Is Life Cycle Marketing Outdated?

• Author: Dumont, Elinor

Problem

Our bank has been trying to utilize the life cycle marketing, but now it seems that a long-standing strategy is changing before our eyes. Is life cycle marketing on its way out, is it simply evolving or is it still a tried and true marketing standby?

Solution

The answer is "yes," "no" and "something in between!" Bank marketers have always been forward-looking. In this era of rapid technological advances, and in a period when the customer cry most often is "I want what I want, and I want it now," banks need to keep up with new or changing models.

Less than a decade ago, life cycle marketing was relatively straightforward. In 1992, Mary Ann Pezzullo showed how clients' "whereabouts" in the life cycle influenced their bank purchases. Stages of life included these five:

* Young, single, just starting out.

* Childless couple, both working, in their late 20s.

* Two-income household with children in school.

* Middle-aged working couple with no dependent children.

* Elderly retired person.

Of course, for each stage there were specific financial benefits sought and product needs to be satisfied. (Pezzullo, Mary Ann, "Understanding and Selling Bank Products," Bank Marketing Association, 1992)

In the final years of the decade, banks continued using similar approaches. In an award-winning School of Bank Marketing paper, "A Life Cycle Segmentation Approach to Internet Banking," the author, Cindy M. Theil, describes First Hope Bank's life style marketing philosophy and the marketing toad map it followed. Using the services of Lance Kessler, a consultant specializing in life style marketing, the bank relied on the results of data from focus groups and surveys to conclude that "Life cycle marketing is based upon the belief that people within specific life cycles have the same basic 'core' needs and, therefore, can be segmented in this manner." The marketplace is defined as

* Younger empty nest.

* Younger full nest.

* Older full nest.

* Older empty nest employed.

* Older empty nest retired.

Core financial needs were identified for each segment, ranging from saving for first homes to planning for children's college education, to retirement preparation and managing fixed incomes and health care expenses.

So far, it sounds very much like the Main Street shopkeepers' basic "Know Thy Customer" philosophy: "Hi, Mrs. Jones... heard your son is off to college!" or "Well, Mr. Smith, so now you are retired!" But that was before the computer replaced the...