Ch 5 PP - ClassNet
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Transcript Ch 5 PP - ClassNet
Unit 2:
Reaching Your Market
Ch 5: Targeting A Market
Learning Goals
Define business opportunity
Explain the components of a marketing strategy
Describe the four qualities of a target market
Identify the four strategies in the marketing mix
Define mass marketing and target marketing and
state the advantages and disadvantages of each
Explain how segmentation helps to determine which
market to target
Explain each of the four segmentation categories
and list the variables for each
Describe how marketers create and use a market
segment profile
Day 1 Response Journal
The Burger King "Whopper Sacrifice" campaign
encouraged people to give up Facebook friends in
exchange for a Whopper burger coupon. Deleted
friends were notified by Burger King that they had
been "dumped" for a Whopper.
Would you have participated in the "Whopper
Sacrifice" campaign?
Do you think this campaign succeeded or failed? Why
or why not?
*** Save As Sept 30 in your Response Journal
Folder ***
Video
Business Opportunity
An ______________
Opportunity is a chance for
success
A _______________________
Business Opportunity is the chance
for success based on a product idea and a
market that is willing and able to buy it
Many great business ideas start with one
person who has a need or observes a need
in others, and others come from personal
hobbies or interests
Read the examples in paragraph 1 on page 55
Marketing Strategy
To turn a business opportunity into a successful
business, you need to develop a business plan
and a marketing plan
An important part of the marketing plan is the
marketing strategy
A ____________
is a plan developed to reach a goal
Strategy
A ____________________
Marketing Strategy consists of the target
market and all the decisions in the marketing mix
Marketing Strategy = Target Market + Marketing Mix
Target Market
When you develop a marketing strategy, you must first
choose the target market
A __________________
is segment of a larger market
Target Market
whose wants and needs you will try to meet with a specific
marketing mix
Choosing a target market is one of the most important
decisions a marketer makes
If the target market is does not want or need your product it will not be
successful
If the target market does not have the money to buy your product it
will not be successful
If your target market is too small, you will not sell enough to make a
profit
Marketers focus on the target market while making
marketing mix decisions
Target Market
Qualities of a good target market include;
Clearly defined needs and wants that
your company can meet
Money to buy your product
Willingness and authority to buy your
product
Enough customers in the market to be
profitable
Marketing Mix
Remember the Marketing Mix consists of the
4 Ps;
Product
Place
Price
Promotion
When you plan your marketing mix, you
should think “How will my target market
respond to this?”
For each P in the 4 Ps, marketers need to
select a strategy
Marketing mix decisions are
______________;
decisions for one of the
Interrelated
Ps will affect decisions made for the other
Ps
Product Strategies
Decisions made about __________
the
What
product has to offer
Remember the term product includes
goods, services, and ideas
These decisions are made with the target
market in mind
Types of decisions include;
Quality, quantity, size, colour, features,
technical support, packaging, warranties,
brand name, brand image, etc.
Price Strategies
Decisions made about pricing a product
These decisions are made with the target
market and profit in mind
Pricing can also have an impact on the
_________
Image of a product
Types of decisions include;
The selling price and any discounts that may
be offered at certain times
Place Strategies
Decisions made about _________
Where the
product will be sold
Made with the target market in mind
Types of decisions include;
What types of stores will carry the product,
whether to sell online, how to transport the
product, etc.
Promotion Strategies
Decisions about _______________
the
How To Tell
customer about the product and the
company
Made with the target market in mind
Types of decisions include;
Advertising, personal selling, customer
service, publicity, promotional events, store
design and layout, etc.
