Download Chapter 02 Section 2.2

Marketing Essentials
n Chapter 2 Basic Marketing Concepts
Section 2.2 Market Segmentation
Chapter 2 n Basic Marketing Concepts
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SECTION 2.2
Market Segmentation
What You'll Learn
 Market segmentation and the four
methods commonly used to segment
a market
 Current demographic, psychographic,
and geographic trends
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SECTION 2.2
Market Segmentation
Why It's Important
Businesses must know who their customers
are to achieve success. In other words, they
must know their markets. This section will
introduce you to the U.S. marketplace and
the different ways businesses classify and
characterize its segments.
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SECTION 2.2
Market Segmentation
Key Terms
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market segmentation
demographics
Baby Boom Generation
Generation X
Generation Y
disposable income
discretionary income
psychographics
geographics
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SECTION 2.2
Market Segmentation
Market Segmentation
Dividing the total market into smaller
groups of people who share specific needs
and characteristics is the essence of
market segmentation.
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SECTION 2.2
Market Segmentation
Analyzing Markets
Businesses may segment a market by:
 demographics
 psychographics
 geographics
 product benefits
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SECTION 2.2
Market Segmentation
Demographics
Demographics refers to statistics that
describe a population in terms of personal
characteristics. These include:
 age
 gender
 income
 ethnic background
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SECTION 2.2
Market Segmentation
Demographics: Age
When marketers study age, they classify
everyone according to certain generations,
because each generation tends to have shared
experiences and common bonds.
Baby Boom Generation:
Generation X:
Generation Y:
1946-1964
1965-1976
1977-1997
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SECTION 2.2
Market Segmentation
Demographics: Gender
Companies can expand their markets by
marketing to the other gender, or by marketing
their products differently to men and women.
 Example: Jockey entered the women’s
market with Jockey underwear for women
and doubled its sales.
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SECTION 2.2
Market Segmentation
Demographics: Income
Marketers want to know how much money
is available for spending on different
products. They look at two types of income
measurement:
 disposable income
 discretionary income
Slide 1 of 2
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SECTION 2.2
Market Segmentation
Demographics: Income
Disposable Income = money left over after taxes.
 Important for companies that produce and
distribute necessities
Discretionary Income = money left after paying
for food, shelter, and clothing.
 Important for companies that produce and
distribute luxury items
Slide 2 of 2
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SECTION 2.2
Market Segmentation
Demographics: Ethnicity
Marketers often segment the market by ethnicity.
The three largest ethnic groups within the
United States are African-Americans, Hispanics,
and Asian-Americans. These three groups will
account for 33 percent of the U.S. population
in 2005.
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SECTION 2.2
Market Segmentation
Census 2000
The United States conducts a census
every ten years to determine the
characteristics of the population. Which
ethnic group is declining? Which ethnic
groups are increasing? What effects
will these ethnic changes have on
marketing in the United States?
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SECTION 2.2
Market Segmentation
Psychographics
Psychographics involves studies of
consumers based on social and psychological
characteristics.
In addition to segmenting people by their
leisure time interests, marketers observe
trends and changes in households, the
economy, politics, and the workplace.
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SECTION 2.2
Market Segmentation
Geographics
Geographics refers to segmentation of the
market based on where people live. Marketers
study geographics in relation to:
 ethnic concentrations
 age
 ethnic background
 income
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SECTION 2.2
Market Segmentation
Product Benefits
Segmenting a market by product benefits
involves studying consumers' needs and wants.
 Example: Different shampoos are marketed
to people with different hair care needs.
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2.2
ASSESSMENT
Reviewing Key Terms and Concepts
1. What do demographics, psychographics,
geographics, and product benefits have in
common?
2. How can a market be segmented using
demographics?
3. What does the study of psychographics
involve?
Slide 1 of 2
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2.2
ASSESSMENT
Reviewing Key Terms and Concepts
4. Provide one example of how a marketer can
segment a market based on product benefits.
5. Of what significance are the combined
African-American, Hispanic, and
Asian-American populations to marketers?
Slide 2 of 2
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2.2
ASSESSMENT
Thinking Critically
How can Procter and Gamble market
household products to a male market segment?
What problems might P&G encounter in that
endeavor?
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Marketing Essentials
End of Section 2.2
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