Consumer Segmentation: STP, VALS, and Family Life Cycle

Posted on Mar 28, 2025 in Marketing

Consumer Segmentation: STP

The STP (Segmentation, Targeting, Positioning) concept is a strategic approach to identify and reach specific customer groups. Here’s how it works:

Segmentation

Segmentation involves dividing the broader market into smaller, distinct groups of consumers with similar needs or characteristics. The main criteria used for segmentation are:

  • Demographic Segmentation: Based on age, gender, income, education, occupation, etc.
  • Geographic Segmentation: Based on location such as country, region, city, or neighborhood.
  • Psychographic Segmentation: Based on lifestyle, values, interests, and personality traits.
  • Behavioral Segmentation: Based on consumer behaviors such as purchase habits, brand loyalty, usage rate, and benefits sought.

Targeting

After segmentation, the next step is targeting, where the company selects the most attractive segments to focus on. Targeting strategies include:

  • Undifferentiated (Mass) Marketing: Targeting the entire market with one offer.
  • Differentiated (Segmented) Marketing: Targeting several market segments with different offers for each.
  • Concentrated (Niche) Marketing: Focusing on a large share of a small market segment.
  • Micromarketing: Tailoring products and marketing efforts to suit specific individuals or locations.

Positioning

Positioning involves creating a distinct image or identity for the product in the minds of the target consumers. It includes:

  • Identifying Possible Competitive Advantages: Based on product, services, personnel, image, or channel differentiation.
  • Choosing the Right Competitive Advantage: Selecting the attributes that make the product stand out.
  • Communicating and Delivering the Chosen Position: Using marketing mix elements (Product, Price, Place, Promotion) to deliver the positioning strategy.

Family Life Cycle Stages

The family life cycle is a series of stages through which a family progresses over time. Each stage has unique characteristics and influences consumer behavior in different ways. Understanding these stages helps businesses tailor their marketing strategies to better meet the needs of consumers at each point in their lives.

Stages of the Family Life Cycle

Bachelor Stage

Characteristics: Single individuals, often young and living alone.

Consumer Behavior: Focus on personal and leisure-related products such as fashion, entertainment, and technology.

Newly Married Couples

Characteristics: Couples without children.

Consumer Behavior: Increased spending on setting up a home, including furniture, appliances, and home improvement products. They also tend to spend on travel and entertainment.

Full Nest I

Characteristics: Youngest child is under six years old.

Consumer Behavior: High demand for baby products, childcare items, and family-oriented products such as larger homes and cars. Focus on health and safety products.

Full Nest II

Characteristics: Youngest child is six years or older.

Consumer Behavior: Increased spending on education, children’s clothing, and extracurricular activities. Family-oriented entertainment and convenience products become important.

Full Nest III

Characteristics: Older children, often teenagers.

Consumer Behavior: Higher expenses for education, transportation, and teenage-related products. There is a growing interest in future financial planning, such as savings and investment products.

Empty Nest I

Characteristics: Children have moved out, parents are still working.

Consumer Behavior: More disposable income for luxury items, travel, hobbies, and leisure activities. Increased focus on health and wellness products.

Empty Nest II

Characteristics: Retired individuals, children are financially independent.

Consumer Behavior: Spending on healthcare, home maintenance, and travel. There’s also a focus on downsizing and simplifying lifestyles.

Solitary Survivor

Characteristics: One surviving spouse, often older.

Consumer Behavior: Emphasis on healthcare, security, and companionship products. Spending on essential goods and services with a focus on maintaining quality of life.