Mass Marketing
A _______________
Mass Market consists of all the
customers for a specific type of product
E.g. everyone who wants and is able and will
to buy a car is part of the mass market for
cars
Mass Marketing is the development of
_________________
only one marketing mix for a specific product
It assumes that everyone’s wants and needs for a
product are exactly the same
It is difficult to be successful with a mass
marketing strategy
Mass Marketing
Two types of
problem can arise
when you use mass
marketing;
1. Diversity of
consumer
markets
2. Profitability
problems
1. Diversity of Consumer
Markets
Consumer markets are diverse and contain
many subgroups with very different needs
and wants
Whereas, mass marketing looks at the market as
a mass (as one)
E.g. one type of shoe will not meet the needs of
everyone who wears shoes
Read the example in paragraph 4 on page 57
2. Profitability Problems
Every business wants to make a profit
But mass marketing can get in the way of
profit, as it is often very ______________
Inefficient
and _____________
Expensive
Read the example in paragraph 3 on page 58
Day 1 Assigned Work
Students please complete the following;
K & U Questions #2 & 4 on page 71
Thinking Questions #1, 2 & 3 on page 71
*** Save As Ch 5 Day 1 in your U2 Folder ***
Day 2 Response Journal
Could one style of car meet the needs of
everyone in the market for a car?
Explain.
*** Save As Oct 2 in your Response Journal
Folder ***
Target Marketing
Target marketing is the answer to problems that may
arise with mass marketing
As outlined in Day 1’s lesson
In the target market approach, marketers analyze
the whole (mass) market first. They then segment
(divide up) the market based on different needs and
wants. The company will then choose a segment of
the mass market that has the same needs and
wants for their product
Once a target market has been selected,
marketers create a unique marketing mix for that
target market
Target Marketing
The development of a unique marketing mix
for a target market is called Target
______________
Marketing
Some companies will choose two or more
segments to target, but will develop a unique
marketing mix for each
What makes a marketing mix unique?
• One or more of the 4 Ps are changed to meet the target market’s
unique needs and wants
Read the GM and house cleaning examples in
paragraph 2 on page 59
Choosing Your
Target Market
There are four general approaches to choosing
a target market;
1. Target market first
2. Product idea first
3. Product and target market together
4. Old product, new target market
1. Target Market First
Choose a target market first and then create
a product that this market will want and/or
need
This approach works well when there is a
large and distinct target market that has
money to spend
E.g. teens are a popular target market
• In Canada, there are more than 4.5 million young people
between the ages of 15 – 24, many with part-time or fulltime jobs
• This makes teens an attractive target market
2. Product Idea First
Develop a product idea first and
then find a target market that
would be willing and able to buy
the product
Potential Problem:
You might never find a market
Potential Benefit:
You might create a huge market
Read the example in paragraph 5
on page 60
3. Product & Target Market
Together
Usually occurs when you observe a need in
a particular group of consumers
Read the MAC cosmetics example in
paragraph 1 on page 61
4. Old Product, New Target
Market
Usually occurs when a long-existing
product is losing sales
The company then attempts to promote
the old product to a new market or for a
new use
Example: Baking Soda
Was promoted as a baking ingredient
Now promoted as a cleaning product
Read the example in paragraph 2 on page
61
Advantages of
Targeting a Market
For a business to be successful, it does not
have to sell to every customer in the entire
market
Advantages
1. Allows a business to focus on meeting
the needs of one smaller group of
customer
• This is often more profitable than trying to meet
the needs of everyone in a large group
Advantages of
Targeting a Market
2. Enables smaller businesses to compete
with larger companies
Smaller businesses can target a group whose
needs are not being met by the larger companies
A ____________________
is a smaller
Market Niche
segment of a larger market whose needs are
not being met by the main providers
Read the Kaepa Inc. example in paragraph 6 on
page 61
Kaepa has found a niche market in the larger
athletic shoe market
Disadvantages of
Targeting a Market
If you target a market that is too small, there will
not be enough sales to make a profit. You will…
Need to broaden your market
If you choose the wrong target market, it won’t
buy your product. You will…
Need to find a new target market
These 2 problems can be avoided by
appropriately segmenting the market through
market research
Disadvantages of
Targeting a Market
If sales for a business all come from one
small market, what happens if that market
has a financial setback?
