Transcript Foundations of Marketing

of
MARKETING
Chapter
3
Market
Segmentation:
Finding a
Base to Start
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Market Segmentation: Finding a Base to Start
Chapter
3
Objectives
1. Explain the concept of the marketing plan.
2. Define market segmentation.
3. Discuss and apply five types of market
segmentation in consumer markets.
4. Illustrate some aspects of the Canadian
market in terms of the five types of
consumer market segmentation.
5. Discuss and apply the main types of
segmentation in industrial markets.
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Market Segmentation: Finding a Base to Start
Chapter
3
Figure 3.1
The Strategic Marketing Planning Process
Input from Corporate
Strategies
• Mission
• Corporate objectives
• Strategic business
unit(SBU) objectives
Situation Analysis
• Internal
• Environmental
• Customer
• Competitive
Implementation and Control
• Measurable goals
• Benchmarks
• Feedback
Marketing Objectives &
Strategies
• Objectives
• Strategies
–
–
–
Retrenchment
Status quo
Growth
Marketing Plan
• Product or service
management
• Price
• Distribution
• Communications
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Market Segmentation: Finding a Base to Start
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3
Fundamental Tasks in Developing a
Strategic Marketing Plan
1. Target Market
2. Implement a Marketing Program
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Market Segmentation: Finding a Base to Start
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3
What is a Market?
• People with the willingness, purchasing
power, and the authority to buy.
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Market Segmentation: Finding a Base to Start
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3
Consumer Goods
• Those products and services
purchased by the ultimate consumer
for personal use.
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Market Segmentation: Finding a Base to Start
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3
Industrial Goods
• Those products purchased to be used,
either directly or indirectly, in the
production of other goods or for resale.
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Market Segmentation
• Grouping people according to their
similarity in one or more dimensions
related to a particular product category.
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Market Segmentation: Finding a Base to Start
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3
Figure 3.2
Bases for Market Segmentation
Descriptive
Demographic Segmentation
Gender
Age
Family life cycle
Race/Ethnic group
Education
Income
Occupation
Family size
Religion
Home ownership
Geographic Segmentation
Country
Region
Urban/Suburban/Rural
Population density
City size
Climate
Behavioural
Psychographic Segmentation
Lifestyles
Psychological variables:
Personality
Self-image
Potential
Markets
Benefit Segmentation
Expected benefits from product
use
Usage Rate
Heavy users
Brand loyalty
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Market Segmentation: Finding a Base to Start
Chapter
3
Figure 3.3
Main Inhabited Areas in Canada
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Market Segmentation: Finding a Base to Start
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Figure 3.4
3
Percentage Distribution of the 2001
Canadian Population by Province
Manitoba 3.7%
Saskatchewan 3.3%
Alberta 9.9%
British Columbia 13.0%
Northwest Territories 0.1%
Nunavut 0.1%
Newfoundland 1.7%
Prince Edward Island 0.4%
Nova Scotia 3.0%
New Brunswick 2.4%
Quebec 24.1%
Ontario 38.0%
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Market Segmentation: Finding a Base to Start
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3
Table 3.1
Provincial and Territorial Populations, 1981, 1991, 2001
POPULATION (THOUSANDS)
Region
Newfoundland
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories
Nunavut
Canada
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1981
568
123
847
696
6 438
8 625
1 026
968
2 238
2 744
23
46
n/a
24 343
1991
568
130
900
724
6 896
10 085
1 092
989
2 546
3 282
28
36
21
27 297
2001
513
135
908
729
7 237
11 410
1 120
979
2 975
3 908
29
37
27
30 007
Source: “Provincial and Territorial Populations, 1981, 1991, 2001” adapted from the Statistics Canada Website
http://geodepot.ca/English/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada.
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Market Segmentation: Finding a Base to Start
Chapter
3
Figure 3.5
Urban - Rural Population Distribution, 1871-2001
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Market Segmentation: Finding a Base to Start
Chapter
Table 3.2
The 25 Largest Metro Areas in Canada, 1996, 2001
Area
Toronto
Montreal
Vancouver
Ottawa-Hull
Calgary
Edmonton
Quebec
Winnipeg
Hamilton
London
Kitchener
St. Catharines-Niagara
Halifax
Victoria
Windsor
Oshawa
Saskatoon
Regina
St. John’s
Chicoutimi-Jonquière
Sudbury
Sherbrooke
Trois-Rivières
Saint John
Thunder Bay
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1996 Population (Thousands)
4445
3359
1891
1031
852
392
698
677
650
416
403
390
347
313
292
281
222
199
178
167
166
150
144
129
131
2001 Population (Thousands)
4881
3512
2079
1107
972
935
693
685
681
426
432
393
359
319
314
305
231
198
176
159
157
155
142
128
125
Source: Adapted from the Statistics Canada publication Canada Year Book 1999, Catalogue No. 11-402, page 94 and from the Statistics Canada Website
http:www.statcan.ca/english/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada.
