2009 Headlines
Research by Vishal Narayan helps marketers zero in on consumers
Need to relax? We have just the drink for you
February 9, 2009 | Ithaca, NY | A new study by Vishal Narayan at Cornell University's Johnson School attempts to give marketers new tools to define their target markets.
The research, based on a survey conducted and funded by a large U.S. beverage marketer, could help companies position existing products and identify opportunities for new products, says Narayan, Johnson School assistant professor of marketing.
Narayan's research uncovers, for the first time, how the consumer's need for a product and the environment in which he or she drinks it affect each other – and how they tangle with demographic factors such as age, income and gender.
"Beverage consumption is affected to a larger extent by needs and contexts than it is by simple demographics," he says.
Before now, this complex interplay among consumer needs, the settings they are in and the levels of product consumption has been difficult to pin down.
For example, a consumer may choose varying beverages for the same need – say, thirst – depending on the context he is in. For example, if he is at a party and he's thirsty, he might drink a beer. Faced with the same level of thirst while mowing the lawn or reading a book, he might choose a bottle of water instead. The authors find that some need states are more likely to be activated in certain settings; for example, the consumer's need for something fun to drink comes to the fore when he is at a party.
Marketers can use the study's findings to reach potential customers more effectively. While the authors did not track consumption by brand, the mathematical framework they developed could be used by marketers to study how needs and contexts affect brand consumption, Narayan says.
Because the study estimates the optimal need-context combination, it opens the door for further research and marketing opportunities, says Narayan, who worked on "An Empirical Analysis of Market Segmentation by Need States and Consumption Contexts" with Sha Yang of Stern School of Business at New York University and Ravi Dhar of Yale School of Management at Yale University.
"Based on this study, marketers can understand the effect of hundreds of need-context combinations on the consumption of specific beverages," he says. "So, for example, one way of defining a market for a beverage could be the 'party market' or the 'quick energy market' and to develop products and advertising tailored to these markets."
Such knowledge could potentially be put to use for more effective advertising, Narayan says. For example, soft drink consumption is expected to be highest when consumers are commuting and need something fun to drink, so soft drink ads that address this need and consumption context might perhaps be more effective.
The study's results also can be used for product development and positioning. Coffee consumption, Narayan says, is expected to be highest when consumers need quick energy and are doing desk work, as compared to any other need-context combination measured in the survey. "Perhaps there is a profitable opportunity to position a coffee brand targeted specifically at consumers doing desk work and needing quick energy," he says.
