Running head: CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 1
Consumer Analysis, Market Segmentation, and Market Coverage
Denyse Miskin
Liberty University
BUSI 520 Strategic Marketing Management
Dr. Keith Bowery
February 2, 2020
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 2
Consumer Analysis, Market Segmentation, and Market Coverage
“A consumer’s buying behavior is influenced by cultural, social, and personal factors”
(Kotler & Keller, 2016, p. 158). Many decisions go into purchasing a product. Consumers have
cultural, social, personal, and psychological factors that influence the purchase of any product or
service, including Hershey’s Kisses. One may think it’s a simple process when in fact
purchasing any product or service in today’s world can be a complex process. Through the
years, Hershey’s chocolate company realized that it is possible to serve diverse markets
simultaneously (Kizil, Eddy, Clary, & Crowell, 2013).
Cultural Factors
“Culture is the fundamental determinant of a person’s wants and behavior” (Kotler &
Keller, 2016, p. 158). Culture encompasses a set of beliefs, traditions, moral values, language
and laws held in common by a community, a nation, or other defined group of people. Cultural
values are different in each country and this directly affects what products and services succeed.
Each culture consists of smaller sub-cultures; sub-culture refers to a set of beliefs shared by a
subgroup of the main culture (Ramya & Ali, 2016). It could be said that Hershey’s Kisses help
break down cultural barriers and the Kisses are enjoyed by many different cultures all over the
world. Additionally, culture is passed on from generation to generation as are Hershey Kisses.
The Hershey Kisses was invented in 1907, and the Kisses have been passed down through the
generations of many cultural groups. Our ancestors likely enjoyed a Hershey Kiss or two over
the years.
In addition to introducing chocolate Kisses in 1907, Milton Hershey began to build a
town in Hershey, Pennsylvania that was its own culture. The town was built around employees
that worked in the large chocolate factory. To this day the town still exists in Central
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 3
Pennsylvania but since culture is not permanent and changes gradually happen over the years the
town is culturally different today.
Social Factors
Social groups consist of many individuals who have common needs. “In addition to
cultural factors, social factors such as reference groups, family, and social roles and statuses
affect our buying behavior” (Kotler & Keller, 2016, p. 159). Additionally, the social factors
influencing consumer behavior are reference groups, family, roles, and status.
A person's reference group are the people they have face-to-face contact with or indirect
influence on their attitudes or behaviors (Kotler & Keller, 2016). There are many different
social groups, top upper class, lower upper class, top middle class, lower middle class, top
underclass, and lower inferior class. Each class develops its own system of preferences toward
the products and services that are on the market one of those products is food (Gherasim, 2013).
A consumer normally lives through two families, their family of orientation and their
family of procreation. The family of orientation is the family of birth, and the family of
procreation is the family formed through marriage. Family relevance for marketing is much
more about consumer behavior than about consumer demand levels. (Ramya & Ali, 2016).
Hershey Pennsylvania, with its Hershey Kisses streetlamps, is a popular travel destination for
families young and old.
Consumers choose to purchase their products and services based upon their role and
actual or perceived status. "A role consists of the activities a person is expected to perform"
(Kotler & Keller, 2016, p. 161). For instance, the role of the Production Manager in a Hershey
Factory will have a higher role than the janitor. Each role helps depict the individual’s status.
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 4
The status o the Production Manager is most definitely higher than the janitor. In marketing, it is
important to be aware of an individuals' roles and status (Ramya & Ali, 2016).
Personal Factors
Personal factors that affect an individual's buying decisions are the individual's age and
stage in the life cycle, occupation, and income level and lifestyle. A consumer's age is important
to know to determine what stage of the life cycle they are in. Are they married with children, are
they empty nesters that are at retirement age? These are important facts to know to market
appropriately (Ramya & Ali, 2016).
The occupation or profession of an individual is another factor that marketers try to
identify. Marketers identify an individual's occupational group to market to groups with an
above-average interest in various products. For example, the buying needs of a doctor, lawyer,
fitness instructor or teacher will all be different. "So, the marketing managers have to design
different marketing strategies to suit the buying motives of different occupational groups”
(Ramya & Ali, 2016, p. 80).