VALS Framework

The VALS FRAMEWORK is a specific type of psychographic segmentation which deals with psychological and emotional appeals of the consumers in context of attaining specific needs. VALS FRAMEWORK is mostly referred to FMCG categories of products or consumer durables and to some extent automobile as well. VALS FRAMEWORK explains the segmentation on the basis of:

  1. Lifestyle
  2. Values (personal and family)
  3. Personality (perception and attitude)

9 Types of Theory

  1. Innovators: They value independence. They value knowledge and more information in context of selecting alternative options. They are less prone to post purchase cognitive dissonance.
  2. Survivors: They value simplicity. Their purchase decision is driven by the purpose and optimum investment.
  3. Thinkers: They value creativity and innovation (technology driven). Due to their area of interest, they take longer time to purchase.
  4. Believers: They value idealism (culture and religious driven). They give priorities to social bonds. They are occasional buyers.
  5. Achievers: They value achievement and functionality. They are customers with minimum selective time but maximum alternative researchers.
  6. Strivers: They value motivation. They are customers with inspiration and role model driven.
  7. Experiencers: They value moods, emotions and inner expression. They are the perfect customers for convincing with emotional appeal.
  8. Makers: They value family bond, social bonds, interpersonal relationships. They are more prone to post purchase dissonance and take longer time to.

Post-Purchase Dissonance

Post-purchase dissonance, also known as buyer’s remorse, is the feeling of regret or anxiety that a consumer may experience after making a purchase. This can occur when the product or service fails to meet the consumer’s expectations or when they second-guess their decision.

Key Points

Definition: Post-purchase dissonance refers to the internal conflict that arises after making a significant purchase, especially when faced with doubts about the decision.

Causes:

  • High-cost items: Expensive purchases often lead to greater dissonance due to the financial commitment involved.
  • Lack of information: If consumers feel they didn’t have enough information when making the purchase, they might regret it.
  • Peer opinions: Negative feedback from friends or family can amplify feelings of regret.
  • Comparison: Discovering a better product or deal after the purchase can lead to dissatisfaction.

Symptoms:

  • Regret and anxiety about the purchase
  • A desire to return the item or cancel the service
  • Seeking reassurance from friends, family, or online reviews
  • Increased attention to negative aspects of the purchased item

Strategies to Reduce Post-Purchase Dissonance:

  • Follow-up communication: Companies can send follow-up emails or messages to reassure the customer about their purchase.
  • Customer support: Providing excellent after-sales support can help alleviate concerns.
  • Money-back guarantees: Offering a return policy can make customers feel more secure in their purchase.
  • Positive reinforcement: Sharing positive reviews and testimonials can help validate the customer’s choice.

Reference Groups

  1. Primary Reference Groups

    These are groups with which an individual has regular, direct interaction. They have a strong influence on the person’s behavior and attitudes. Examples include:

    • Family: Immediate family members often have the most significant influence on an individual’s purchasing decisions.
    • Friends: Close friends can impact choices and preferences through social interactions and shared experiences.
  2. Secondary Reference Groups

    These groups have less frequent and less direct interaction compared to primary groups. They still influence an individual’s decisions, but to a lesser extent. Examples include:

    • Coworkers: Colleagues at work can influence buying behavior, especially in professional or work-related purchases.
    • Clubs and Organizations: Membership in clubs, societies, or professional associations can affect choices and preferences.
  3. Aspirational Reference Groups

    These are groups to which an individual aspires to belong. They influence behavior because the individual admires the members and desires to be like them. Examples include:

    • Celebrities and Public Figures: People may adopt behaviors, styles, and preferences of celebrities they admire.
    • Successful Individuals: Individuals may look up to successful professionals or entrepreneurs and mimic their choices.
  4. Dissociative Reference Groups

    These are groups that an individual does not want to be associated with. The behaviors, beliefs, or attitudes of these groups are avoided. Examples include:

    • Competing Organizations: A professional may avoid products associated with a competing firm.
    • Unfavorable Social Groups: Individuals may steer clear of behaviors or styles linked to groups they view negatively.

Maslow’s Theory of Motivation

Abraham Maslow sought to explain how people are driven by different needs at a particular point in time. He proposed five major types:

  1. Physiological needs: Food, water, sleep and, to an extent, sex are physiological needs.
    • Product: Basic food, basic clothing, medicines, drinks and physical exercise equipment.
  2. Safety needs: Seeking personal safety, shelter and security, stability, familiar surroundings, so on and so forth.
    • Product: Preventive medicines, insurance, post-retirement savings, installing safety devices (e.g., seat belts, helmet, anti-virus package, etc.).
  3. Belonging and love needs: Desire for love, friendship, affiliation and group acceptance.
    • Products: Personal grooming, entertainment, superior clothing, and many other luxury products and conspicuous consumption items which offer hedonic pleasures.
  4. Esteem needs: Desire for superiority, self-respect and prestige.

