BEYOND DEMOGRAPHIC BOUNDARY: DETERMINING GENERATIONAL VALUES BY COHORTS
Ernest Cyril de Run* Faculty of Economics and Business, Universiti Malaysia Sarawak, Hiram Ting Faculty of Economics and Business, Universiti Malaysia Sarawak,
ABSTRACT Generation and value have been key extensions of demographic and psychographic bases in market segmentation respectively. However, generation has always been regarded as a demographic factor. Little is done to understand generational values across cohorts in emerging market. Using the cohort research in Sarawak as the basis, the present study is aimed to assess personal values of four generational cohorts and how these values may be different by cohorts. List of Values (LOVs) was utilized to determine internal values, external values and interpersonal values of cohorts. A quantitative approach by means of self-administered questionnaire was adopted in data collection. Subsequently, 1,116 usable copies were collected and the data was tested using analysis of variance (ANOVA). The results show that there is significant difference in personal values across four generational cohorts. Specifically, Idealistic-strugglers (the oldest cohort) are found to be different from others in every aspect while Neoteric-inheritors (the youngest) only differ from the rest in their external values. Prospectivepursuers and Social-strivers are found to have similar values internally and externally. The findings validate heterogeneity of different segments by cohorts in a developing market and support this observation with their distinctive values. Implication on generational values is provided. Keywords: Generational cohort, personal value, demographic, segmentation *Corresponding author: Prof. Dr. Ernest Cyril de Run Address: Universiti Malaysia Sarawak, Kota Samarahan, Malaysia, Email:
[email protected]; Tel/Fax: +6082-582280/+6082-582484
Bibliographic Information de Run, E. C. and Ting, H. (2014). Beyond Demographic Boundary: Determining Generational Values by Cohorts, Proceedings of MAG Scholar Global Business, Marketing and Tourism Conference, November 22-24, 2014, Hyatt Regency, Yogyakarta.
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INTRODUCTION Marketers today are more than often confronted with intricate tasks to serve diverse consumers in dynamic societies. It has been well recognized that effective segmentation strategy holds the key to profile customers and satisfy their needs and wants (Frochot & Morrison, 2001; Plummer, 1974). For many years several segmentation strategies such as those based on demographic and psychographic bases have been utilized (Kotler & Armstrong, 2011). However an innovative and highly successful profiling method utilizing generational cohort is emerging as prominent approach and becoming increasingly useful in tracking consumer behaviours (Meredith & Schewe, 2002). Despite being recognized as a demographic factor, generation unveils more than what a population trend does. Notably, Generation X and Generation Y, amongst others, are extensively appropriated to categorize and characterize consumers in marketplaces, not only in the West but also in the East. Despite originating from western sources, these labels along with their respective descriptions have also been adopted in Malaysia (Munusamy, Chelliah & Mun, 2010; Ting & de Run, 2012). Despite the complexity in diverse societies, researchers have claimed that personal value is an evident reflection of human behaviours, including attitudes, consumption patterns, and actual actions (Kamakura & Novak; 1992; White, 2005). Personal value is described as individual belief about what is more preferable, and is thus related to inner desire (Solomon, 2011). While generational cohort is generally accepted as a demographic factor, personal value is regarded as a psychographic factor (Kotler & Armstrong, 2011). As a result, generational values in western sources are time and again generalized in other settings, including developing countries like Malaysia (Chuah, Marimuthu & Ramayah, 2014; Munusamy & Wong, 2007; Ramaprasad, 1994). The segregation of recognized cohorts is conveniently adopted to describe people’s values and explain their behaviours without theoretical basis (de Run & Ting, 2013). Moreover, since generational cohort study in Malaysia is still at its infancy stage, differences of personal values across cohorts still remain largely unknown. Hence, the purpose of this study is to investigate personal values across generational cohorts by using List of Values (LOVs). Instead of using western cohorts, the recently established cohorts in Sarawak are adopted to determine generational values.