Buying power is different according to a consumer’s income level and lifestyle. As the
economy fluctuates over the years both product and brand choice are affected by these economic
circumstances. A person’s pattern of living affects what they purchase, and their income level
affects how much they purchase. In order to be successful, marketing managers must design
their marketing strategy to suit the lifestyles of the consumers. Focusing on the economic status
of the United States, the Hershey Chocolate Company made a prominent decision during the
Great Depression. Instead of focusing on their bottom line, the company decided to forgo around
$1 million in profits. Hershey’s Chocolate Company opted instead to give the consumer a larger
candy bar for the same price of five cents (Lamme & Parcell, 2013).
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 5
Psychological Factors
Seven basic questions support any understanding of a consumer's psychological behavior
(1) Who is the market? (2) What do they buy? (3) Why do they buy? (4) Who is involved in
buying? (5) How do they buy? (6) When do they buy? (7) Where do they buy? The answers to
the seven basic questions, provide an understanding of how consumers are most likely to respond
to marketing stimuli. The psychological factors influencing consumer behaviors include
motivation, perception, memory, and learning (Kotler & Keller, 2016).
A motive is an inner urge or need that moves a person to act. A need becomes a motive
when it is aroused to a sufficient level of intensity to drive us to act. There are many different
theorists of human motivation. Freud’s theory stands out and states that “psychological forces
shaping people’s behavior are largely unconscious” (Kotler & Keller, 2016, p. 165). Another
theorist, Maslow finds that human needs are arranged in a hierarchy from most to least pressing.
His theory is depicted in a five-tiered pyramid model. Needs ranging from physiological needs
(food, water, shelter), the most basic need to the last need of self-actualization. Furthermore,
Maslow thought that people would try to satisfy their most basic need for food, water, and shelter
before, for example, their social needs of sense of belonging and love (Kotler & Keller, 2016).
Hershey’s Kisses satisfy the most basic need of food therefore, a consumer would purchase a
Hershey Kiss before a piece of beautiful art.
The way consumers perceive a situation is sometimes more important than what is a fact.
A motivated person usually reacts to a product based on their perception, which "is the process
by which we select, organize, and interpret the information" (Kotler & Keller, 2016, p. 167).
Consumers have more than the basic five senses and each sense is feeding information to the
brain. All these senses could send the brain into overload however, the brain is brilliant and
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 6
sometimes does not absorb all these senses, only selectively stores the information he or she
perceives. The brain takes subjectivity, categorization, selectivity, expectation, and experience
into consideration when storing information. Most of us do not remember much of the
information we are exposed to. We only retain information that supports our attitudes and
beliefs.
Cognitive psychologists recognize the difference between short-term and long-term
memory. Short-term memory is a temporary repository of information and long-term memory is
more permanent. "In this context, we can think of marketing as a way of making sure consumers
have product and service experience that create the right brand knowledge structures and
maintain them in memory" (Kotler & Keller, 2016, p. 171). An example of a product being
linked to the consumer’s long-term memory is the Hershey Kiss. The Hershey Company has
created the Hershey Kiss to be recognized as a holiday candy. For Easter, the Hershey Kisses are
wrapped in pastel colors, during Christmas, the Kisses are wrapped in silver, red and green and
during Valentine’s Day, the Kisses are wrapped in pink, red and white. The Hershey Kisses
Christmas advertisement where the Kisses are shown ringing like bells, to the song We Wish You
a Merry Christmas, is a promotion that has aired since 1989. Many consumers have an
emotional attachment to that commercial and have stored this information in their long-term
memory. Additionally, the consumer can recognize the Hershey Kisses and have positive brand
recognition.
