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Professor Richardson S E G M E N T A T I O N 2. Purpose of ... who like hard rock music probably prefer beer to ... Stripe Plus White, on sale. Ultra Brite ... – PowerPoint PPT presentation

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Title: Beckman PowerPoint Presentation


1
Market Segmentation
2
Purpose of this section
1. Introduce the Concept of the MARKETING PLAN 2.
To Define Market Segmentation 3. Present 4 types
of market segmentation 4. Aspects of the Canadian
market 5. Main types of segmentation in
industrial markets
3
Baby Boomers Chicken
  • Purpose of this discussion is to explain the
    advantages of carefully watching how a market
    segment acts as it becomes older
  • You have to watch consumption trends and match
    this - (eg. This is the wrong time to open a
    steak house)
  • Companies must plan constantly and the plan
    must be based on an understanding of market
    trends and marketing segments

4
Marketing Plan - many factors involved
  • Consumer Analysis
  • Environmental Analysis
  • 1. Target Market - you have to decide on which
    segment
  • 2. Look at competitors, what are they doing
  • 3. Market research required
  • 4. Develop a unique marketing plan

5
Fundamental Tasks in Developing a Marketing Plan
1. Target Market 2. Implement a Marketing
Program this recognizes that you are
consumer oriented (to be able to do this, you
have to recognize the difference among people and
understand there are different segments)
6
What is a Market?
  • PEOPLE

7
What is a Market?
  • PEOPLE
  • BUT - not just ANY people, they have to have
  • Willingness to buy
  • Purchasing power (money)
  • Authority to buy

8
Types of Markets
  • Consumer Goods and Services
  • Industrial Goods and Services

9
Classes of Consumer Products
14-1
Convenience
Shopping
Specialty
Goods
Services
10
Various Classes of Consumer and Industrial Goods
and Services
Defn - industrial goods are products used in the
production of other products
11
Industrial Goods
  • Industrial goods are things used in the
    production of other products
  • Some products are both industrial and consumer
    goods - eg. electricity, water, desktop PCs 2
    categories of industrial goods
  • Production Goods
  • Support Goods

12
Market Segmentation
  • With a large country
  • Many different types of people
  • - it is too difficult to create a product that
    will satisfy everybody, that is why we focus on a
    segment of the total market

13
Market Segmentation Defn
  • Grouping people according to their similarity
    related to a particular product category

14
Market Segmentation
  • Characteristics
  • age
  • gender
  • geographic location
  • income
  • spending patterns
  • cultural background
  • demographics
  • marital status
  • education
  • language
  • mobility

15
Market Segmentation
  • 4 commonly used bases for Segmentation
  • Descriptive
  • geographic location
  • demographic
  • Behavioural
  • psychographic
  • benefits

16
Figure 3.1 Bases for Market Segmentation
Slide 3-7
17
Market Segmentation
  • geographic location - based upon where people
    live (historically a popular way of dividing
    markets)
  • demographic - based upon age, gender and income
    level (very often used)

18
Market Segmentation
  • Psychographic / lifestyles - based on peoples
    opinions, interests, lifestyles eg, people who
    like hard rock music probably prefer beer to
    wine
  • benefits - based on the different expectation
    that customers have about what a product/service
    can do for them eg. People who want to but lite
    food cause ti will help them lose weight

19
Geographic location of Canadians
  • most live in Toronto - Montreal axis
  • Vancouver
  • most live along east-west line close to the
    American border

20
Percentage Distribution of the Population of
Canada by Province
Slide 3-8
Geographic Segmentation
, Ontario contains 52 of foreign born people in
Canada
21
Impact of Immigration
  • Ontario contains 51.8 of Canadas living
    foreign-born people
  • Most of these people live in Toronto
  • Canadas urban population is growing for 2
    reasons 1. Immigrants come to Canada and make
    their homes in the cities 2. Canadians are moving
    out of the rural areas and in to the cities

22
Slide 3-9
Figure 3.4 UrbanRural Population Distribution,
18711991
Geographic Segmentation
23
Geographic Segmentation
The reason why we study geographic segmentation
is because WHERE people live has a big effect on
their consumption patterns. Additionally, WHERE
people live in a city is also a reflection of
their income level and we can make certain
assumptions about their ABILITY TO SPEND based
upon their address. This helps people plan store
locations and the location of other services.
24
Geographic Segmentation
Climate winter equipment and recreation are
effected by geographic location you will sell
more snow shovels in Northern Ontario than
southern Ontario , BUT, population in Northern
Ontario is very small clothing purchases are
also effected by climate/geography
25
Demographic Segmentation
  • Demographic Segmentation is the most common
    approach to Market Segmentation
  • Variables are
  • age
  • gender (male/female)
  • income
  • occupation
  • education
  • household (family - style) size

26
Demographic Segmentation
  • Demographic Segmentation is the most common
    approach to Market Segmentation
  • Variables are
  • gender (male/female)
  • gender is an obvious way to divide the market
    into segments since so many products are
    gender-specific
  • clothing
  • medical products
  • sports products/services
  • entertainment

Examples ??
27
Demographic Segmentation
  • Demographic Segmentation is the most common
    approach to Market Segmentation
  • Variables are
  • age
  • age is another obvious way to divide the market
    into segments since so many products are based
    upon time of life
  • diapers for babies
  • toys for children
  • entertainment for over 19

Examples ??
28
Demographic Segmentation
  • age
  • also, people have different consumption patterns
    at different ages
  • eg. Milk products
  • children and teens drink a lot of milk
  • adults dont
  • older adults need calcium, but dont drink milk
    (they take pills)

