Download market identification

MARKET
IDENTIFICATION
OBJECTIVES
EXPLAIN THE IMPORTANCE OF MARKET
IDENTIFICATION
DICUSS WAYS THAT A MARKET CAN BE SEGMENTED
THE MARKET
 For marketers, a market is a customer or a potential customer
who has an unfulfilled desire and is financially able and willing to
satisfy that desire.
 Composed of customers or potential customers
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might be an individual who purchases a good or
service to satisfy his/her personal desires
 Known as the consumer market
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includes individuals such as yourself, your
friends, and your family.
CUSTOMERS OR POTENTIAL CUSTOMERS
 Could also be businesses which purchase items for
use in the operation of the business, for resale, or for
making other goods.
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Known as the industrial market
Includes producers, government agencies,
wholesalers, and retailers.
More sales are made to the industrial market although
the consumer market has more members.
CUSTOMERS WITH UNFULFILLED DESIRES
 These customers have desires that have not been
satisfied.
 Example: You are offered a job but, in order to
accept the offer you must have reliable
transportation.
 Unsatisfied desires motivate potential customers to
make purchases.
FINANCIAL ABILITY
 Unless a customer has money or the ability to get the
money, they cannot be considered a market.
 You may need the transportation but would not be
considered part of the market if you could not pay for
the transportation---car, bike, cab, bus, etc.
WILLINGNESS
 Composed of customers who have the
financial resources available to purchase the
desired products and are willing to spend
money in order to satisfy their desires.
 If you have the money you must be willing to
spend it.
 If not willing to spend the money, you are not
part of the market at this time.
For businesses to satisfy their
customers, they need to determine
who the market is for their
products.
Is it all people?
Is it a select few who have a
special need?
Is it somewhere in between?
TARGET MARKETING
 Defined as the identification and
selection of markets for a business
or for a product.
Importance of Target Marketing
 When businesses determine their target markets, they can then
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begin to plan their marketing activities.
What promotions will best reach a market?
What prices will attract the market?
How can the products be made available to the market?
What products are desired by the market?
By knowing who their markets are and what they want,
businesses can aim all of their marketing activities toward
satisfying their consumers’ desires while accomplishing
company goals.
IDENTIFYING TARGET
MARKETS
 MARKETING SURVEYS
 OUESTIONNAIRES
 DIRECT INTERVIEWS
Businesses can plan their
target-marketing activities in
two, broad ways
MASS MARKETING
MARKETING SEGMENTS
MASS MARKETING
 MASS MARKETING occurs when sellers
design products that will appeal to most
buyers and direct their marketing activities to
the whole market.
 Goal is to appeal to as many types of
consumers as possible through one
marketing plan
 EXAMPLE--Henry Ford’s Model T
ADVANTAGES OF MASS
MARKETING
LOWER
PRODUCTION
COST
LOWER
COST
PROMOTION
FACTORS WHICH CAUSE A
DECREASE USE OF MASS
MARKETING
 1. INCREASED COMPETITION (from
specialized stores)
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forced companies to pay more attention to the
specific needs of consumers
When a company isn’t meeting the needs of
its customers, it allows the competition to step
in and meet those needs.
DECREASED USE OF MASS
MARKETING
 2. MORE KNOWLEDGEABLE
CONSUMERS
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Tend to very discerning in the purchases that
they make
Need to be convinced that a purchase will add
value to their lives
They feel that products that are designed to
meet the needs of everyone do not meet their
specific needs
DECREASED USE OF MASS
MARKETING
 3. IMPROVED MARKETING RESEARCH
METHODS
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Companies can better determine the specific
needs of their markets.
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Increased use of a variety of marketing
research methods is helping marketers
determine consumers likes and dislikes so that
goods and services better satisfy the product
users.
MARKET SEGMENTATION
 MARKET SEGMENTATION occurs when
marketers divide the total market for their
products into smaller, more specific groups,
or segments.
 A. Use of market segmentation is
increasing.
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Marketers are increasingly aware that people
are not alike
People have different product needs and
different reasons for buying.
MARKET SEGEMNTATION
 B. Marketers plan their activities for
specific, well-defined groups of
consumers.
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Tailor their product, price, place, and promotion
activities to the segments with which they choose to
work.
Might focus their efforts on one segment, a few
segments, or all of the groups within the total market.
MARKET SEGMENTATION
 C. DISADVANTAGES OF M/S
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1. Can increase costs of production
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2. Can increase inventory costs
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3. Can increase promotion costs
MARKET SEGMENTATION
 D. Use of market segmentation has benefited
both large and small companies by making
them use their resources more efficiently.
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Must focus their activities on what their
customers want
Can focus efforts one one or a few markets,
rather than try to be everything to everybody.
 Businesses need to know as much
as possible about their customers
or potential customers.
 Enables
them to market their products
efficiently
 Can consider a variety of
characteristics in order to learn about
their markets.
 DEMOGRAPHIC
 GEOGRAPHIC
 PSYCHOGRAPHIC
 BEHAVIORAL
DEMOGRAPHIC SEGMENTATION
Dividing a market by
characteristics people
have in common that
affect their purchasing
power.
DEMOGRAPHIC SEGMENTATION
 INCOME
 Income levels tells marketers how much
money a consumer has available to spend for
goods and services.
 Three, broad, income levels--high, middle,
low
 Actual dollar amounts attached to levels will
vary according to current income conditions
DEMOGRAPHIC SEGMENTATION--INCOME
 Marketers could promote their products to
one or more of the income levels.
 As income levels rise, so does the demand
for certain goods and services.
 HOUSING
 VACATIONS
 DINING OUT PREPARED FOOD ITEMS
 ETC
DEMOGRAPHIC SEGMENTATION--INCOME
 DISPOSABLE INCOME----The money you
have left in your paycheck after taxes have
been taken out.