Most human behavior is learned, and learning changes our behavior arising from
experiences. Furthermore, learning is thought to be more incidental, than intentional. Learning
theorists believe learning is produced partly through responses and reinforcement. Marketers use
two types of learning theories to reach consumers, through positive reinforcement and a more
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 7
active approach of inferences or interpretations consumers make about outcomes (Kotler &
Keller, 2016). One of the Hershey Company methods of learning in their marketing is based
upon their history. The Hershey Company entered the market in the late 1800s and continue to
build their brand recognition on what the consumer has learned about their brand over the years.
Firms Target Market Needs
The Hershey Company's target market needs are vast. The Hershey Company's approach
to marketing is on achieving market growth, surpassing the competition and gaining market
access where they have had very little or none. Over the past few years, the Hershey Company
has decided, after 124 years in business, to recreate themselves as not just a candy company but
as a snacking company. To meet the needs of consumers, the Hershey Company has invested a
great deal of money in analyzing their target markets to determine which target markets they
should focus on with old and new products.
One of the Hershey Companies' goals is to not only be the nation's, but the world's largest
chocolate seller by achieving substantial market growth. In March of 2018, the Hershey
Company joined forces with Accenture, a global consulting firm, “to help the snacks company
streamline manufacturing and supply chain process, gain real-time customer insights to inform
decision making, and accelerate revenue-generating innovation to drive growth” (2018, para. 1).
The hiring of the firm Accenture demonstrates the Hershey Company's ongoing commitment to
meeting the needs of the consumers, growing their company and surpassing the competition.
Evaluation of Potential Global Markets
“The world has become a smaller place. New transportation, shipping, and
communication technologies have made it easier for us to know the rest of the world, to travel, to
buy, to see anywhere” (Kotler & Keller, 2016, p. 14). Global marketing is described as a
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 8
company’s ability to take advantage of world markets, both established and emerging markets.
Globalization is used to reach and meet the company’s global goals.
Once a company decides to go global, they must adapt their marketing plans to meet the
needs of the specific international market they are targeting. Entering a new market can be both
competitive and risky. Effective international marketing begins with being able to interpret the
business environment; recognize the opportunities of the foreign market and know how the
company’s resources can be the best match for the international market (Gilligan & Hird,
2013:2012).
The Hershey Company views international sales as important for future growth and
profitability. Over the years, the Hershey Company has introduced its Hershey Kisses to more
than 90 countries all over the world. Entering new markets is a necessity for company's like the
Hershey Company to gain or sustain their competitiveness. Around 2013, the Hershey Company
began an evaluation for potential entry into the Australian market. The Hershey Company began
their process by analyzing the Australian market both for brand recognition and financial where-
with-al. The analysis determined the target customers to be both children and adults. The
company also looked at the potential of candy consumption in Australia among the children and
adult markets by analyzing the demographics of Australia’s market, culture, history, climate and
wealth. The Hershey Company was attempting to market their current products, including the
Hershey Kiss, and developing a new brand. Thus, they did a SWOT analysis, looked at the
competition and demographics, developed a marketing plan and finally reviewed the financial
outlay for the existing Hershey Company. The analysis concluded that the Hershey Company
should enter the Australian market and although there were potential threats there was an overall
need for the Hershey Company (Kizil et al., 2013).
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 9
Modes of Global Market Entry
A company has various modes of entry into the global markets and once a company
decides to target a market with its brand or introducing a new brand, they must decide which
mode of entry to use. The broad choices of deciding how to enter a new market are indirect
exporting, direct exporting, licensing, joint ventures, and direct investment. Each method listed
has commitment, risk as well as potential for success (Kotler & Keller, 2016). It appears that the
Hershey Companies' most common mode of entry into the global market is with a direct
investment. Direct investment is the ultimate form of foreign involvement by the company
building its own manufacturing plant. Besides the manufacturing plant in Hershey,
Pennsylvania, North America, the Hershey Company also has opened plants in Europe, Japan,
and Australia (Coyle, Reihman, & Ruamsook, 2018).
Variables Used to Segment Firm’s Target Market
“Market segmentation divides a market into well-defined slices” (Kotler & Keller, 2016,
p. 246). A group of customers who share a similar set of needs and wants is a market segment.