Examples ??
29
Slide 3-10
Figure 3.5 Population Projections by Age Group
Demographic Segmentation
30
Demographic Segmentation
  • Demographic Segmentation is the most common
    approach to Market Segmentation
  • Variables are
  • household (family - style) size
  • Segmenting by the stages in the family life
    cycle
  • (page 45)
  • There are different buying characteristics of
    people in each stage of the family

31
Demographic Segmentation
  • household (family - style) size
  • BUYING PATTERNS
  • 0-5 young children
  • 6-19 school children
  • 20-34 young adults
  • 35-49 younger middle-aged
  • 50-64 older middle-aged
  • 65 seniors
  • 80 SUPER seniors

32
Demographic Segmentation
  • household (family - style) size
  • THE CHANGING HOUSEHOLD
  • half of the households in Canada are only one,
    or two people
  • number of married couples forming a household
    is decreasing
  • many unmarried people, and old widowed people,
    live by themselves

33
Demographic Segmentation
  • household (family - style) size
  • FAMILY LIFE CYCLE STAGES
  • 1. Young Single
  • 2. Young Married with no Children (DINKS)
  • 3. Young - married with children
  • - divorced without children - divorced with
    children

34
Demographic Segmentation
  • household (family - style) size
  • FAMILY LIFE CYCLE STAGES
  • 4. Middle Aged
  • a. married without children
  • b. divorced without children
  • c. married with children
  • d. divorced with children
  • e. married without dependent children
  • f. divorced without dependent children

35
Demographic Segmentation
  • household (family - style) size
  • FAMILY LIFE CYCLE STAGES
  • 5. Older
  • a. older married
  • b. older unmarried (divorced, widowed)
  • 6. other

36
Demographic Segmentation
  • household (family - style) size
  • SSWDs
  • single separated widowed divorced in Canada,
    1.6 million people live alone - they buy
    different sizes of products eg. Single serving
    soup, etc.

37
Demographic Segmentation
  • Demographic Segmentation is the most common
    approach to Market Segmentation
  • Variables are
  • age
  • gender (male/female)
  • income
  • occupation
  • education
  • household (family - style) size

38
Demographic Segmentation
income Segmenting markets on the basis of
income and expenditure patterns - The number of
single mom families has increased by 12.8
between 1985 and 1994 - Male single parent
families have more income, on average, than
Female single parent families (chart 3.6)
39
Engels Laws
  • As family income increases ……
  • a smaller goes for food - TRUE
  • the spent on housing and household operations
    and clothing will remain constant (that is grow
    as total income grows) - FALSE in reality this
    amount declines
  • the spent on recreation, education will
    increase - TRUE, but there are exceptions

40
Engels Laws
  • Why is this important……
  • because marketing managers can use this law to
    figure out what will happen (ie. What kinds of
    spending patterns will develop) if peoples
    incomes increase
  • also, if you are planning on going into a new
    market, where people have more money - this law
    helps you to plan how peoples spending patterns
    will be different

41
Psychographic Segmentation
The use of psychological attributes, lifestyles
and attitudes in determining the behavioral
profiles of different customers TEXT The use of
detailed information to understand differences in
what people buy WTGR
psychological
42
Psychographic Segmentation
Psychographic profiles on a target market
segment are obtained by doing a lot of
questionnaires and surveys to ask people if they
agree/disagree with certain statements made about
particular activities, interests or opinions AIO
- activities, interests, and opinions http//ou
rworld.compuserve.com/homepages/finkleman/psychogr
.htm
43
Psychographic Segmentation

Thompson Lightstone Segments 1.
Passive/Uncertain 2. Mature 3. Home Economists 4.
Active/Convenience 5. Modern Shoppers 6.
Traditional Home/Family Oriented http//www.goldfa
rbconsultants.com/who.html
44
Psychographic Segmentation

LIFESTYLE PROFILES Table 3.8 - HOW DO YOU FIT?
45
Benefit Segmentation

It is based on the Attributes (characteristics)
of products, as seen by the customers example,
people buy something because it causes a
benefit ie. Diet coke - less sugar, lose
weight ie. Extra white toothpaste, whiter teeth,
better smile
46
Benefit Segmentation
Many marketers now consider benefit segmentation
one of the most useful methods of classifying
markets ie. Watches - the benefits customers
looked for where durability and product quality-
older research was based on dividing the watch
market according to a different segment - once
they used the new segment, they changed the
marketing plan- modern example would be price of
PCs for home use - biggest use is entertainment
NOT schoolwork or home based businesses

47
Benefit Segmentation of the Toothpaste Market
Benefit Segmentation
Segment Name The The
Sensory The Independent Segment Sociables The
Workers Segment Principal benefit
sought Flavour, product Brightness Decay Price ap
pearance of teeth prevention Demographic
strengths Children Teens, young Large
families Men people Special behavioural Users
of Smokers Heavy users Heavy users characteristics
spearmint- flavoured toothpaste Brands
disproportionately Colgate, MacLeans, Crest Brand
s flavoured Stripe Plus White, on sale Ultra
Brite Personality characteristics High
self- High High High involvement sociability hypo
chondriasis autonomy Lifestyle characteristics Hed
onistic Active Conservative Value- oriented
48
Slide 3-12
Figure 3.9 Segmentation Bases for Industrial
Markets
Segmentation for Industrial Markets
49
Segmentation for Industrial Markets
  • Geographic Segmentation
  • useful for the automotive industry
  • Product Segmentation
  • ie. Special parts and components
  • Segmentation by End-Use Application
  • ie. Paint mfg. Paint for waterproof
    applications, paint for rust prevention, paint
    which sticks to glass
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