2-BASES OF MARKET SEGMENTATION

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Copyright © 2003 by Nelson, a division of Thomson Canada Limited.

Chapter

Implementationand Control

• Measurable goals• Benchmarks• Feedback

Marketing Plan

• Product orservicemanagement

• Price• Distribution• Communications

The Strategic Marketing Planning Process

Market Segmentation: Finding a Base to Start

Marketing Objectives& Strategies

• Objectives• Strategies

– Retrenchment– Status quo– Growth

Situation Analysis• Internal• Environmental• Customer• Competitive

Input from CorporateStrategies

• Mission

• Corporate objectives

• Strategic businessunit(SBU) objectives

3-2




Chapter

Fundamental Tasks in Developing aStrategic Marketing Plan

1. Target Market

2. Implement a Marketing Program


3-3




Chapter

What is a Market?

• People with the willingness, purchasing

power, and the authority to buy.


3-4




Chapter

Consumer Goods

• Those products and services

purchased by the ultimate consumer for personal use.


3-5




Chapter

Industrial Goods

• Those products purchased to be used,

either directly or indirectly, in theproduction of other goods or for resale.


3-6




Chapter

Market Segmentation

• Grouping people according to their

similarity in one or more dimensionsrelated to a particular product category.

3Market Segmentation: Finding a Base to Start

3-7




Chapter

Bases for Market Segmentation


PotentialMarkets

DemographicSegmentation

GenderAgeFamily life cycle

Race/Ethnic groupEducationIncomeOccupationFamily sizeReligionHome ownership

Descriptive Behavioural

Geographic SegmentationCountryRegionUrban/Suburban/RuralPopulation densityCity sizeClimate

PsychographicSegmentation

LifestylesPsychological variables:

PersonalitySelf-image

Benefit SegmentationExpected benefits from

product use

Usage RateHeavy usersBrand loyalty

3-8




ChapterMarket Segmentation: Finding a Base to Start

Figure 3.6

3-14

Population Projections by Age Group


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Chapter

Buying Patterns for Different Age GroupsAge Name of Age Group Merchandise

0 - 5 Young children Baby food, toys, nursery, furniture, children’s

wear

6 - 19 School children Clothing, sports equipment, records, (including

teenagers) school supplies, food, cosmetics, used cars

20 - 34 Young adults Cars, furniture, houses, clothing,

recreational equipment, purchases for younger age groups.

35 - 49 Younger middle-aged Larger homes, better cars, second

adultscars, new furniture, recreational

equipment

50 - 64 Older middle-aged Recreational items, purchases for adults

young marrieds and infants

65+ Senior adults Medical services, travel, drugs, purchases for

younger age groups


Table 3.3

3-15



Chapter

Family Life Cycle

• The process of family formation,

development, and dissolution.


3-16



Chapter

SSWDs

• Single, separated, widowed, or

divorced people.


3-17



Chapter

Engel’s Laws

As family income increases

1. a smaller percentage goes for food2. the percentage spent on housing and

household operations and clothing will

remain constant, and3. the percentage spent on other items

will increase.


3-18



Chapter

Lifestyle

• The mode of living


3-20



Chapter

Psychographics

• The use of psychological attributes,

lifestyles, attitudes, and demographicsin determining the behavioural profiles

of different consumers.


3-21



Chapter

AIO Statements

• Statements about activities, interests,

and opinions that are used indeveloping psychographic profiles.


3-22



Chapter

Segments

• Elders

• Boomers• Generation X


3-24



Chapter

Provides choice

for family members X X

Convenient to use X

Tastes good X X

Good quality X X X X

Healthy X X X X

Helps digestion X

Helps diet X

Spend less money X

Benefit Segmentation Applied to Yogurt


Attributes of Yogurt

BENE

FITS

Individually

packaged

With

fruit

High-

pricedMild Organic Contains

bio-bifidus

Low

fat

Low-

priced

3-25

Source: Adapted from Marco Vriens and Ter Hofseted, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research,

Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association.



ChapterConsumer Marketing Decisions Affected by Segmentation Choices

Segmentation Basis

Geographic

Demographic

Psychographic

Benefit

Product Usage Rates


Decisions Affected

• Choice of sales region• Sales force location

• Retail location

• Estimates of segment size

• Choice of local distribution channels or channels that cater to differentage, income, and education groups

• 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

3-26 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.



Chapter

Segmentation Bases for IndustrialMarkets


End-Use

Application

Segmentation

ProductSegmentation

Account Size

and Potential

Segmentation

GeographicSegmentation

Potential

Industrial

Markets

3-27



ChapterMarket Segmentation: Finding a Base to Start

Consumer Marketing Decisions Affected by

Segmentation ChoicesSegmentation Basis

Geographic

Product (including NAICS)

End-Use Application

Account Size & Growth Potential

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

Table 3.7

3-28 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.

2-BASES OF MARKET SEGMENTATION

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