Transcript Presentation - Mr. Beals Quest

Market Segmentation
What You’ll Learn
• What market segmentation is and the
four methods used to segment a
market.
• Analyze a target market.
• Differentiate between mass marketing
and market segmentation.
Identifying and
Analyzing Markets
• The surest way for businesses to make
a connection with customers is to know
those people well.
• This means knowing:
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Where they live
Income Level
Age
Ethnic Background
Activities
Values
Interests
Analyzing Markets
Marketers analyze groups of
customers to see if they can be
broken down into smaller more
precise clusters.
This process is called Market
Segmentation.
Market segmentation is a way
of analyzing a market by
specific characteristics in order
to create a target market.
Example: Jeans
• A marketer might ask:
– Who buys jeans?
– At what price?
– What special features do they want?
• Depending on the answers to these
questions, the jean market may be
segmented by:
– Age: Kids, Teens, Adults
– Price: reach different income levels
– Desired features: tight fit; newest fashion;
unique design;
Example: Jeans
• Marketers then will ask: Which of these
segments should we target?
– Too costly to target all the potential markets.
– Identify those markets which the company has an
advantage against its competition.
– Marketers call this a competitive advantage.
• Marketers then study data to determine if a
given market is large enough to justify the
expense.
– Governments
– Research firms
– Their own research
Types of Segmentation:
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Demographics
Psychographics
Geographics
Behavioral
Demographics – Def
• Statistics that describe
a population in terms of
personal characteristics
Demographics – Age
– Marketers work with age ranges
• Information available through the Census
– Baby Boom Generation - born 1946-64
• They like tech gadgets, cosmetics and
products that enhance lifestyle
– Generation X (baby bust Gen)
• Children of 2 incomes
• Hip music & humor
– Generation Y (Millennium Gen)
• Ethnically Diverse
• Fashion & Internet marketing
Demographics – Income
• Disposable income
– money left after taking out
taxes.
– Companies who produce
basic necessities are
interested in this
• Discretionary income
– money left after paying for
basic living necessities
such as food, shelter, and
clothing.
– Companies who produce
luxury items are interested
in this
Demographics – Gender
• Marketers need to have
a different approach
when targeting each
gender
• There are gender
‘specific’ qualities that
businesses need to
recognize.
• Q – What qualities can
you think of already?
Demographics – Marital Status
• The US Census indicates there is currently a lower
percentage of married couples compared to the
1950s.
• People are getting married at an older age
• People are living longer
• Marrying less
• All this info is important
to marketers
• You may notice
containers with more
servings for large
families
• Also notice packages
of individual servings
• Ethnic Background
U.S. Trend – The percentage of the
Caucasian population is declining,
while other ethnic populations
increase.
Psychographics
• Involves grouping people with similar lifestyles,
as well as shared attitudes, values, and opinions.
– Activities
– Attitudes
– Personality & Values
• Requires more research about personality traits
and motivation
• They create focus groups so that researchers
can study responses to questions and
interactions among participants.
Attitudes and Opinions
• These are often created by changing times and
personal experiences.
• Marketers study trends that are a result of some of
these attitudes.
– “Going Green” to save the environment is a trend that
some businesses have utilized to create new products
and packaging.
– Taking responsibility for one’s health, eating healthier,
becoming physically fit are current trends.
• Q – What are some other trends you recognize?
• Marketers must use caution when segmenting by
Psychographics – difficult to predict.
Interests and Activites
• Visit a magazine section in a bookstore to realize
just how many different interest and activity groups
there are.
• People with common interests often purchase
similar products.
Music teachers,
dancers, and other
music lovers would
be one category of
people who share
psychographic
characteristics.
Geographics –
Segmentation
based on
where people
live.
Geographics
• Segment based upon:
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Local
State
Regional
National
Global
• Also Segment based
upon:
– Population Density
– Climate
Geographics
• Small restaurants market
on a local basis
• Create menu options that
are preferred by its
regular customers
• Food manufactures and
retailers also have
learned that certain areas
share similar tastes
• Example: Mr. Tods Sweet
Potato Pies
Behavioral Segmentation
• Looking at the benefits desired by
consumers, their shopping patterns, and
usage rate.
• Market the benefits, not just the physical
characteristics of a product.
Behavioral Segmentation
• Many businesses find that the 80/20 rule
applies.
• 80% of a company’s sales are
generated by 20% of its loyal customers.
• Many companies market with loyalty
programs to focus on the 20% group.
Mass Marketing
Vs Segmentation
• Mass Marketing uses a single marketing
strategy to reach all customers
• Mass marketing is used when a product has
universal appeal and few features to vary from
its competitors
• Products become less expensive, because it is
less expensive to advertise
• Mass marketing not as popular as it once was –
not as effective as segmenting
• Niche marketing (the current trend) – markets
are narrowed down and defined with extreme
precision.