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2
MARKET
SEGMENTATION
AND THE MARKETING
ENVIRONMENT
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
Market segmentation and the
marketing environment
At the end of this session, you should understand:
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•
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What is meant by the marketing environment and its
relationship to consumer behaviour
The trends in consumption behaviour and the marketing
environment in the ‘noughties’
The underlying principles of consumer behaviour and how
to explain the concept of segmentation
The broad approaches to segmentation in consumer and
business markets
The conditions for effective segmentation and the advantages
and limitations of segmenting markets
The ways that various target marketing strategies are used to
satisfy customer needs
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-2
The marketing environment in the
‘noughties’
•
The marketing environment
includes all factors
that influence the operation
of a business and its
effectiveness in the
marketplace
See EXHIBIT 2.1 Peppercorn Food Company
addresses the trend towards healthier eating,
page 35.
PowerPoint slides supplied on the Instructor
Resource CD to accompany Consumer
Behaviour include advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-3
Technology boom
• Technology - affordable, accessible and user
friendly
–
Changing the way consumers, live, buy and consume,
i.e. SMS competition promotions, searching for products
and buying them online (globally), match to lifestyle
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-4
Social/cultural factors
• Focus on healthier lifestyles
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nutritional issues, natural medicine, healthy fast food,
psychology, relaxation therapies
• Multicultural
–
wide variety of foods, activities and product/service
experiences from all over the world
• Time poor consumers
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work to leisure time ratio, fast paced lifestyle
• Changing gender roles
–
role changes in family units, single families
• Household consumption
–
media consumption becoming fragmented, Internet buying
• Environmental issues
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-5
Changing gender roles
See EXHIBIT 2.10 Marketers of skin care products are
now successfully targeting men, page 40.
PowerPoint slides supplied on the Instructor Resource
CD to accompany Consumer Behaviour include
advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-6
Segmentation
•
•
•
The process of dividing the market into different groups
Allows the marketer to better respond to the needs of the
consumer through different marketing mixes
Five steps
Research needs or buying motivations i.e. for toilet paper price conscious, softest and best quality, or environmentally
friendly
2. Consider how the needs relate to the segmentation bases
1.
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Geographic
Demographic
Psychographic
Product-related benefit segmentation
Describe segments as distinct groups i.e. ‘budget conscious’
4. Determine which segment will be targeted and the positioning
approach
5. Develop an appropriate marketing mix
3.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-7
Geographic
• Grouping people according to their geographic
location
• International country or region, state, regional area
within a state, city/town, suburb, rural, urban
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-8
Demographic
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Age
Gender
Family life cycle
Occupation
Education
Ethnic background
EXHIBIT 2.11 Using demographic criteria to
segment the market, page 43
PowerPoint slides supplied on the Instructor
Resource CD to accompany Consumer
Behaviour include advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-9
Geodemographic
• Combining geographic and demographic
information
• Based on the assumption that people living in
similar areas have similar needs, wants and
purchasing behaviour
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-10
Psychographic
•
•
Profiles developed by
considering attitudes,
interests and opinions
Grouping consumers
according to similar lifestyle
traits, i.e health conscious,
environmentally aware,
adventure seekers
See EXHIBIT 2.12 American Express appeals to
lifestyle segments, page 43
PowerPoint slides supplied on the Instructor
Resource CD to accompany Consumer Behaviour
include advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-11
Product-related benefit
segmentation
•
Based on the benefits
desired from the product
category
•
These can vary with usage
situation
See EXHIBIT 2.13 An example of productrelated segmentation, page 44.
PowerPoint slides supplied on the Instructor
Resource CD to accompany Consumer
Behaviour include advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-12
Describe segments - activity
•
List the needs and motives for:
‘budget conscious’ or ‘home beautifuls’
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-13
Determine which segments to target
and the positioning approach
• All segments? One segment? A couple of
segments? What should an organisation do when
customers can be clearly segmented?
• Considering ‘home beautifuls’ or ‘budget conscious’
renovation segments, how could an organisation
serve both with its approach to meeting their
needs?
• Would this be different if they chose to only serve
one of these segments? How?
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-14
Determine the appropriate
marketing mix
• The target market is that group of customers
chosen as the focus of the organisation’s
marketing effort
• A clear or distinct identity must be achieved,
showing clear benefits to the target market –
this is the positioning strategy
• The marketing mix is used to:
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Communicate and deliver this strategy
Differentiate the organisation’s offering from competitors’
Maximise satisfaction with the offering
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-15
Market aggregation
• Market aggregation:
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Treating the total market as one unit
Useful when customers have similar perceptions
about the offering
Profitable if economies of scale can be achieved
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-16
Broad approaches to segmentation
• What business is the company really in?
• What is the psychological basis of the wants and
needs of the customers?
• What is happening in the market? Is the structure
changing?
• Will technology, new products, or competitor
threats change the market?
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-17
Changes in the market and impact
for marketers
See EXHIBIT 2.15 Yates provides water-saving
solutions, page 48.
PowerPoint slides supplied on the Instructor Resource
CD to accompany Consumer Behaviour include
advertisement images.
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-18
Conditions for effective
segmentation
• Measurable
• Accessible
• Large enough to be profitable
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-19
Advantages and limitations of
segmenting markets
• Benefits
–
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Allows better satisfaction of customers
More efficient use of marketing resources
• Limitations
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Expensive to produce small quantities for limited
market size
Difficult to know where to identify a segment
Smaller business may have difficulty segmenting
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-20
Business market segmentation
• Geographic segmentation
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Regional variables
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Customer concentration
Regional industrial growth
International macroeconomic factors
Useful if customers have similar needs
Not effective where customers’ needs not considered
• Customer type and size
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Size of organisation
Industry of customer
The offering of the customer (what they make or sell)
Copyright  2005 McGraw-Hill Australia Pty Ltd
PPTs t/a Consumer Behaviour by Karen Webb
Slides prepared by Sarah Fletcher and Morena Dobrowolski
2-21