Thursday, February 14, 2008

Lifestage marketing

Lifestage marketing has been a buzz term in recent years as a method of targeting consumers and characterizing consumer behavior. More and more companies are realizing the importance of positioning products not as products, but as something that a consumer would require at a particular stage of their life. Typically, marketers categorize consumers of fast moving consumer goods and consumer durables by social class, income, age and gender. However, discovering lifestage triggers help to identify who among these is more likely to buy the product.

In lifestage marketing, consumers tend to go through four distinct phases: Transition Stage, Early Stage, Expansion Stage and Mature Stage. From a marketer's perspective, the key questions will be: “what are the target lifestage groups?” and “Within each stage, what are the purchase triggers?” When Maruti was pitching for the 800 model car, their campaign started off with spreading the message of “Reliable and trustworthy”. This was

In 1983, when the only competition was the old ambassador and the fiat, thereby the message seemed apt. The company soon realized that the M800 was the average middle income Indian's first car. The purchase decision was taken to move up from a two wheeler, to a four wheeler, and hence affordability played a big role. The main criterion for this was lifestage. The customer, a young family man, who needed to upgrade from a two wheeler to a car, with the many commitments of running a family, put off purchase because of the “cost” of the vehicle. M800's 2599 campaign that ran in early 2003 attempted to pitch the car as an “affordable” vehicle with great success.

In April 2000, the Financial Services Authority (FSA) published a report titled “Better informed consumers”. In this report, the FSA found that in 16 per cent of cases, the primary driver for the consideration of a financial services product was event/lifestage led and that it had an influence in almost a third of all cases. It was also found that consumers were unaware of what product would best meet their apparent need. This leaves a tremendous opportunity for financial service providers to help customers identify what they need at each lifestage and thus gain business.

The very essence of lifestage marketing is: “there are events or moments in people's lives that trigger particular needs or desires.” The key is to recognize these changing priorities as quickly as possible and target customers, whether existing or potential, with the relevant products. Lifestage marketing is a good way to attract attention to the product, as it relates specifically to what is happening in the customer's life. When done correctly and used in way that is consistent with the company's brand, this type of marketing should form a highly successful acquisition and retention tool. Lifestage and lifestyle are two very different things. Both allow a company to identify and target consumers. While lifestage is event based and looks at where customers are in their lives, for example divorce or about to have children, lifestyle concentrates on how they live them.

Both methods have their uses and can be effective complementary tools. Personalization

When consumers move between lifestages, they are entering unfamiliar territory. By increasing attention at these times, companies can help when it counts, thereby building strong, profitable relationships. The result is a much more personalized process which makes the consumer feel more valued and more loyal. Technology, product and organization cultural changes are necessary.

Datamonitor's report found that centralized systems are vital to understand how a customer's need changes across all products and how best to target them. Systems also require sensitive and experienced handling. Investment in technology is necessary to receive the long-term gains available from targeted marketing. The traditional product focus of financial service providers has typically fuelled a very rigid product offering to customers. This design is not considerate of customer needs and does not reflect that people's needs are constantly changing. As part of the process of becoming more customer centric, products need to evolve and become more flexible, with the ability to adapt as a customer moves from one lifestage to another. Internal cultural change is also required, to switch from a product focus towards a more customer-centric approach.

Change involves not only becoming customer centric within departments but also requires increased co-operation between them. This is vital if lifestages are to be used effectively.

In Conclusion

It is true that lifestages are becoming less predictable. However, their use can give an indication of what people are likely to want/do. The age bands where events typically

happen are becoming more elastic and cultural changes are leading to more lifestages.

People in general actively make decisions in a very short span of time. By being better equipped to predict these decision points, for example by picking up changes to

normal spending patterns, companies can increase their chance of successfully securing business. Many of these times will be when people enter new lifestages. Thus, careful

identification of these stages might prove useful. By providing support and giving valuable advice over these periods, long term, trusting relationships can be built.

- Madan Menon

PGPM Class of 2005



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