Transcript Market Segmentation - River Dell Regional School District

2.2 Market
Segmentation
MARKETING
MR. PAVONE
Identifying and Analyzing Markets
Think of yourself as a consumer. What are your key
characteristics?
Identifying and Analyzing Markets
Businesses look for ways to connect with current and
potential customers by getting to know them well.
 Market Segmentation – The process of analyzing and
classifying customers in a given market to create smaller,
more precise target markets.
 To meet the needs of different market segments,
manufacturers use a unique marketing mix, including
different products, promotions, stores and price points.
 By using a sustainable competitive advantage,
marketers identify its specific markets to target.
 Companies will study data in order to break down
information to demographics, geographics,
psychographics, and behavioral factors.

Demographics

Demographics – Statistics that describe a population in
terms of personal characteristics such as age, gender,
income, marital status, ethnicity, education, and
occupation.
Age

Marketers easily use age to segment the market by
creating age ranges; some of the common labels used
to segment the population by generation are:

Baby Boom Generation: 76 million babies born between
1946 and 1964 with a seeming increase in income and
spending power as they get older; prime targets for all
types of products.

Generation X (Baby Bust Generation): Generation from
1965 to early 1980s, mostly children of dual-career
households or divorced parents, heavily influenced by the
media and marketed with music, share images and humor.

Generation Y: Generation from mid 1980s to early 2000s,
also known as the Millennium Generation, very ethnically
diverse, very heavily influenced by the Internet.
Gender

Gender helps to create market segments as well; one
good example being Jockey (one a men’s underwear
company) doubling its sales by entering the women’s
market with Jockey underwear for women.
Income

Marketers want to know how much money people have
to spend on different products and therefore look at two
types of income: disposable and discretionary income.

Disposable Income – The money left over after taxes are
taken out of a consumer’s income.

Discretionary Income – The money left over from a
consumer’s income after paying for basic living
necessities such as food, shelter, and clothing.
Marital Status

The U.S. Census indicates that married couples have
decreased to 49.7 percent of total households,
compared to 80 percent in the 1950s, attributed to
reasons such as:

People are older when they get married for the first time.

Higher divorce rates.

People are living longer.

People are remarrying less.
Ethnic Background

The U.S. population is becoming more multicultural and
ethnically diverse; the Caucasian population is declining,
while African American, Hispanic and Asian American
populations make up more than 30 percent of the U.S.
population.
Geographics

Geographics – Segmentation of the market based on
where people live.

Geographics segment markets geographically by local,
regional, national, even global markets; some examples:

Businesses interested in marketing to Latinos need to know the top
Hispanic markets, such as New York, Miami, etc.

55% of the African-American population lives in the South, but large
populations of African-Americans also reside in New York and Chicago.

If interested in marketing to children, it is good to know large proportions
of children to population reside in Utah and Alaska.

In 2005, the states with the largest populations of people age 65 and
older could be found in California, Florida, New York and Texas.

In 2005, states with a median household income of at least $50,000 were
Delaware, Washington, California, Colorado, Virginia, Utah,
Massachussetts, Minnesota, Alaska, Connecticut, New Hampshire,
Hawaii, Maryland and New Jersey.
Psychographics

Psychographics – Studies of consumers based on social
and psychological characteristics.

Consumer lifestyles include how people spend their time
and money based on:

Activities

Attitudes

Personality & Values
Activities

If you made a list of all of your present activities, you
would realize how many market segments can be
identified by psychographics.
Attitudes

Consumers’ attitudes, such as taking responsibility for
one’s health, eating healthier, and becoming physically
fit, are trend-setting issues for markets in the twenty-first
century.
Personality & Values

More advanced study of psychographics includes the
study of personality characteristics and values.
Behavioral

Segmenting the market based on product related
behavior involves looking at the benefits desired by
consumers, shopping pattern and usage rate.

MasterCard research revealed five groups of online
consumers:

Confident core users

Cautious shoppers

Mainstream users

Curious but not convinced

Technology skeptics
How Marketers Use Consumers’
Behavioral Patterns

Marketers study shopping patterns to determine usage
rates, for instance, Jupiter Research determined that
most teenagers spend about $50 a month on
entertainment and teenage girls spend 15 percent more
on music than teenage boys.

Companies classify their customers according to the
percentage of sales each group generates; many
businesses are finding that 80 percent of their sales are
generated by 20 percent of their loyal customers (the
80/20 rule).
Mass Marketing Versus
Segmentation

Mass Marketing – Use of a single marketing plan to reach
all customers.

When products have universal appeal and few features
to differentiate them from competitors, mass marketing is
used.
A New Marketing Trend

Mass marketing is not as popular as it once was; the
current trend is now niche marketing, the narrowing
down of markets and defining them with extreme
precision.