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Age, Preferences and Market Segmentation

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Consumer Demographics and Behaviour

Part of the book series: The Springer Series on Demographic Methods and Population Analysis ((PSDE,volume 30))

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Abstract

The ninth chapter examines reinforcing and socioeconomic factors during the life cycle that influence consumer priorities and preferences. It reviews the concepts of largest and best customers in the context of age segments. It introduces concepts and measures of preferences for different types of commodities as the age of the household head changes. It shows the results of age-preference analyses for seven selected countries. This allows for the identification of commodities preferred by households headed by young, middle aged and seniors. It illustrates how consumer priorities and preferences change during the life cycle. It assesses the effect of household size during the various stages of the life-cycle on household expenditure levels. It draws some generic propositions from the seven-country analyses.

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Notes

  1. 1.

    There are no readily available data in the same format for Malaysia, New Zealand and the United Kingdom.

  2. 2.

    There are no readily available data in the same format for Malaysia, New Zealand and the United Kingdom.

  3. 3.

    There are no readily available data in the same format for Malaysia, New Zealand and the United Kingdom.

  4. 4.

    There are no readily available data in the same format for Malaysia, New Zealand and the United Kingdom.

  5. 5.

    This concept and methodology could be applied to assess preferences of households with other characteristics.

  6. 6.

    See Chapter 7, Section 7.3.

  7. 7.

    The importance of culture in Malaysia – with a majority of Muslim population – in relation to the consumption of alcoholic beverages has been mention in Chapter 7, Section 7.3.

  8. 8.

    Again, it should be stated that the authors are not of the opinion that tobacco is basic to life, the term basic is in the context that expenditures by households on tobacco products tend to behave as for other commodities such as food, i.e. expenditures on tobacco tend to increase less than proportionately as household income rises.

  9. 9.

    There are no readily available data in the same format for Malaysia, New Zealand and the United Kingdom.

References

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  • Statistics New Zealand (SNZ). (2004). Household economic survey – Year ended 30 June 2004. Wellington. http://www.ststs.gov.nz/store/2006/06/household-economic-survey-yejun04. Retrieved 10 June 2009.

  • World Bank (WB). (2008). Global purchasing power parities and real expenditures – 2005 International Comparison Program. Washington, DC: World Bank.

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Author information

Authors and Affiliations

  1. Department of Marketing and Management, Macquarie University, Sydney, NSW, 2109, Australia

    Jo M. Martins & Farhat Yusuf

  2. Department of Sociology, University of California Riverside, Watkins Hall 1223, 92521, Riverside, California, USA

    David A. Swanson

Authors
  1. Jo M. Martins
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  2. Farhat Yusuf
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  3. David A. Swanson
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Corresponding author

Correspondence to Jo M. Martins .

Appendix: Age Preference Ratio Estimation – Example

Appendix: Age Preference Ratio Estimation – Example

The following example uses data from a household expenditure survey for New Zealand (SNZ, 1998).

 

Average weekly expenditure in New Zealand dollars

Age household head (Years)

Dom. fuel and power

Alcoholic beverages

Recreation

All items

Less than 25

22.0

25.4

59.4

659.4

25–29

21.7

21.5

76.6

674.2

30–39

25.4

18.6

89.2

735.0

40–49

27.8

21.4

125.4

871.7

50–59

25.1

16.5

113.2

652.2

60–64

22.4

13.2

83.1

544.7

65 and over

19.2

7.3

57.0

381.1

All Ages

24.0

16.9

93.2

660.9

Following the equation and notation in Box 9.1

$${\textbf{\textit{r}}}_{\textbf{\textit{i}}\textbf{1}}^{\textbf{\textit{n}}} = {\textit{\textbf{Age Preference Ratio}}} = ({\textbf{\textit{g}}}_{\textbf{\textit{in}}} /{\textbf{\textit{g}}}_{\textbf{\textit{i}}\textbf{1}})/{\textbf{(\textit{G}}}_{\textbf{\textit{in}}} /{\textbf{\textit{G}}}_{\textbf{\textit{i}1}})$$

The APRs for domestic fuel and power are

  • APR<25 = (22.0/24.0)/(659.4/660.9) = 0.9167/0.9977 = 0.92

  • APR25–29 = (21.7/24.0)/(674.2/660.9) = 0.9042 /1.0201 = 0.89

  • APR30–39 = (25.4/24.0)/(735.0/660.9) = 1.0583/1.1121 = 0.95

  • APR40–49 = (27.8/24.0)/(871.7/660.9) = 1.1583/1.3190 = 0.88

  • APR50–59 = (25.1/24.0)/(652.2/660.9) = 1.0458/0.9868 = 1.06

  • APR60–64 = (22.4/24.0)/(544.7/660.9) = 0.9333/0.8242 = 1.13

  • APR>64 = (19.2/24.0)/(381.1/660.9) = 0.8000/0.5766 = 1.39

The APRs for domestic fuel and power show that expenditure on this item rises more than in proportion to changes in household total expenditures and could be designated a senior (S) commodity.

The APRs for alcoholic beverages are

  • APR<25 = (25.4/16.9)/(659.4/660.9) = 1.5030/0.9977 = 1.51

  • APR25–29 = (21.5/16.9)/(674.2/660.9) = 1.2722 /1.0201 = 1.25

  • APR30–39 = (18.6/16.9)/(735.0/660.9) = 1.1006/1.1121 = 0.99

  • APR40–49 = (21.4/16.9)/(871.7/660.9) = 1.2663/1.3190 = 0.96

  • APR50–59 = (16.5/16.9)/(652.2/660.9) = 0.9763/0.9868 = 0.99

  • APR60–64 = (13.2/16.9)/(544.7/660.9) = 0.7811/0.8242 = 0.95

  • APR>64 = (7.3/16.9)/(381.1/660.9) = 0.4320/0.5766 = 0.75

The APRs for alcoholic beverages indicate that expenditure on this item falls with age and could be considered a young age (Y) commodity.

The APRS for recreation are

  • APR<25 = (59.4/93.2)/(659.4/660.9) = 0.6373/0.9977 = 0.64

  • APR25–29 = (76.6/93.2)/(674.2/660.9) = 0.8219 /1.0201 = 0.81

  • APR30–39 = (89.2/93.2)/(735.0/660.9) = 0.9571/1.1121 = 0.86

  • APR40–49 = (125.4/93.2)/(871.7/660.9) = 1.3455/1.3190 = 1.02

  • APR50–59 = (113.2/93.2)/(652.2/660.9) = 1.2146/0.9868 = 1.23

  • APR60–64 = (83.1/93.2)/(544.7/660.9) = 0.8916/0.8242 = 1.08

  • APR>64 = (57.0/93.2)/(381.1/660.9) = 0.6116/0.5766 = 1.06

The APRs show that expenditure on recreation tends to rise more than proportionately to changes in household expenditures for all items and reaches a peak in middle age (50–59) and then declines. This commodity could be designated as middle age (M) type commodity.

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Martins, J.M., Yusuf, F., Swanson, D.A. (2011). Age, Preferences and Market Segmentation. In: Consumer Demographics and Behaviour. The Springer Series on Demographic Methods and Population Analysis, vol 30. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-1855-5_9

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