2.2 Market Segmentation MARKETING MR. PAVONE. Identifying and Analyzing Markets.
Market Segmentation Ch 2.2. Section 2.2 Objectives Explain the concept of market segmentation...
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Transcript of Market Segmentation Ch 2.2. Section 2.2 Objectives Explain the concept of market segmentation...
![Page 1: Market Segmentation Ch 2.2. Section 2.2 Objectives Explain the concept of market segmentation Analyze a target market Differentiate between mass marketing.](https://reader035.fdocuments.us/reader035/viewer/2022062217/5697bfc91a28abf838ca8d30/html5/thumbnails/1.jpg)
Market SegmentationCh 2.2
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Section 2.2Objectives
Explain the concept of market segmentation
Analyze a target market
Differentiate between mass marketing and market segmentation
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Identifying and Analyzing Markets
Companies identify groups of people who have common interests and traits. This is called market segmentation.
Businesses use these groups to create market-specific ads
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Market Segmentation
Marketers analyze groups of customers and look to see if they can break the group down further into smaller sections
This process of taking a given market and making the group even smaller is called market segmentation
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Market Segmentation
The four factors that help segment a market and describe a target market are:
Demographics
Geographics
Psychographics
Behavioral factors
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Example: Jeans
The jean market:
Segmented by: age (kids, teens, adults)
By Price: different income levels (referred to as socio-economic)
By desired features: tight, comfortable, unique, newest design
To meet the needs of these different market segments, companies make a unique marketing mix for each segment
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Which Segments?
The next question: Which of these segments will we target?
Must identify markets in which companies have a sustainable competitive advantage
Advantage that allows you to survive against the competition over a long period of time
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How is this information gathered?
Government census
Private research firms
Trade associations
Make a decision if the market is large enough to target
Additional research will reveal more about the market segment
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Demographics
Statistics that describe a population in terms of personal characteristics
Age, gender, income, marital status, ethnic background, education, occupation
Age: target markets by using age ranges common labels used: Baby boomers, Generation X and Generation Y or the Echo Generation
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Age: Boomers
Baby boomers: 76 million born between 1946-64
As the boomers get older, their income and spending power increase
Prime target for many products: tech gadgets, cosmetics, and products that enhance their lifestyle
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Gen X or baby Bust
Followed the boomers
Children of duel-career households or divorced parents
Bombarded with media from early age
Savvy purchasers and skeptical consumers
Reach this market: sharp images, music, a sense of humor and meet them on their terms
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Generation Y
Sons and daughters of later boomers (you)
Known as Echo Boomers or Millennium Generation
More racially and ethnically diverse with spending power
Fashions and info get passed via the internet
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Gender
Gender creates market segments
Jockey exclusively for men: entered the women’s market doubled its sales
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Income
Marketers want to know how much money they have to spend on different products
They look at two types of income: Disposable income: Money left over after taxes/important to companies that produce and sell necessities
Discretionary income: Money left over after paying for basic living necessities such as food, shelter, and clothing/important to companies that sell luxury items
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Marital Status
Census says married couples have slipped to 49.7% of total households compared with 80% in the 50’s
Reasons for change: getting married later, divorcing more, living longer, and remarrying less
Married couples with kids represent less than 25% of the population
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Ethnic Background
U.S. population is becoming more diverse
Due to increase immigration
Caucasians population is declining
African American, Hispanic, and Asian make up 30% of the population
By 2025 they will represent 37.2%
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Geographics
• Segmenting markets based on where people live
• Closely related to demographics because of the similarities among people who live in certain areas
• Segmented by: – Local & regional – National & global
Examples: • Small independent restaurant (Cuginos)• Coca-Cola• Meijer
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To reach Latinos
• Top Hispanic Markets: LA, New York, Miami, Houston and Chicago
• Best places to test new products to reach Latinos
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African Americans
• 55% live in the south
• City with the largest populations is New York with 2.3 million
• 2nd largest: Chicago 1.1 million
• Detroit, Philadelphia, Houston, LA, Baltimore, Memphis, DC, and New Orleans
• Key outlets in these cities would be necessary to reach this market
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Children
• Highest proportion of their population in the 5-13 year old age group (15% each) are in Utah and Alaska
• 14% in Texas, Arizona, California, and Idaho
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Older population
• 65 and older greatest populations are found in
• CA (3.8 million)
• Florida: (2.9 million)
• New York: (2.5 million)
• Texas (2.2 million)
• Pennsylvania (1.8 million)
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Income
• States with a median income of at least $50,000
• Delaware, Washington, California, Colorado, Virginia, Utah, Massachusetts, Minnesota, Alaska, Connecticut, New Hampshire, Hawaii, Maryland, and New Jersey
• Target financial, insurance, luxury goods
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Psychographics
• Grouping people with similar lifestyles, attitudes, values, and opinions
• Activities/Interests: create target markets (magazines target activity segments)
• Attitudes: health conscious, being fit 21st century trend attitudes
• Personality and values: More advanced studies look at these issues and segment based on them
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Behavioral
• What are the benefit desired by consumers
• Shopping patterns
• Usage rate
• ex: regardless of income people desire luxury and premium merchandise/people more and more define themselves by the products and brands they buy
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How marketers use Consumers’ behavioral
Patterns• Companies classify their customers according to
% of sales each group generates
• Often 80/20 rule applies: 80% of the time sales are generated by 20% of its loyal customers
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Mass Marketing Vs. Segmentation
• Mass Marketing is used when a product has universal appeal and few features that differentiate them from their competitors
• It uses a single marketing strategy to reach all of its customers
• Not very common today
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Niche Marketing
• Markets are narrowed down and defined with extreme precision
• Even products with one slogan : Got Milk will use different models or themes to reach market segments