Download V2Chapter2.2MarketSegmentation

Section 2.2 – Market
Segmentation
What You’ll Learn
• What market segmentation is and the
four methods used to segment a market
• Analyze a target market
• Differentiate between mass marketing
and market segmentation
Identifying and
Analyzing Markets
• Businesses look for ways to connect
with current and potential customers.
• Marketers must know where their
customers live(region), their income
level, age, ethnic background, activities,
values, and what interests them.
Analyzing Markets
Market segmentation
is a way of analyzing a
market by specific
characteristics in order
to create a target
market
Analyzing Markets
• Companies study data generated by
governments, private research firms,
trade associations, and their own
research to determine if a given target
market is large enough to justify
expense.
Types of Segmentation:
•
•
•
•
Demographics
Psychographics
Geographics
Behavioral
Demographics – statistics that describe a
population in terms of personal
characteristics.
• Demographics include
–
–
–
–
Age
Gender
Income
Marital Status
• Age
– Baby Boom Generation
• Born between 1946-1964
• Targets for all types of products, such as
technological gadgets, cosmetics and
products to enhance lifestyle.
Demographics
• Generation X
– Known as the baby bust generation
– Most members are children of dual career
households or divorced parents
– Savvy purchasers and skeptical
consumers.
– To reach this group marketers must use
sharp images, music, a sense of humor
and meet them on their terms.
Demographics
• Generation Y
– Sons and daughters of the later baby
boomers
– Known as Echo Boomers or Millennium
Generation
– More racially and ethnically diverse with
spending power.
– Most members of this generation use
email and surf the Web
Demographics
Income
• Marketers want to know how much
money they have to spend on different
products.
Disposable income – money
left after taking out taxes
Discretionary income –
money left after paying for
basic living necessities such
as food, shelter, and clothing
Demographics
• Gender
– Helps create market segments.
Demographics
• Marital Status – US Census reports
49.7% of total households are married
couples.
• Down from 80% in 1950.
• Married couples with kids represent 25%
of the population.
• Ethnic Background – US is
becoming more diverse
U.S. Trend – The percentage of the
Caucasian population is declining,
while other ethnic populations
increase.
Psychographics
• Involves grouping people with similar
lifestyles, as well as shared attitudes,
values, and opinions.
– Activities: ex. Magazines
– Attitudes: Consumers attitudes, such as taking
responsibility for one’s health, eating healthier,
and becoming physically fit, are trend setting
issues
– Personality & Values
Music teachers,
dancers, and other
music lovers would
be one category of
people who share
psychographic
characteristics.
Behavioral Segmentation
• Looking at the benefits desired by
consumers, shopping patterns, and
usage rate. Market benefits, not just the
physical characteristics of a product.
• Many people regardless of status, desire
luxury and premium merchandise
Behavioral Segmentation
• Research shows that teenagers spend
$50 a month on entertainment. Girls
spend $15 more than boys on music.
• Many businesses find that the 80/20 rule
applies.
• 80 % of a company’s sales are
generated by 20 % of its loyal
customers.
Geographics –
Segmentation
based on where
people live
-May market locally,
regionally, nationally, or
globally
Mass Marketing Vs
Segmentation
• Mass marketing not as popular as it
once was.
• Niche marketing (the current trend) –
markets are narrowed down and defined
with extreme precision.