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STUDENT NO: 21149061

COURSE: BUSINESS STUDIES WITH MARKETING
LEVEL: YEAR 3, TERM 1





MARKETING ASSIGNMENT 1

Analyse and discuss how subcultural factors (such as age, ethnicity, social
class, income or gender and corresponding group belief and norms) affect
consumers preferences and behaviour in your chosen market. You should
compare and contrast two specific subcultural groups.
Use your findings of your analysis to make specific recommendations on a
relevant marketing mix for each subcultural group.





THE CARD MARKET





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TABLE OF CONTENTS
Pages

Introduction 3

Overview of card market 4

Factors behind the use of cards 5


Comparative Evaluation 6 - 8


Conclusion 9


References 10














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INTRODUCTION
Subculture is a group of people with shared value systems based on common life
experiences and situations which include nationalities, religions, racial groups and
geographic regions. Within these group homogeneities are other factors such as age,
ethnicity, social class, group beliefs/norms, gender and income which influence
consumer preferences and behaviours (Kotler and Wong et al., 2005, p. 257).
An example of sub culture is the skinheads and punks in the UK during the 70s

For the purpose of this assignment, drawing on secondary and market data and using
relevant consumer behaviour model as shown in figure 1, will discuss the market impact
of subculture on the card market within the UK considering age and income factors.
The model provides an understanding of how marketing stimuli and other major forces
and events in the buyers environment: economic technological, political, and cultural
shape consumer choice and responses towards the consumption of products.

Fig 1: Stimulus- response model of buyer behaviour


Source: http://www.tutor2u.net/business/marketing/buying_stimulus_model.asp



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OVERVIEW OF THE CARD MARKET:
Changes in technology and consumer attitudes towards payment methods have made
the use of cards part and parcel of the daily lives of consumers in the UK and around the
world.
In the UK, at the start of the year 2002, debit cards were already widespread, with 77%
of adults holding a debit card in 2000. They were used less than today partly because
people preferred cash and cheques and partly because, in the days before chip & PIN,
they werent as widely accepted in places such as pubs, dentists and hairdressers.

According to reports in 2012 as illustrated by figure 2, there were 169.0 million cards in
issue by the year end representing a 2.0% increase following a marginal decline in 2011
during the recession. From this total 56.4 million were credit cards, 6.6 million charge
cards, 88.6 million debit cards and 17.4 million ATM-only cards (The UK Card
Association, 2013).

Fig 2 Number of cards at year end

Source: UK Card Association
By usage type, debit card remains the main method used for cash withdrawals,
representing 86% of all cash withdrawal transactions in 2009.
This market is reported to be growing fast and debit card purchases increased by 76%
since 2004, compared to just 2% growth for credit card purchases. The use of credit
cards was restricted to and for purchases of expensive items (Mintel 2011).
In 2012 credit and charge card holders stood at 30million, representing about 61% of
the UK adult population with for cast of credit and charge card purchase volumes
expected to grow to 3.5 billion in 2022, with a total spend of 214 billion in that year (The
UK Card Association, 2013).

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FACTORS BEHIND USE OF DEBIT/CREDIT CARDS:
The rise in consumerism, aspirations of an affluent lifestyle sought by new consumers,
change in attitudes towards borrowing, convenience that payment by card offers,
demand for cheaper credit and the relative ease with which customers can switch cards
compared with 10 years ago due to internet technology and growth in online shopping
has fuelled this trend.

A survey undertaken on how the credit card culture has taken hold in the UK reveals
that nearly one in four people admit to regularly using loans or credit cards to pay their
household bills and meet other day-to-day expenses (BBC News, 2003).
In 2000, 2% of card spending was online and 13% in 2010.
By 2012 as figure 2 below illustrates, total online card spending increased by 5 billion
with consumers spending being 68 billion online last year.
Of these almost nine in ten used the internet for personal purposes in 2012, including
37% who did so using a mobile phone. 86% of users bought something online (The UK
Card Association, 2013).

Fig 3
Internet card use: Consumer internet card spending


Source: UK Card Association





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COMPARATIVE EVALUATION: PROFILE OF CREDIT CARD HOLDERS BY INCOME
AND AGE.
With various types of cards on offer from card companies, consumer preference and
behaviour towards ownership and use of cards has been influenced by several factors
including subcultural ones such as income and age.
Though card ownership is by no means universal, Mintel research shows that 90% of
adults own a debit card in contrast to 55% for credit cards.
According to the UK card association credit and charge card holding has seen little
change since 2000 in the wealthiest.
Better off consumers who were very early adopters of credit cards still hold them in large
numbers with over 85% of people earning more than 50,000 having a card. This
compares to less than half (46%) of people earning between 5,000 and 10,000.