 DISCRETIONARY INCOME--The money you
have left over after you have paid your bills.
DEMOGRAPHIC SEGMENTATION--AGE
 Consumers in the same age group can have
many of the same buying needs
 EXAMPLE--Babies need baby food,
teenagers wants CDs, and older adults need
health-related services.
DEMOGRAPHIC SEGEMTATION--AGE
 Commonly recognized markets based on
age are:
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Children’s market--children to age 10
Teenage market--ages 10----19
Young-adult market--ages 20-----34
Middle-aged market--ages 35----54
Young old market--ages 55-----64
Middle old market--ages 65----74
Senior market--ages 75-------84
Elderly market--ages 85+
DEMOGRAPHIC SEGMENTATION--AGE
 Percentage of the population in each age
group varies over time.
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Due to changes in the birth and lifeexpectancy rates.
Marketers need to examine product needs for
each of the age groups.
 Segmentation by age groups is practical for
some products because consumer needs and
wants change with age.
DEMOGRAPHIC SEGMENTATION--SEX
 The roles of men and women are changing
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Women are working longer and marrying later
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Products that have traditionally been marketed
to men are now being marketed to women,
too.
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Marketers need to be aware of trends so that
potential markets are not overlooked.
DEMOGRAPHIC SEGMENTATION--EDUCATION
 Can be an important basis for market
segmentation
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The higher the level of education, the better
the quality of the product needs to be in order
to satisfy the consumer.
These consumers are also more aware of the
value received for the money that they spend.
Promotions to this group must be more truthful
and technical that those to less-educated
groups.
DEMOGRAPHIC SEGMENTATION--EDUCATION
 Examples of education levels used for market
segmentation
 Eighth-grade education or less
 High school diploma
 Some college work
 College degree
 College degree plus
DEMOGRAPHIC SEGMENTATION--LIFE STAGE
 The life stages of a family or household can
create new markets.
 Examples of life stages
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Young, single people
Young married couples without children
Families--children at home (full nest)
Older, married couples without children at
home (empty nest)
Older, single people
DEMOGRAPHIC SEGMENTATION--OCCUPATION
 The market for some products can be
segmented on the basis of occupation
 Some occupations relate to certain products
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Example--Auto mechanics and auto parts
 Teachers and books
DEMOGRAPHIC SEGMENTATION--OCCUPATION
 Marketers found it easier to work with
categories of occupations than with individual
occupations.
 Categories of occupation used by marketers.
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White-collar workers---business executives,
lawyers, doctors, teachers.
Blue-collar workers--plumbers, factory workers
Service workers--police workers and
salespeople
Farm workers--ranchers and farm workers.
GEOGRAPHIC SEGMENTATION
 Grouping consumers according to where they
are located.
 One of the oldest methods of market
segmentation
 Marketers use such geographical divisions as
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Regions
Cities
States
Rural Areas
GEOGRAPHIC SEGMENTATION
 Use of this type of segmentation is easy to
understand for some products
 EXAMPLE--consumers in hot climates will
prefer suntan lotions and lightweight clothing,
while consumers in cold climates will be the
market for heavy, warm clothing.
GEOGRAPHIC SEGMENTATION
 Marketers need to be aware of the
geographic shifts of our population.
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Our society can move from one town to
another, one state to another, or one country
to another.
Recent trends indicate loss of customers from
rural markets but an increase in customers for
suburban markets.
PSYCHOGRAPHIC SEGMENTATION
Dividing consumers into groups
based on their lifestyles and
personalities.
PSYCHOGRAPHIC SEGMENTATION
 LIFESTYLES refers to a person’s interests,
values, and activities.
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EXAMPLE: A consumer who is interested in
running is a natural market for running clothes,
shoes, magazines, and health products.
 PERSONALITY is defined by a person’s
individual qualities.
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EXAMPLE: An individual with a bold,
aggressive personality might be a market for
fast, expensive, sports cars.
PSYCHOGRAPHIC SEGEMNTATION
 Psychographic segmentation is difficult to
measure.
 It is much easier to determine whether is
male or female.
 P/S does provide valuable information to
marketers.
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The activities consumers participate in may
determine the types of stores located in the
area
BEHAVIORAL SEGMENTATION
 Dividing consumers into groups according to
their response to a product.
 Grouped according to what consumers are
looking for in a product and why they buy the
product.
 Types of behavioral segmentation are:
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Rate of Use
Loyalty Response
Benefits Derived
Occasion Response
BEHAVIORAL SEGMENTATION
 RATE OF USE
 Segmentation on the basis of usage rate
classifies consumers as heavy, moderate,
light or nonusers of a product.
 Marketers would focus on the heavy users
because they will purchase more of the
product than light users.
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Who do you send your catalogs to, a golfer
who plays four rounds a year or one that plays
a hundred?
BEHAVIORAL SEGMENTATION
 BENEFITS DERIVED
 This type of segmentation classifies
consumers on the basis of the benefits they
desire from products.
 EXAMPLE: some consumers might buy a
sports car because of its quality while others
might purchase the same car because of
prestige.
BEHAVIORAL SEGMENTATION
 LOYALTY RESPONSE
 By studying the common traits of loyal consumers,
marketers can determine what they have in common
and can plan to attract other consumers who have
similar traits.
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EXAMPLE: A mother buys only Gerber brand baby
food for her child because she believes it is the best,
regardless of price or availability of other brands of
baby food. The mother is exhibiting a loyalty response
to the product.
BEHAVIORAL SEGMENTATION
 OCCASION RESPONSE
 Special occasions, such as birthdays,
weddings, graduations, and ________ can
prompt spending trends for some products.
 By studying the occasion response of
consumers, marketers can predict what
special events result in demand for products.