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Market Segmentation: Finding a Base to Start
Chapter
Figure 3.6
3
Population Projections by Age Group
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Market Segmentation: Finding a Base to Start
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3
Table 3.3
Buying Patterns for Different Age Groups
Age
Name of Age Group
Merchandise
0-5
Young children
Baby food, toys, nursery, furniture,
children’s wear
6 - 19
School children
(including teenagers)
20 - 34
Young adults
35 - 49
Younger middle-aged
adults
50 - 64
Older middle-aged
adults
Senior adults
65+
3-15
Clothing, sports equipment, records,
school supplies, food, cosmetics,
used cars
Cars, furniture, houses, clothing,
recreational equipment, purchases
for younger age groups.
Larger homes, better cars, second
cars, new furniture, recreational
equipment
Recreational items, purchases for
young marrieds and infants
Medical services, travel, drugs,
purchases for younger age groups
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Market Segmentation: Finding a Base to Start
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3
Family Life Cycle
• The process of family formation,
development, and dissolution.
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SSWDs
• Single, separated, widowed, or
divorced people.
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Engel’s Laws
As family income increases
1. a smaller percentage goes for food
2. the percentage spent on housing and
household operations and clothing will
remain constant, and
3. the percentage spent on other items
will increase.
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Market Segmentation: Finding a Base to Start
Chapter
3
Figure 3.7
Percentage Annual
Expenditures by Income
Groups, 1999
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Market Segmentation: Finding a Base to Start
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3
Lifestyle
• The mode of living
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Market Segmentation: Finding a Base to Start
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3
Psychographics
• The use of psychological attributes,
lifestyles, attitudes, and demographics
in determining the behavioural profiles
of different consumers.
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AIO Statements
• Statements about activities, interests,
and opinions that are used in
developing psychographic profiles.
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Figure 3.8
3
VALSTM Network
High Resources
ACTUALIZERS
Principle
Oriented
Status
Oriented
FULFILLEDS
ACHIEVERS
BELIEVERS
STRIVERS
High Innovation
Action
Oriented
EXPERIENCES
MAKERS
Low Resources
STRUGGLERS
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Low Innovation
Source: SRI Consulting Business Intelligence. Http://www.sric-bi.com/VALS/types.shtml
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Market Segmentation: Finding a Base to Start
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The Environics Segments
• Elders
• Boomers
• Generation X
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Table 3.5
3
Benefit Segmentation Applied to Yogurt
BENEFITS SOUGHT FROM YOGURT
Attributes of Yogurt
Individually
packaged
With
fruit
High- Mild
priced
Organic
Contains
bio-bifidus
Low
fat
Lowpriced
Provides choice
for family members
X
Convenient to use
X
X
Tastes good
X
Good quality
X
Healthy
X
X
X
X
X
X
X
X
Helps digestion
X
Helps diet
X
X
Spend less money
Source: Adapted from Marco Vriens and Ter Hofseted, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research,
3-25
Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association.
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Market Segmentation: Finding a Base to Start
Chapter
Table 3.6
Consumer Marketing Decisions Affected by Segmentation Choices
Segmentation Basis
Decisions Affected
•
•
•
Choice of sales region
Sales force location
Retail location
Demographic
•
•
Estimates of segment size
Choice of local distribution channels or channels that cater to
different age, income, and education groups
Psychographic
•
•
•
Product/service positioning
Advertising themes
Sales training
•
•
•
Product/service design--different models with different
features
Advertising themes
Sales training
•
•
•
•
Special products (sizes and quality)
Special services
Frequent-user promotions
Special financial terms
Geographic
Benefit
Product Usage Rates
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3
Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of
South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Market Segmentation: Finding a Base to Start
Chapter
3
Segmentation Bases for Industrial
Markets
Product
Segmentation
Geographic
Segmentation
Potential
Industrial
Markets
End-Use
Application
Segmentation
Account Size
and Potential
Segmentation
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Market Segmentation: Finding a Base to Start
Chapter
Table 3.7
Consumer Marketing Decisions Affected by
Segmentation Choices
Segmentation Basis
Geographic
Product (including NAICS)
End-Use Application
Account Size & Growth Potential
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3
Decisions Affected
•
Choice of sales region
•
Sales force organization
•
Product design
•
Media choices
•
Trade show choices
•
Product design
•
Sales force training
•
Advertising emphasis
•
Account and relationship management
Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of
South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Market Segmentation: Finding a Base to Start
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3
North American Classification
System (NAICS)
• A coding system used to categorize
different types of business and
products (formerly the Standard
Industrial Classification, or SIC)
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