There are two broad groups of variables to segment consumer markets, descriptive
characteristics, and behavioral considerations. Demographic and psychographic are terns'
researchers use to define segments. These are called segmentation variables and marketers need
to ask whether these segments exhibit different needs or product responses. Researchers also
look at behavioral considerations, when defining segments. Whatever type of segmentation
scheme that is used, the key is adjusting the marketing plan to recognize customer differences
(Kotler & Keller, 2016).
For marketing purposes, a company needs to understand what demographic variables are
relevant for their product. The demographic variables that are popular to analyze are age, family
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 10
size, family life cycle, gender, income, occupation, education, religion, race, generation,
nationality, and social class. These demographic variables are easy to measure and are often
associated with consumer needs and want (Kotler & Keller, 2016). The Hershey Company has
used demographic information to help the growth in international sales. The Hershey Company
determined that developed markets remain the most prominent for their Hershey Kisses however,
some of the markets they are currently in have matured and the growth rate is slowing. For the
future of their company, the Hershey Company determined that its future growth needed to look
into new markets. Based on their analysis of the demographic information they obtained, they
determined that many of the company's key growth markets are in Asia and the Middle East,
notably China, India, Saudi Arabia and the United Arab Emirates (Coyle et al., 2018).
“Psychographics is the science of using psychology and demographics to better
understand consumers” (Kotler & Keller, 2016, p. 258). Psychographic segmentation is a
primary factor in your life. It decides who you are friends with, the career path you choose, who
you marry and so on. These are examples of psychographic segmentation and consumers are
divided into groups based on different psychological traits or values. However, consumers can
exhibit very different psychographic profiles that are within the same demographic group.
Consumers are inspired by ideals, achievements, and self-expression. Conducting research is a
great way for a company to start to look at psychographic segmentation (Kotler & Keller, 2016).
Behavioral segmentation is dividing buyers into groups based on their knowledge of,
attitude toward, use of, or response to a product. When marketers are dividing buyers into
behavioral segmentation, they are looking at the buyer’s needs, what benefits the buyer is
receiving or needing, the roles the buyer is playing, buyer brand loyalty, the occasion the buyer is
buying for and the buyer’s usage frequency. There are many benefits to behavioral
CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 11
segmentation, it helps companies identify with the customer, making it easier for the companies
to target their audience and allows the company to cater to consumers with brand loyalty.
The Hershey Company must understand customers' prior knowledge base of the Hershey
Kisses, the customer's media preferences, the Hershey Kisses competition and what the
competition does better or worse than the Hershey Company. When the Hershey Company
knows all this important data, it can market to attract and maintain customers. The Hershey Kiss
is marketed to adults that love chocolate. Based on the Hershey Company's analysis, targeting
grownups, between ages 25 and 35, instead of children in their Hershey Kisses campaigns is the
way of the future. The Hershey Company believes their marketing should be aimed toward these
adults who have children, especially mothers who determine the early tastes of their children,
thus influencing them to consume Hershey Kisses (Velasquez, 2019).
Full Market Coverage vs. Multiple Segment Specialization
The Hershey Company should pursue full market coverage for their company as a whole.
since they have a multitude of products that appeal to many different market segments.
However, for their Hershey Kisses, the company should use the multiple segment specialization
over full market coverage, single-segment concentration or individual marketing. “With
selective specialization, a firm selects a subset of all the possible segments, each objectively
attractive and appropriate” (Kotler & Keller, 2016, p. 265). The primary research shows that
mothers determine the children’s early taste in candy, so by being the first to reach this target and
converting these mothers into loyal consumers the company is hoping the mothers will introduce
their children to Hershey’s Kisses. Therefore, the Hershey Company should and does focus on
mothers, who are between 25 and 35 years old, who have children ages 5 to 18. This type of
synergy is an isolated segment, which is called a super segment (Kotler & Keller, 2016).
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CONSUMER ANALYSIS, MARKET SEGMENTATION, AND MARKET 13
References
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