© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 1 Segmentation.
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Transcript of © Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 1 Segmentation.
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 1
Segmentation
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 2
Segmentation
Market Segmentation
• With a large country
• Many different types of people
- it is too difficult to create a product that will satisfy everybody, that is why we focus on a segment of the total market
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 3
Segmentation
Market Segmentation Defn
• “Grouping people according to their similarity related to a particular product category”
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 4
Segmentation
Market Segmentation
Two Step Process
• 1. Naming broad product-markets
• 2. Segmenting these to select target markets
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 5
Segmentation
Clustering
• Marketing-Oriented managers know that segmenting involves clustering people with similar needs into a market
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 6
Segmentation
Market Segmentation
Four Criteria for determining if the segment you have is useful
1. Homogenous
2. Heterogenous
3. Substantial
4. Operational
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 7
Segmentation
Market SegmentationFour Criteria 1. Homogenous
- the people within the segment are all similar
2. Heterogenous- the people between segments should be very different
3. Substantial- the segment should have enough people to make to worthwhile
4. Operational- the dimensions should be useful
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 8
Segmentation
Market SegmentationCharacteristics• age
• gender
• geographic location
• income
• spending patterns
• cultural background
• demographics
• marital status
• education
• language
• mobility
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 9
Segmentation
Market Segmentation4 commonly used bases for Segmentation
Descriptive
geographic location
demographic
Behavioural
psychographic
benefits
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 10
Segmentation Figure 3.1 Bases for Market SegmentationSlide 3-7
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 11
Segmentation
Market Segmentation
geographic location - based upon where people live (historically a popular way of dividing markets)
demographic - based upon age, gender and income level (very often used)
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 12
Segmentation
Market Segmentation
Psychographic / lifestyles - based on people’s opinions, interests, lifestyleseg, people who like hard rock music probably prefer beer to wine
benefits - based on the different expectation that customers have about what a product/service can do for themeg. People who want to but “lite” food cause ti will help them lose weight
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 13
Segmentation
Geographic location of Canadians
• most live in Toronto - Montreal axis
• + Vancouver
• most live along east-west line close to the American border
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 14
Segmentation Percentage Distribution of the Population of Canada by Province
Slide 3-8
+, Ontario contains
52% of foreign born people in Canada
Geographic Segmentation
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 15
Segmentation
Impact of Immigration• Ontario contains 51.8% of Canada’s
living foreign-born people
• Most of these people live in Toronto
• Canada’s urban population is growing for 2 reasons1. Immigrants come to Canada and make their homes in the cities2. Canadians are moving out of the rural areas and in to the cities
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 16
Segmentation
Figure 3.4 Urban–Rural Population Distribution, 1871–1991
Slide 3-9
Geographic Segmentation
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 17
Segmentation
Geographic Segmentation
The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns.
Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND based upon their address.
This helps people plan store locations and the location of other services.
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 18
Segmentation
Geographic Segmentation
Climate:
winter equipment and recreation are effected by geographic location
you will sell more snow shovels in Northern Ontario than southern Ontario , BUT, population in Northern Ontario is very small
clothing purchases are also effected by climate/geography
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 19
Segmentation
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
• age
• gender (male/female)
• income
• occupation
• education
• household (family - style) size
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 20
Segmentation
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
• gender (male/female)gender (male/female)
•gender is an obvious way to divide the market into segments since so many products are gender-specific
• clothing
• medical products
• sports products/services
• entertainment Examples ??
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 21
Segmentation
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
age
• age is another obvious way to divide the market into segments since so many products are based upon “time of life”
• diapers for babies
• toys for children
• entertainment for “over 19” Examples ??
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 22
Segmentation
Demographic Segmentation
age
• also, people have different consumption patterns at different ages
•eg. Milk products
• children and teens drink a lot of milk
• adults don’t
• older adults need calcium, but don’t drink milk (they take pills)
Examples ??
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 23
Segmentation
Figure 3.5 Population Projections by Age GroupSlide 3-10
Demographic Segmentation
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 24
Segmentation
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
•household (family - style) size
• Segmenting by the “stages in the family life cycle”
(page 45)
• There are different buying characteristics of people in each stage of the family
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 25
Segmentation
Demographic Segmentation
•household (family - style) size
BUYING PATTERNS
• 0-5 young children
• 6-19 school children
• 20-34 young adults
• 35-49 younger middle-aged
• 50-64 older middle-aged
• 65+ seniors
• 80+ SUPER seniors
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 26
Segmentation
Demographic Segmentation
•household (family - style) size
THE CHANGING HOUSEHOLD
• half of the households in Canada are only one, or two people
• number of married couples forming a household is decreasing
• many unmarried people, and old widowed people, live by themselves
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 27
Segmentation
Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
1. Young Single
2. Young Married with no Children (DINKS)
3. Young - married with children
- divorced without children- divorced with children
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 28
Segmentation
Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
4. Middle Aged
a. married without children
b. divorced without children
c. married with children
d. divorced with children
e. married without dependent children
f. divorced without dependent children
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 29
Segmentation
Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
5. Older
a. older married
b. older unmarried (divorced, widowed)
6. other
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 30
Segmentation
Demographic Segmentation
•household (family - style) size
SSWDs
single separated widowed divorced
in Canada, 1.6 million people live alone- they buy different sizes of products eg. Single serving soup, etc.