LITERATURE REVIEW Generational Cohort Labels of generational cohorts, such Veterans, Baby boomers, Generation X and Generation Y from the U.S sources, have been commonly used to classify consumers and understand their distinctive characteristics in marketing literature (Cennamo & Gardner, 2008; Munusamy et al., 2010; Yu & Miller, 2003). A generational cohort is defined as an individual group, who shares about the same age, born during the same time period, and experiences similar major external events during the developmental stages (Edmunds & Tuner, 2005; Kupperschmidt, 2000; Ryder, 1965; Smola & Sutton, 2002). The theory of historical generations proposed by Rogler (2002) emphasizes that major societal events instill greater and more permanent marks on the coming-of-age group than on other age-groups who live through the same period. Their personal attachment to these events will consolidate in them permanent orientation, thus affecting them throughout their lives (Rogler, 2002). Hence, generational cohort starts with external events and their impact on individuals during late adolescent and adulthood years (Noble & Schewe, 2003). Moreover, it is asserted that once a society embarks on industrialization, fundamental changes in values will take place (Abramson & Inglehart, 1995; Inglehart & Pippa, 2003). It is therefore surmised that cohort labels from western sources and their respective characteristics, such as their values, should not and cannot be construed to other settings, including developing countries due to differences in major events and societal development.
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Personal Values Personal value has been extensively used to divulge consumers’ decision-making patterns and behaviours across different contexts (Kopanidis, 2009). Despite having several instruments to measure values, List of Values (LOVs) is adopted in the study due to its relative ease of use yet better predictive relevance (Goldsmith & Kilsheimer, 1993; Kahle, Beatty, & Homer, 1986). LOVs is composed of three dimensions, namely internal values, external values, and interpersonal values (Homer & Kahle, 1988). Internal value is generally about how a person is internally fulfilled (Jago, 1997). They do not depend on others when making decision. They are more concerned about themselves. As such, internal value is measured by self fulfillment, self respect, sense of accomplishment, and excitement. External value, in turn, hinges more on exterior factors, such as peers. People having such value believe everything is beyond their control (Homer & Kahle, 1988). Be it failure or success, it is not just about themselves. As such, external value is measured by sense of security, sense of belonging, and being well respected. Lastly, interpersonal value is a combination of the two former values (Kahle, 1991). It emphasizes on the interaction and communication among people. As such, interpersonal value is measured fun and enjoyment in life, and warm relationship.
Hybrid Segmentation Approach The need to target homogenous groups of a heterogeneous market rather than the market as a whole is well recognized in past decades (Pennington-Gray, Fridgen & Stynes, 2010). To remain competitive and effective, marketers must be able to develop and refine their products to meet varying needs and preferences. This gives rise to market segmentation, which is generally described as a division of market into identifiable and substantial groups of similar consumers (Arnould, 2004). Segmentation allows marketers to identify and profile distinct groups of consumers, whose characteristics are different from others, thus ensuring effectual marketing strategies. Demographic and psychographic bases are the two most popular segmenting approaches (Kotler & Armstrong, 2011). While demographic base uses the variables of human populations, such as location, age, gender, race and occupation, psychographic base is a lifestyle inventory which takes into account the values and personalities of people (Burns & Bush, 2005; Kotler & Armstrong; Wasserman, 2002; Wellner, 2002; Wilke & Applebaum, 2001). Even though generational cohort is largely regarded as a demographic factor (Kotler & Armstrong, 2011), it is only applicable in western contexts where cohort studies were conducted. As a result, cohort segmentation base is later claimed to be a hybrid approach, which utilizes both the stability that age variable offers (Steenkamp & Hofstede, 2002) and of the insights into consumer motivations which value variable offers (Hung, Gu & Yim, 2007). Past studies have demonstrated the great potential of cohort analysis in marketing strategies and the understanding of consumer behaviour (Rentz and Reynolds, 1991; Meredith and Schewe, 1994; Schewe and Evans, 1998). Hence, when looking into generational values in another context, it is imperative that generational cohorts are determined with theoretical foundation. Treating generational cohort as a mere demographic factor and adopting cohort labels and characteristics from western sources as a general population trend have likely hampered the understanding of consumer behaviour and marketing strategy.
