the household consumer behavior process Power structure affects the process of buying decision in the family. In most societies man is regarded as the head of the family and makes most of decisions that are major. Yet in other societies a woman is the head of the family and makes all the decisions. In a society like equalitarian both share decision making powers equally. A marketer should be keen on what society he or she is marketing the product or services in order to understand the decision makers and target them The decision making stage each family member is at affects the buying decision process. Family members don’t usually make decisions at the same decision making stage but each of them plays a role in the purchasing at different stages. If a family decides to buy a family car, the wife may specify the needs of the family in order to buy a car that will satisfy those needs. The husband decides on the type of model to buy and the children decide on the color they would like the car to be. Family culture also affects the buying decision of households. Each family has their own social upbringing, cultural background and family values. Culture determines what kind foods they eat, the kind clothing they put on and so on. A marketer cannot sell bacon or jeans trousers to a Muslim community because Muslims don’t eat pork and they wear long dresses for ladies and cover their heads (Wilkins & Warren 2010). Implications of Changing Household trends on the market Household structure, stage of household life cycle, household decision process and household purchase and consumption behavior affect marketing strategy. Each stage in the household life cycle has its own needs and the product or services to satisfy those needs are therefore different. Let us take the case of households and the car size they need. The size of car particular households can depend on the needs. A car bought by a single person is different in size compared to a car bought by couple with children. This will have a great implication on the market strategy that a marketer needs to execute. Single person’s households and couples without children or with only one child need a small family size cars. They may need saloons, estate cars, and so on with an engine capacity of up to 2 liters. These families may need a car that can accommodate five people. A marketer therefore can think of providing cars like Toyota Corolla, afford Focus, and Mitsubishi Lancer. As families become large like full nest II as our main focus, the need for a bigger family car size is born; at least a car that can accommodate five adults. A marketer may think of providing a car that has a big trunk with powerfully built engines. In Australia these car are known as medium size cars. Their size begins from 4800 and above. The type of cars a marketer can provide for these families are Toyota Camry and Citroen C5. Since there are many young children of fewer than 6 years and students who are dependent there may also be need for a full size family car for full nest II. The size of the car starts from 4900mm and above. They have large space than the normal large family car. These types of cars are Toyota Avalon and Dodge Charger. Full nest II families have children needs to concentrate on as they save for higher education of these students. The main focus is on the welfare of the whole family and luxury is the least of items on the couple’s mind. These couple may not be interested in buying luxury cars which are built up of six to eight cylinder engines like Lincoln MKZ and BMW 3. Those there are more room in the vehicle being good enough for the family, these types of families may not spend their money buying a luxury car and therefore, a marketer will need to change the product to meet the needs of these families. Cars like Mazda MX5, Lotus Elsie and Porsche 911 sports cars may not interest full nest II. Ferrari 612 Scarlatti and Aston Martin grand pourers although larger than sports cars might not interest this type of household and neither are the supercars which employ high technology like Ferrari Enzon, Porsche Carrera GT, and so on. This is because these cars are very expensive to buy, to maintain and to fuel. Full nest II families pay schools fees for their children, buy food and clothing and save for their children’s higher education and so buying these sorts of cars may be straining to them. A marketer should therefore understand that these kinds of families are price sensitive and the type of cars they can sell to them should be big and spacious and not expensive (Dimension Guide 2010). Single-sized food packaging will work well in families of couples without children or those single who are not yet married. This is due to the fact that they don’t need much food at a go. The strategy applied here may be constant and may not face any constraints. However, as household changes the need for single-sized food packaging changes. In the discussed family of full nest II, single-sized food packaging is not what they need. Due to the needs of the large family, they may need large –sized food packaging to meet those needs. It is however important for the marketer to understand this and change its marketing strategy. The structure of the household will affect the marketing strategy. The singles without children may have a lot of money to spend on vacation and luxury vehicles and so on. They may need a product or service to meet those needs. A family with independent children may not need a big car or big houses because the children have moved to their own houses. A family that used a company’s product in the last fifteen years may not use the same product today. It thus important for marketers to notice the trend and executive strategies to meet the needs of these household structures. The household decision process also affects the marketing strategy. In a family where there are children each play a role in the decision making process. As discussed earlier the wife may be the information gatherer for a particular product the family may need. Children may influence by specifying the type of product and the color they need. The father as the decision maker may decide whether or not to buy the product. Either parents or mother may purchase the product and the children may be the users. Marketers however have to know the decision making process in households in order to identify who to target for advertisement. Most marketers target the influencers (children) with their adverts as they are able to push their parents to buy for them what they want. Household purchase and consumption behavior also affect the marketing strategy. Consumption of each household varies by the stage of household lifecycle. Single people, couple with independent children or couple without children may buy food stuffs once a month and less clothing for themselves. Their purchases are in low quantity and most of the time they don’t mind the price as they have money to spend. Marketers can target these customers for products like luxury cars and services like vacations. Couple families with children who are dependent buy in large quantities as they consume a lot. They buy clothing and food stuffs in large quantities and marketers should target them for household stuffs. They however are price sensitive as they save a lot for their children education in future. If the clothing is too expensive they may not buy. Since the families have children, parents may be cautious on the kind of foods to buy for the children. The issue of health foods comes out strongly for parents and they may be very choosy while choosing the most nutritious foods. Markers should therefore understand the purchase behavior of these families in order to come up with strategies to catch them otherwise they may loose them. Recommendations Targeting roles played by every member Marketers should understand the roles of each and every member of full nest II in order to know who to target for their products and services as well as their advertisement. If the influencers are the ones who make the products or services to move at a higher rate then marketers should target this group. Studying trends Marketers should study trends of households as these affects the strategy to be employed. As household changes the marketers can be able to understand products movements from one stage of the life cycle to another. By studying trends and statistics of households, the issue of purchase and consumption behavior is understood and thus making it easier to determine the type of marketing strategy to executive. Further research A research in other parts of the world regarding households’ structure, lifecycle, purchase and consumption should be undertaken in order to find out if the case is the same in other part of the world for comparison purpose and for business expansion. Market segmentation Sometimes it needs more efforts to keep on studying household trends from one stage to another. It is difficult to provide products and services for all stages of the household lifecycle. Marketers should therefore stick to a maximum of two type of household lifecycle stages in order to concentrate on them and provide them with high quality services and products. This also ensures ample usage of available resources. Conclusion Household structure and household lifecycle is widely used by marketer in segmentation. Products and services are widely consumed by households. As household trends change, there is need for change in the marketing strategy. As children are born they become dependent, then independent, they marry, they get children, and they become grandparents and so on. Their needs change along the way as they progress. Full nest II plays an important role in households’ consumer process. These roles are information gatherers, influencers, decision maker, purchaser and the user. Other factors their consumer behavior process are power structure, family culture and the decision stage each household member is at. Factors that affect the marketing strategy as households change are the household structure, household purchase and consumption behavior, and household decision process. References Wilkins, R., Warren, D., & Hahn, M. 2010. Families, Incomes and Jobs: A Statistical Report on Waves 1 to 7 of the Household, Income and Labour Dynamics in Australia Survey, Vol. 5. Melbourne Institute of Applied Economic and Social Research. Australian Bureau of Statistics. (1998). How Australians use their time, 1997 (Cat. 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