Marketing Segmentation LESSON 2 2 Market Segmentation Key

Marketing Segmentation LESSON 2. 2

Market Segmentation Key Terms market segmentation demographics disposable income discretionary income geographics psychographics mass marketing Objectives • Explain the concept of market segmentation • Understand Mass marketing • Continue to Analyze a target market • Differentiate between mass marketing and market segmentation Marketing Essentials Chapter 2, Section 2. 2

Mass Marketing versus Segmentation When products have universal appeal and few features differentiate them from competitors, mass marketing is used. Mass marketing. X involves using a single marketing strategy to reach all customers Marketing Essentials Chapter 2, Section 2. 2

Mass Marketing Example • Coca-Cola television ads that appear during the winter holidays. The polar bears cavorting and drinking Coca-Cola are designed to appeal to just about everyone,

Current Trend • The current trend is niche marketing, meaning that marketing targets extremely specific markets, utilizes market segmentation processes to find the target market

Identifying and Analyzing Markets • market segmentation X process of classifying or identifying groups of people who have common interests and traits • Businesses use these groups to create market-specific ads and products that connect with potential customers on a personal level Marketing Essentials Chapter 2, Section 2. 2

Identifying and Analyzing Markets Think of market segmentation as a puzzle A whole puzzle = mass market Each piece = one of the smaller, more precise groups, or market segmentation Marketing Essentials Chapter 2, Section 2. 2

Think about it • You are selling jeans. Think about who is the whole market? Think of what things you would ask and how you would “segment” this market into pieces. Give three ways you could segment this. • Student Answers

Jean Segmentation • Answer: – By age – kids, teens, adults – By price – different income levels – Desired features – tight fit, comfortable fit, low rise etc. – Who buys these in photo?

Identifying and Analyzing Markets The four factors that help segment a market and describe a target market are: 1. Demographics 2. Geographics 3. Psychographics 4. Behavioral factors

1. Demographics. X refer to statistics that describe a population in terms of personal characteristics What are some personal characteristics that can be used to segment (divide out) a market as a demographic?

Demographics. X refer to statistics that describe a population in terms of personal characteristics such as: • Age • Gender • Marital status • Ethnic background • Education • Occupation • Income

2. Geographics. X segmentation of the market based on where people live What are some examples of segmentation based on geographics?

Geographics Examples of geographics include: • Local • State • Regional • National • Global Marketing Essentials Chapter 2, Section 2. 2

3. Psychographics. X involves grouping consumers based on social and psychological characteristics. What are some examples of segmenting by psychographics?

Examples of Psychographics • Activities • Opinions • Interests • Attitudes • Personalities • Values

4. Behavioral Separating the market based on product-related behavior Examples: • Benefits desired by consumers • Shopping patterns • Usage rate • The brand they buy • many consumers define themselves more by what they own or the brand they buy • Luxury and premium items are a growing market as a result

• By studying consumer behavior, many businesses find that 80 percent of a company’s sales are generated by 20 percent of its loyal customers. This phenomenon is known as the “ 80/20" rule.

Income Demographics Is your target Market Low, Middle, or High Income. Marketers look at two types of income measurements for price decisions • disposable income. X - Money left after subtracting taxes from your gross wage (net wage). Must first pay for basic living necessities (utilities, rent, food, clothing) • discretionary income X - Money left after you subtract your taxes and costs for basic living necessities (use as you like) If I market products that are necessities such as food and clothing, what income type am I focused on? disposable income If I market luxury products, like a car, what income type do I focus on? discretionary income

Market Segmentation Study Organizer Use a chart like the one below to list differences between mass marketing and market segmentation. Marketing Essentials Chapter 2, Section 2. 2