METHODOLOGY Sarawak was chosen as the research site in the study. The main reason for this is because the only empirical cohort study in Malaysia to date is done in the Sarawakian context (de Run & Ting, 2013). Five cohorts were found in the past study, and they are labeled as Neoteric-inheritors (aged 21 and below as of 2013), Prospective-pursuers (aged 22 to 35), Social-strivers (aged 36 to 51), Idealistic-strugglers (aged 52 to 70) and battling lifers (aged 71 and above). Each cohort has their own characteristics due to their experiences of major events during formative years (de Run & Ting, 2013). Moreover, the state is as diverse as Peninsular
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Malaysia and Sabah, and has different cultural and historical background from them. Sarawak is also emerging as a lucrative market due to its strategic location and rich resources. This makes the investigation of how generational values develop from one cohort to another more significant. Given the quantitative nature of the study, self-administered questionnaire was used. The questionnaire was part of a larger study but only sections related to this paper are discussed here. Data collection was administered in early 2013, and subsequently 1,116 usable copies were gathered for analysis. There were 4 statements for measuring internal values, 3 statements for external values, and 2 statements for interpersonal values. A seven-point Likert scale was used, where 1 indicated strong disagreement and 7 indicated strong agreement to the statement. Statistical Package for Social Sciences (SPSS) was utilized to run descriptive analysis and analysis of variance (ANOVA).
FINDINGS Respondents Profile Table 1 presents the profile of 1,116 respondents from four generational cohorts in Sarawak. The oldest cohort, namely Battling-lifers (aged 71 and above), is excluded from the study due to the low response rate. Age, race and present residence are also shown to denote the representativeness of the sample. TABLE 1: RESPONDENTS PROFILE Frequency
Variables
Items
Generational Cohort
Neoteric-inheritors (aged 21 and below) Prospective-pursuers (aged 22 to 35) Social-strivers (aged 36 to 51) Idealistic-strugglers (aged 52 to 70)
263 348 267 238
Percent 23.6 31.2 23.9 21.3
Race
Iban Chinese Malay Others
387 306 287 136
34.7 27.4 25.7 12.2
Gender
Male Female
522 594
46.8 53.2
Present Residence in Sarawak
Kuching city Miri city Bintulu Sibu Others
315 183 175 170 273
28.2 16.4 15.7 15.0 24.7
Personal Values by Generational Cohorts Table 2 presents Mean and standard deviation values for personal values by generational cohorts. Moreover, Cronbach alpha is also provided to indicate the reliability of data. Since Cronbach alpha values of 0.7 and above are commonly accepted, alpha value that is below 0.7 may indicate the data is not reliable (Streiner and Norman, 2008). However, as an alpha of 0.50 or greater is acceptable for value and preference assessments, all the variables are therefore retained (Huang, et al., 2012; Tuckman, 1999).
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TABLE 2: MEAN AND RELIABILITY VALUES BY GENERATIONAL COHORTS NeotericProspectiveSocialIdealisticinheritors pursuers strivers strugglers Factor Mean S.D. Mean S.D. Mean S.D. Mean S.D. Self-fulfillment 5.816 1.222 6.043 1.016 6.006 1.057 5.517 1.070 Self-respect 6.202 1.019 6.273 0.840 6.297 0.809 5.819 0.945 Sense of accomplishment 6.149 1.054 6.244 0.842 6.293 0.844 5.731 1.073 Seeking excitement in life 5.681 1.315 5.667 1.366 5.307 1.452 4.853 1.696 Safety and security 6.328 0.976 6.422 0.823 6.529 0.753 5.949 1.116 Sense of belonging 5.894 1.158 6.122 0.910 6.210 0.850 5.846 1.156 Being well-respected 6.126 1.024 6.224 0.870 6.262 0.866 5.717 1.097 Fun and enjoyment in life 5.878 1.254 6.054 1.035 5.865 1.110 5.386 1.313 Warm inter-relationship 6.183 1.010 6.302 0.854 6.375 0.782 5.894 1.155
Overall C.A.
75.7
78.4 56.5
Note: S.D. indicates Standard Deviation whereas C.A. indicates Cronbach Alpha for all cohorts
In order to test whether the level of agreement to personal values differ significantly across the four generational cohorts, one-way ANOVA with post-hoc comparison using the Duncan’s range test was used. Table 3 shows the Mean and F values of personal values by generational cohorts. TABLE 3: DIFFERENCES IN PERSONAL VALUES BY GENERATIONAL COHORTS Mean Factor NeotericProspectiveSocialIdealisticinheritors pursuers strivers strugglers Internal value 5.962a 6.057a 5.976a 5.480b a b b External value 6.116 6.256 6.333 5.837c a a a Interpersonal value 6.030 6.178 6.120 5.640b
F value 25.209* 19.000* 19.436*
Note: * p < 0.05; Means with different superscripts indicate that they are significantly different at p < 0.05.