    These needs relate to the individual’s feelings of attaining certain status and accomplishment.

    • Products: Luxury clothing, furniture, liquors, hobbies and personal use products like digital camera, premium cars, amongst others.
  5. Self-actualization needs: This involves the desire for self-fulfillment to become all that one is capable of becoming.
    • Desires: To earn a PhD or join a good academic course in a premier institution, to win a gold medal in UG/PG studies, to serve the nation as a politician, to play for the country, become a great musician, actor, and so on.

Social Class

  1. Criteria for Classification:
    • Economic Factors: Income and wealth are primary determinants. Higher income and greater accumulation of wealth generally place individuals in higher social classes.
    • Educational Attainment: Levels of education, such as high school, college, and advanced degrees, influence social class.
    • Occupation: Types of jobs and professions can indicate social class. For example, managerial and professional occupations are typically associated with higher social classes.
  2. Major Social Classes:
    • Upper Class: The wealthiest and most powerful group, often with significant influence over economic and political decisions. This class includes top executives, large business owners, and wealthy families.
    • Middle Class: Individuals with moderate incomes and a comfortable standard of living. This class includes professionals, small business owners, and educated individuals with white-collar jobs.
    • Working Class: Individuals with lower incomes and less job security. This class includes blue-collar workers, service workers, and those with manual labor jobs.
    • Lower Class: The poorest segment of society, often with limited access to education and employment opportunities. This class includes unskilled workers, the unemployed, and those living in poverty.
  3. Social Mobility:
    • Upward Mobility: The ability to move to a higher social class through factors like education, career advancement, and improved economic status.
    • Downward Mobility: The movement to a lower social class due to factors like job loss, economic downturns, or decreased income.
  4. Impact on Lifestyle and Behavior:
    • Consumption Patterns: Social class influences spending habits, preferences for certain products, and lifestyle choices.
    • Access to Opportunities: Higher social classes often have better access to education, healthcare, and networking opportunities, leading to further advantages.
    • Social Networks: Relationships and connections within one’s social class can impact career opportunities and social support systems.
  5. Role in Society:
    • Social Inequality: Social class stratification often leads to inequalities in wealth, power, and opportunities.
    • Cultural Norms: Each social class has its own set of cultural norms and values, influencing behavior and social interactions.

Attribution Theory

Dispositional Attributes

Dispositional attributes, also known as internal attributes, refer to explanations for behavior that are based on an individual’s inherent traits, personality, or internal characteristics. These attributes focus on factors within the person. Here are the key aspects:

  • Personality Traits: Attributes behaviors to stable traits like introversion, extraversion, or conscientiousness.
  • Abilities and Skills: Considers inherent abilities or talents, such as intelligence or athleticism, as reasons for behavior.
  • Attitudes and Beliefs: Relates actions to an individual’s attitudes, beliefs, and values, such as being environmentally conscious.
  • Motivation: Looks at internal drives and motivations that influence behavior, such as ambition or curiosity.
  • Emotional State: Attributes behavior to an individual’s emotions or mood at the time, like feeling happy or stressed.

Situational Attributes

Situational attributes, also known as external attributes, refer to explanations for behavior that are based on external factors or the environment. These attributes focus on the context surrounding the behavior. Here are the key aspects:

  • Environmental Factors: Attributes behavior to the physical or social environment, such as weather conditions or social settings.
  • Social Influences: Considers the impact of other people, such as peer pressure or cultural norms, on behavior.
  • Opportunities and Constraints: Looks at external opportunities or limitations that affect behavior, such as access to resources or time constraints.
  • Specific Situations: Attributes behavior to specific situational contexts, like a person’s actions in a high-pressure job interview versus a casual outing.
  • Temporary Conditions: Considers temporary states or conditions, like fatigue or hunger, that influence behavior.