Then the business will suffer financially
too
Despite the potential disadvantages, most
companies use target marketing
Day 2 Assigned Work
Students please complete the following;
Targeting The Right Market Worksheet
A hardcopy will be provided for you
Day 3 Response Journal
Imagine that there is $100 available to spend.
How might a teenaged boy spend that
money?
How might a 30 year old mom spend that
money?
*** Save As Oct 5 in your Response Journal
Folder ***
Segmenting a Market
___________________
Market Segmentation
is the process of
dividing a large market
into smaller parts
Each of these smaller
parts is called a
_____________
Segment
Mass
Market
Segments
Market
Segmenting a Market
The purpose of market segmentation is to find
a target market with;
Similar wants and needs for your
product
Money to buy your product
The will and authority to buy your
product
Enough size to be profitable
Segmenting a Market
Marketers use characteristics of customers
to segment the market
E.g. Age and Income
A customer characteristic used to segment a
market is called a _____________________
Segmentation Variable
Adult
Baby
High
Medium
Child
Senior
Age
Teen
Income
Low
Segmenting a Market
Segmentation variables are organized into the
following four categories;
1. Geographic
2. Demographic
3. Psychographic
4. Behavioural
1. Geographic Variables
Dividing a market based on where customers
live is called ________________________
Geographic Segmentation
Geographic variables include;
Climate
Location
Community Size
Climate
Climate has a huge impact on what
customers need
Different climates require different types of
products, such as;
Clothing
Tires
Heating and air conditioning
Location
A customer’s need for products often vary based on
where they live
Based on the customs or rules of place
Not the same as climate
Those who live in downtown areas have different
needs from those who live in the country
E.g. riding lawn mower, subway pass, etc.
Example: Car Manufacturers
Canadian market: metric system indicators
• KM per hour
U.S. market: imperial system indicators
• Miles per hour
Community Size
Some communities are too small to be
profitable for certain businesses
E.g. some restaurant chains won’t open
restaurants in cities that have a population under
200,000 – as small cities don’t provide enough
customers to be profitable
Other businesses prefer to focus on the
needs of small towns
E.g. Wal-Mart – originally opened in only smaller
communities
2. Demographic Variables
Most countries want to know basic information about
their citizens
E.g. how many people are in each age group
As a result most countries count the number in their country
A _____________
is a count of the people in a country
Census
made by the government on a regular basis
Statistics Canada: conducts census every 5 years
A census collects demographic information
Demographic Information consists of statistics
________________________
(numbers) that describe the characteristics of a
population
Segmenting the market based on demographic
variables is called ____________________________
Demographic Segmentation
2. Demographic Variables
Demographic information
is organized into
demographic variables,
including;
A. Age
B. Gender
C. Ethnicity
D. Income
E. Family size and
make-up
A. Age
Age is a common segmentation, because people of
different ages have different needs and wants
E.g. babies require special food
An important variable related to age is generation
A __________________
is a group of people who
Generation
were born or grew up during a particular period of time
People in the same generation generally have similar attitudes,
wants, and needs
E.g. people born between 1977 – 1994 are known as
Millennials
_________________
- they were the first generation to grow up
with a computer in the home and use social networking
The Canadian consumer market is often segmented by
generations
B. Gender
Men and women differ in their wants and
needs for many products
E.g. Lady Foot Locker stores providing running
shoes and other athletic equipment that meet the
specific needs of women
Other examples????
C. Ethnicity
The need for jeans may not vary based on a
person’s ethnic background, however the
needs for many other products can vary with
culture and ethnicity
Examples;
Ingredients for culture-specific foods
Items for religious practices
• For example, a rosary
In Canada, many people enjoy products
produced for a by other of cultures that they
are not a part of
D. Income
Income level has a major influence on what
people buy
People with similar income levels often buy
similar products
People in __________
income groups often
Lower
spend a large portion of their money on
necessities such as food, shelter and clothing
Whereas, people with __________
incomes
Higher
tend to spend more on recreation, education
and luxuries
D. Income
Marketers are interested in two categories of
income;
____________________:
the money left
Disposable Income
over after taxes are taken out
Usual the first things disposable income is spent
on are the necessities of life
______________________:
the money left
Discretionary Income
over after taxes are taken out and after
necessities are paid for
This is the money a person can spend on their
wants, such as vacations, going out to eat, etc.
