While many of us are familiar with demographics, the concept of psychographics is something that might be relatively new, but I would argue as, if not more important, to understanding your target audience than demographics. So we're going to talk about psychographics as it's related to macroeconomic change, and what we can do with that to be better entrepreneurs. This is the second element that we're going to be examining within our discussion of macroeconomic change. So our definition of psychographics are the attitudes, values, opinions, interests and related personal factors of markets. It's contrasted with demographics in that psychographics involve how people think, how they feel, what their interest and values are. And it's influenced by things like social class and lifestyle and personality. It's also very much related to Maslow's Hierarchy of Needs. So a principle that may be familiar to you from past courses. The element is that most of us as individuals are primarily concerned with basic health and wellness. The food and shelter elements. We go from there into safety, into esteem, and on up through actualization and transcendence. But there's a pattern that we see of human behavior and human needs and wants. Based on that pattern, the marketing from Young and Rubicam have segmented that hierarchy of needs into basic motivations and brand preferences. And they've tried to build those brand preferences on a system of understanding inclusive of cultural considerations and differences. So they've developed something called the 4C's which is this Cross Cultural Consumer Characterization, that segments individuals into seven different types. One primary type, and a secondary type based on their core motivations. And so within that, we have the seven categorizations on the right. The reading for the background of this is provided for you online, as is the tool itself. Now, to understand what's out there, and to understand the psychographics, there are a variety of resources. One of the better ones is Nielsen, and they have a tool called MyBestSegments. And what you can do within MyBestSegments is go through and select from several dozen profiles. So here, we have Profile 04. Which is a wealthy, younger family mix. And so Nielsen has categorized this group as a tech-savvy, fashionable, urban fringe group. Relatively affluent, highly educating, ethnically mixed. Communities with the trendy apartments and condos, fitness clubs, boutiques, casual restaurants, and bars, from juice to coffee to micro brews. We see here within the mapping of where this categorization tends to be centered, and it's around your more urban areas. It's New York, Philadelphia, DC, Chicago, LA, San Francisco, and other pockets as well. The top five most dense counties, include Arlington and Alexandria and Virginia, New York City, DC, San Francisco. And when we dive deeper into that and want to understand the statistics of this psychographic, we see US households represent 1.5 million, average household income, 90,000. We can learn little bit about where they shop, where they travel, what they read, what they watch, what they drive. So this again, different than demographics and we're getting into those lifestyle and media traits. We also can look at the demographics and that plays an important role. But what we do when we look at these levels of segmentation, and when we begin to think about the element of psychographics, particularly, in this context, it helps us understand. For example in the Lifestyle and Media category, if we want to sell our product, where do we need to place it? If we want to advertise our product, where do we need to advertise? As we build our brand, are there other brands that are having success with our target audience, and what are some characteristics and personalities of those brands? And what inspiration might we draw from them as well. So we'll take a few minutes and learn from Joseph Pine about what customers want, and we'll post the entirety of the video online for you. >> I'm going to talk about a very fundamental change that is going on in the very fabric of the modern economy. And to top off that, I'm going to go back to beginning. Because in the beginning were commodities. Commodities are things that you grow in the ground, raise in the ground, or pull out of the ground. Basically animal, mineral, vegetable. And then you extract them out of the ground and sell them on the open market place. Commodities were the basis of the agrarian economy that lasted for a millennia. But then along came the industrial revolution, and then goods become the predominant economic offering. Where we use commodities as a raw material to be able to make or manufacture goods. So we move from an agrarian economy to an industrial economy. But what then happened over the last 50 or 60 years is that goods have become commoditized. Commoditized where they're treated like a commodity. Where people don't care who makes them. They just care about three things and three things only. Price, price, and price. Now there's an antidote to commoditization and that is customization. My first book was called Mass Customization and it came up a couple of times yesterday. And how I discovered this progression in economic value was realizing that customizing a good automatically turned it into a service. Because it was done just for a particular person. Because it wasn't inventoried. It was delivered on demand to that individual person. So it moved from an industrial economy to a service-based economy. But over the past 10 or 20 years, what's happened is that services are being commoditized as well. Long distance telephone service sold on price, price, price. Fast food restaurants with all the value pricing. And even the Internet is commoditizing not just goods but services as well. What that means, is that it's time to move to a new level of economic value. Time to go beyond the goods and the services, and using the same heuristic, what happens when you customize a service? What happens when you design a service that is so appropriate for a particular person? That's exactly what they need at this moment in time. Then you can't help but make them go, wow. You can't help but turn it into a memorable event. You can't help but turn it in to an experience. >> So a theme that you're going to learn about within the video is that experiences are becoming the predominant economic offering of innovative ventures. It's not only the good, it's not only the service, but it's what customization and personalization of that can be brought to bear. Both effectively and that it works and it's meaningful, and efficiently mean that you can do so profitably, is the central challenge that we're going to talk about in the course. So in summary, understanding psychographics in addition to demographics provides insights into how prospective customers think and feel, and what influences their buying preferences. And that by examining these psychographics, it gives us valuable insight into evolving needs and new wants of our target customers. It also gives us insights in how to build and market our offerings both effectively and efficiently.
