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 ***