Further evidence of income as an influencing factor on consumer behaviour towards the
ownership of credit/charge card is shown by Mintel research in 2011, which indicated
that over 80% of householders with income levels above 50,000 had a credit card in
contrast to 39% of householders with income levels under 15,500.

Fig 4
Source: Mintel 2011



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With age comes a change in consumer needs and wants. For example Baby Boomers
(born between 1946 and 1964) with a high level of education, more discretionary income
and with a desire to stay healthy and keep up with fashion trends are considered to be
most likely users of credit cards to purchase expensive items.

On the other hand young adults (Generation Y also known as the Echo Boomers born
1980-1994) aged 18-24 who are considered to be emerging into adulthood and making
a transition from education to work in which individuals are no longer fully dependent but
also not yet fully self-sufficient were among the least likely to own a credit card.
According to Mintel only 30% of this age segment has a credit card probably owning to
most lacking a credit history and rising living cost.
Below in figure 5, research by Mintel shows that credit card ownership was highest
among the 45-54 age segments and lowest in the 18-24 age groups.

Fig 5

Source: Mintel 2011




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Despite growth in the card market, recent credit crisis, rising cost of living, low interest
rates has meant that most card holders have been making an effort to reduce their credit
balances.
Mintel, 2011 research on how card holders have tried to reduce their balances in the last
two years by age and household income is indicated below
Within the age groups, younger adults (Generation Y) sort most to decrease their credit
balances followed closely by those aged 45-54 (Baby Boomers) attest to recent
economic and financial climate instability. Further effects of the financial crises on
disposable incomes is also seen across the income brackets of households

Figure 6
Base: 1,024 adults aged 18+ who own credit cards

* small sub-sample
Source: Ipsos Mori/Mintel







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CONCLUSION:
The marketing impact of cultural and subcultural influences on consumer choice of
product and consumption has made it important for marketers to understand these
properties influence on consumer preferences and behaviour and in analysing especially
for marketing purposes how to position, segment and target their products within a broad
market.
Card marketers through segmentation and implementation of relevant marketing mix
strategies comprising of price, product, promotions and place can create value for their
target markets.

For example, in marketing to Generation Ys, this generation grew up in the era of
technology and therefore are open to new ideas and products. They seek change and
innovation and hence can be best reached utilising the internet, television and social
media to generate their awareness of the existence of a number of products on offer to
suit their needs. As the majority lack discretionary income, they are receptive to product
promotions that offer reward schemes and incentives.

On the other hand, for Baby Boomers, marketers must promote an element of exclusivity
for their product not only through media but also through personal invitations to reflect
their social status owing to their greater possession of unrestricted income and middle
class beliefs.

Overall for the card market reward schemes and incentives will remain an important
focus especially where credit cards are concerned. Amongst the Grey market where the
pin and chip technology may be viewed as cumbersome, introduction of innovative
products such as the contactless cards stands to enhance the appeal of credit cards in
this market.


















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REFERENCES:


BBC News. 2003. Credit Culture takes hold. [online] Available at:
http://news.bbc.co.uk/1/hi/business/3184379.stm [Accessed: 8 Nov 2013].

keynote. 2012. Credit card and debit market report 2012. [Report]. Available through:
University of West London Library Resources.

Kotler, P., Wong, V., Saunders, J. and Armstrong, G. 2005. Principles of Marketing. 4th
ed. Pearson Education Limited.

Mintel. 2011. Credit and Debit cards -UK - July 2011. [Report]. Available through:
University of West London Library Resources.

The UK Card Association. 2010. A Decade of Cards 2000 - 2010... and beyond. [report].
Available at:
http://www.theukcardsassociation.org.uk/wm_documents/decade_of_cards_final.pdf
[Accessed: 14 Nov 2013

The UK Card Association. 2013. Credit and charge card figures (2012). [online] Available
at: http://www.theukcardsassociation.org.uk/2012-facts-
figures/credit_charge_card_figures_2012.asp [Accessed: 14 Nov 2013