DISCUSSIONS Generational Values by Cohorts The findings shown in Table 2 indicate that safety and security are the most important personal values for all generational cohorts. In like manner, Table 3 corresponds to the earlier findings by showing that external value is deemed more important than internal and interpersonal values by all cohorts. Moreover, the findings also show consistently that interpersonal value is more important than internal value. Hence, it can be posited that Sarawakians in general are more concerned with external factors. How they feel about the surroundings, and how people treat them are more essential than how they regard themselves. Interpersonal value being more important internal value also suggests that they prefer collective activities more than individual contentment. More notably, Table 3 also shows the difference in personal values by generational cohorts. It is found that personal values of Idealistic-strugglers are significantly different from other cohorts. Given the fact that all of them are above 50 years old in 2013, and have experienced the insurgence of communists, curfews and even the formation of Malaysia during their coming-of-age years, their viewpoints and value orientations are expected to be different from others (Ting, de Run & Fam, 2012). As they struggled to adapt to some of the major environmental changes in the state, they held on to their beliefs about what an ideal situation should be. Therefore, they have learnt to put aside their own interest, and this may well explain why they have the weakest agreement in all personal values. Neoteric-inheritors are the youngest among cohorts and they are still in their formative years. While their personal values are largely similar to Prospective-pursuers and Social-strivers due to probable crossover effect, their external value is found to be significant different from the rest. On one hand, they are still
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learning and inheriting things revolving around them, on the other hand, they pay more attention to external factors, such as their peers and the present social trends, more than the others, and thus are more gullible to changes (de Run & Ting, 2013). This corresponds to propositions made by Rogler’s (2002) about young adults being more susceptible to impactful events than older generations in the same period of time. Despite being attached to different major events during formative years, personal values of Prospectivepursuers and Social-strivers are found to be similar. While Social-strivers experienced economic and social development in 1980s and 1990s before being struck by financial crisis in late 1990s, Prospective-pursuers experienced financial crisis in late 1990s and the recovery before being caught by another global economic downturn in 2007-2008 (de Run & Ting, 2013). Such experiences may well suggest the similarity of motivations within them to react to external values more favourably than other values. Both cohorts did not struggle what Idealistic-strugglers went through when they came of age. Neither do they inherit things such as technological devices the way Neoteric-inheritors do. They are generally learners, and they realize the importance of taking environmental factors and interpersonal relationship into account in order to be successful in a complex and volatile society.
Managerial Implication People today have become more sophisticated, knowledgeable and socially-aware than before, thus demanding specific attention and products that match their value orientation and go well with their beliefs and lifestyles. Using demographic base along is no longer a probable solution to unlock predictions about consumer behaviours. As people age and go through different stages of life, their attitude and behaviours inevitably change. Generational cohort not only gives insights into the formation of values during formative years but also provides superior forecasting of their future behaviours. Once generational cohorts are determined, cohort segmentation approach will then utilize the stability that age offers and motivation orientation that value unveils to profile and understand consumers (Hung, et al., 2007; Steenkamp & Hofstede, 2002s). Hence, in addition to identifying actual generational cohorts in Sarawak from the past studies, the determining of generational values further validates the differences across cohorts and reinforces the need for marketers and managers alike to profile consumers based on cohort approach.
CONCLUSION Since little is known about actual generational cohorts in Malaysia, this study is a further attempt to articulate generational values across cohorts in Sarawak based on previous studies (de Run & Ting, 2013; Ting et al., 2012). As such, findings and discussions of the study cannot be generalized to the whole nation. Moreover, despite the usefulness of LOVs, there are several other value and lifestyle inventories, such as Activities, Interests and Opinions (AIO), which may provide more insights into the phenomenon. Therefore, nationwide studies on generational cohort are needed not only to establish actual cohorts in the Malaysian context, but also to facilitate cohort studies in other developing countries and cross-border studies. This will provide a more holistic view about the formation of generational values across cohorts and how such values differ from one cohort to another.
ACKNOWLEDGEMENT This paper is based on research at Universiti Malaysia Sarawak (UNIMAS) under Fundamental Research Grant Scheme (Grant no: FRGS/2/2013/SS05/UNIMAS/01/1). The authors express their gratitude to Ministry of Higher Education (MOHE) and UNIMAS for sponsoring the research carried out.
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