E. Family Size & Make-Up
Families come in all
different sizes and
therefore have
different needs
How might purchases
differ between a
single person
household and a two
parent, 3 child
household?
Day 3 Assigned Work
Students please complete the following;
Segmenting the Market by Generations
Worksheet
A hardcopy will be provided for you
K & U Question #13 on page 71
Thinking Questions #6 & 8 on page 72
*** Save As Ch 5 Day 3 in your U2 Folder ***
Day 4 Response Journal
List a minimum of 3 brands that you are you
loyal to. Why do you stay loyal to these
brands? Explain.
*** Save As Oct 6 in your Response Journal
Folder ***
3. Psychographic Variables
Psychographic segmentation involves
segmenting the market based on the
psychological characteristics of customers
Aspects included in psychographic variables
are;
Hobbies
Social activities
Lifestyle
Interests
Attitudes
Hobbies and Activities
People who participate in the same hobbies
and activities often buy similar things
Examples of hobbies and activities include;
Photography
Crafts
Stamp collecting
Sports
Cultural events
Attending concerts, etc.
Lifestyle
Lifestyle and values are often difficult to
measure and define
To discover lifestyle and values, marketers may
use the VALS™ Survey
Based on psychological characteristics that correlate
purchase behaviour and key demographics
Divides consumers into eight VALS™ segments
Organized by level of resources and personal
motivation
This information is then used to meet the unique
needs of the target market
VALS Consumer Segments
4. Behavioural Variables
Dividing a market based on the
way customers use a product
or behave towards it is called
_________________________
Behavioural Segmentation
Behavioural variables include;
Features desired
Usage rate
Brand loyalty
Features Desired
Consumers vary in the features they want in
a product
E.g. Personal Computers
• Some computer users want a basic computer for word
processing and e-mail only
• Other computer users want a computer with a few more
features so they can play games and surf the Internet
• Other computer users want advanced features so they
can edit videos and create 3D graphics
• As a result, personal computer manufacturers often
segment the market based on the features that
customers want
Usage Rate
Research shows, that for many businesses 80% of
sales come from 20% of customers; called the
_____________
80/20 Rule
The majority of most business’s profit come from a small
number of customers
For this reason, marketers often segment the market
based on how often the customer uses or buys the
product; called _______________
Usage Rate
Usage rate categories include;
Heavy
Moderate
Light
Nonuser
Brand Loyalty
Customers vary in how loyal they are to a
particular brand
The value of brand loyalty is related to the
80/20 Rule, as loyal customers are often the
source of most of a company's sales
As a result, marketers often segment the
market based on the degree of loyalty
E.g. Airlines have developed frequent flyer
programs to reward airline customers who use
their airline frequently
Combining Variables
Marketers often target a market based on
______
Two or _______
More segmentation variables
Geographic location and income is a
common combination
E.g. Marketers of luxury products can get
the postal codes of people with the highest
income levels
Market Segment Profile
Once marketers have divided a market into segments,
they must choose the segment(s) to target
Once a segment has been picked, marketers develop a
market segment profile
Market Segment Profile
A __________________________
(sometimes called a
Consumer Profile), is a detailed description of the typical
customer in a market segment
This profile includes;
•
•
•
•
Geographic location
Demographics
Psychographics
Behaviour relevant to the product
This profile outlines the “typical” customer
Day 4 Assigned Work
Students please complete the following;
Variables Used to Segment the Market
Worksheet
A hardcopy will be provided for you
Take the VALS™ survey
Click on the link posted under the Useful Links section of
our ClassNet page
After you complete the survey write down your primary and
secondary VALS type
Read the description of each type and briefly summarize
what the VALS survey says about you
*** Save As Ch 5 Day 4 in your U2 Folder ***