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 31
Segmentation
Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
• age
• gender (male/female)
• income• occupation
• education
• household (family - style) size
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 32
Segmentation
Demographic Segmentation
income
Segmenting markets on the basis of income and expenditure patterns
- The number of single mom families has increased by 12.8% between 1985 and 1994
- Male single parent families have more income, on average, than Female single parent families(chart 3.6)
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 33
Segmentation
Engel’s Laws
As family income increases ……• a smaller % goes for food - TRUE• the % spent on housing and household
operations and clothing will remain constant (that is grow as total income grows) - FALSE in reality this amount declines
• the % spent on recreation, education will increase - TRUE, but there are exceptions
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 34
Segmentation
Engel’s Laws
Why is this important……• because marketing managers can use this
law to figure out what will happen (ie. What kinds of spending patterns will develop) if people’s incomes increase
• also, if you are planning on going into a new market, where people have more money - this “law” helps you to plan how people’s spending patterns will be different
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 35
Segmentation
Psychographic Segmentation
“The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers” TEXT
The use of detailed information to understand differences in what people buyWTGR
psychological
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 36
Segmentation
Psychographic Segmentation
Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions
AIO - activities, interests, and opinions
http://ourworld.compuserve.com/homepages/finkleman/psychogr.htm
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 37
Segmentation
Psychographic Segmentation
Goldfarb Segments
1. Day2day watchers
2. Old fashioned Puritans
3. Responsible survivors
4. Joiner-Activists
5. Aggressive Achievers
6. Disinterested Self-Indulgents
http://www.goldfarbconsultants.com/who.html
More traditional
Less traditional
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 38
Segmentation
Psychographic Segmentation
Page 51~52
Thompson Lightstone Segments
1. Passive/Uncertain
2. Mature
3. Home Economists
4. Active/Convenience
5. Modern Shoppers
6. Traditional Home/Family Oriented
http://www.goldfarbconsultants.com/who.html
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 39
Segmentation
Psychographic Segmentation
LIFESTYLE PROFILES
Table 3.8 - HOW DO YOU FIT?
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 40
Segmentation
Benefit Segmentation
“It is based on the Attributes (characteristics) of products, as seen by the customers”
example, people buy something because it causes a benefitie. Diet coke - less sugar, lose weightie. Extra white toothpaste, whiter teeth, better smile
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 41
Segmentation
Benefit Segmentation
“Many marketers now consider benefit segmentation one of the most useful methods of classifying markets”ie. Watches
- the benefits customers looked for where durability and product quality- older research was based on dividing the watch market according to a different segment - once they used the new segment, they changed the marketing plan- modern example would be price of PCs for home use - biggest use is entertainment NOT schoolwork or home based businesses
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 42
Segmentation
Benefit Segmentation of the Toothpaste Market
Segment Name
TheThe Sensory The IndependentSegment Sociables The Workers Segment
Principal benefit sought Flavour, product Brightness Decay Priceappearance of teeth prevention
Demographic strengths Children Teens, young Large families Menpeople
Special behavioural Users of Smokers Heavy users Heavy userscharacteristics spearmint-
flavouredtoothpaste
Brands disproportionately Colgate, MacLean’s, Crest Brandsflavoured Stripe Plus White, on sale
Ultra Brite
Personality characteristics High self- High High Highinvolvement sociability hypochondriasis autonomy
Lifestyle characteristics Hedonistic Active Conservative Value-oriented
Benefit Segmentation
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 43
Segmentation
Figure 3.9 Segmentation Bases for Industrial MarketsSlide 3-12
Segmentation for Industrial Markets
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 44
Segmentation
• Geographic Segmentationuseful for the automotive industry
• Product Segmentationie. Special parts and components
• Segmentation by End-Use Applicationie. Paint mfg. Paint for waterproof applications,
paint for rust prevention, paint which sticks to glass
Segmentation for Industrial Markets
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 45
Segmentation
Criteria for Segmenting
Single Target Market approach
Multiple Target Market approach
Combined Target Market approach
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 46
Segmentation
Criteria for Segmenting
Combined Target Market approach
Eg. A company that makes garlic flavoured cream cheese
competition is companies that use single market approach and makeroasted garlic and garlic and herb cream cheese
“… to
o much combining
is ris
ky …”
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 47
Segmentation
Segmenting
“...Should you Segment, or Combine …”
the text says it is better to segment
- also, depends on which gives you the best profit
TR - it also depends on what competition does !
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 48
Segmentation
Profit is the Balancing Point
• In trying to determine whether you should divide the market up into many segments, and sell variations of the product to different segments, or sell the same product to everybody, the deciding factor is based on which option will give you the most profit
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 49
Segmentation
Market Segmentation
“… cost considerations encourage more aggregating to obtain economies of scale
… demand considerations suggest less aggregating to satisfy needs more exactly…” …”
what does this mean ?
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 50
Segmentation
Market Segmentation
“… Segmenting is an aggregating process …”
what does this mean ?
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 51
Segmentation
Market Segmentation
Aggregate - 1. collected; collective, total 2. Sum total 3. Unite
- Oxford Pocket Dictionary
TR. - all the stuff together
Aggregating
- putting things together which are similar
© Professor Tim Richardson matches some of Chpt 3 in Wong, 11th ed. slide 52
Segmentation
Market Segmentation
Aggregating“… how far should the aggregating go …”?
- sometimes not everybody will fit, you can leave them out, or just call it “other”
“… these people are simply too few … may have to be ignored unless they are willing to pay a high price for special treatment…”