Download - Professor Richardson
-
8/14/2019 Professor Richardson
1/49
Professor Richardson S E G M E N T A T I O N slide 1
-
8/14/2019 Professor Richardson
2/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
3/49
Professor Richardson S E G M E N T A T I O N slide 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 andmatch this - (eg. This is the wrong time to open asteak house)
Companies must plan constantly and the
plan must be based on an understanding ofmarket trends and marketing segments
-
8/14/2019 Professor Richardson
4/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
5/49
Professor Richardson S E G M E N T A T I O N slide 5
Fundamental Tasks in Developing aMarketing 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 amongpeople and understand there are different segments)
-
8/14/2019 Professor Richardson
6/49
Professor Richardson S E G M E N T A T I O N slide 6
What is a Market?
PEOPLE
-
8/14/2019 Professor Richardson
7/49Professor Richardson S E G M E N T A T I O N slide 7
What is a Market?
PEOPLEBUT - not just ANYANY people, they have to have
Willingness to buy
Purchasing power (money)
Authority to buy
-
8/14/2019 Professor Richardson
8/49Professor Richardson S E G M E N T A T I O N slide 8
Types of Markets
Consumer Goods and Services
Industrial Goods and Services
-
8/14/2019 Professor Richardson
9/49Professor Richardson S E G M E N T A T I O N slide 9
Classes of Consumer ProductsClasses of Consumer Products
ConvenienceConvenience ShoppingShopping SpecialtySpecialty
GoodsGoods
ServicesServices
POP
14-1
$$
ATM
-
8/14/2019 Professor Richardson
10/49Professor Richardson S E G M E N T A T I O N slide 10
Various Classes of Consumer and
Industrial Goods and Services
e g . n e w
e g . M a c '
C o n v e n i e n
e g . g r o c
e g . c l o t h
S h o p p i n g
C o n s u m e
e g . t r a v
e g . b a n k
S p e c i a l t y
e g . f a s t f
C o n v e n i e n
C o n s u m e r i
r a w m a
g r a i n , s
e g . w
h a r n
e g . c i r c
c o m p o n
p a r t s
m a t e r i a
n u t s , b o
P r o d u c t i o
I n d u s t r i a l
a c c e s s o r y
t o o l s , c o m
e g . b u i l
i n s t a l l a t i
S u p p o r t
I n d u s t r i a l
G o o d s a n
Defn - industrial goodsindustrial goods are products used in the production of other
products
-
8/14/2019 Professor Richardson
11/49Professor Richardson S E G M E N T A T I O N slide 11
Industrial GoodsIndustrial Goods
Industrial goods are things used in theIndustrial goods are things used in theproduction of other productsproduction of other products
Some products are both industrial and consumerSome products are both industrial and consumergoods - eg. electricity, water, desktop PCsgoods - eg. electricity, water, desktop PCs
2 categories of industrial goods2 categories of industrial goods
Production GoodsProduction Goods
Support GoodsSupport Goods
-
8/14/2019 Professor Richardson
12/49Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
13/49Professor Richardson S E G M E N T A T I O N slide 13
Market SegmentationDefn
Grouping people according to their
similarity related to a particular
product category
-
8/14/2019 Professor Richardson
14/49Professor Richardson S E G M E N T A T I O N slide 14
Market SegmentationCharacteristics age
gender
geographic location
income
spending patterns
cultural background
demographics
marital status
education
language
mobility
-
8/14/2019 Professor Richardson
15/49Professor Richardson S E G M E N T A T I O N slide 15
Market Segmentation
4 commonly used bases for Segmentation
Descriptive
geographic locationdemographic
Behavioural
psychographic
benefits
i 3 f k
-
8/14/2019 Professor Richardson
16/49Professor Richardson S E G M E N T A T I O N slide 16
Figure 3.1 Bases for MarketSegmentation
Slide 3-7
-
8/14/2019 Professor Richardson
17/49Professor Richardson S E G M E N T A T I O N slide 17
Market Segmentation
geographic location - based upon where peoplelive (historically a popular way of dividing markets)
demographic - based upon age, gender and incomelevel (very often used)
-
8/14/2019 Professor Richardson
18/49Professor Richardson S E G M E N T A T I O N slide 18
Market Segmentation
Psychographic / lifestyles - based on peoplesopinions, interests, lifestyles
eg, people who like hard rock music probably prefer
beer to wine
benefits - based on the different expectation thatcustomers have about what a product/service can do
for themeg. People who want to but lite food cause ti will help
them lose weight
-
8/14/2019 Professor Richardson
19/49Professor Richardson S E G M E N T A T I O N slide 19
Geographic location of Canadians
most live in Toronto - Montreal axis
+ Vancouver
most live along east-west line close
to the American border
P t Di t ib ti f th
-
8/14/2019 Professor Richardson
20/49Professor Richardson S E G M E N T A T I O N slide 20
Percentage Distribution of thePopulation of Canada by Province
Slide 3-8
+, Ontario
contains
52% of
foreign born
people in
Canada
Geographic Segmentation
-
8/14/2019 Professor Richardson
21/49
Professor Richardson S E G M E N T A T I O N slide 21
Impact of Immigration
Ontario contains 51.8% of Canadasliving foreign-born people
Most of these people live in Toronto
Canadas urban population is growingfor 2 reasons
1. Immigrants come to Canada and
make their homes in the cities2. Canadians are moving out of the
rural areas and in to the cities
-
8/14/2019 Professor Richardson
22/49
Professor Richardson S E G M E N T A T I O N slide 22
Figure 3.4 UrbanRural PopulationDistribution, 18711991
Slide 3-9
Geographic Segmentation
-
8/14/2019 Professor Richardson
23/49
Professor Richardson S E G M E N T A T I O N slide 23
Geographic Segmentation
The reason why we study geographic segmentation isbecause 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.
-
8/14/2019 Professor Richardson
24/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
25/49
Professor Richardson S E G M E N T A T I O N slide 25
Demographic Segmentation
Demographic Segmentation isthe most common
approachto Market Segmentation
Variables are:
age
gender (male/female)
income
occupation
education
household (family - style) size
-
8/14/2019 Professor Richardson
26/49
Professor Richardson S E G M E N T A T I O N slide 26
Demographic Segmentation
Demographic Segmentation isthe most commonapproachto Market Segmentation
Variables are:
gender (male/female)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 ??
-
8/14/2019 Professor Richardson
27/49
Professor Richardson S E G M E N T A T I O N slide 27
Demographic Segmentation
Demographic Segmentation isthe most commonapproachto 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 19Examples ??
-
8/14/2019 Professor Richardson
28/49
Professor Richardson S E G M E N T A T I O N slide 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 ??
Slide 3 10
-
8/14/2019 Professor Richardson
29/49
Professor Richardson S E G M E N T A T I O N slide 29
Figure 3.5 Population Projectionsby Age Group
Slide 3-10
Demographic Segmentation
-
8/14/2019 Professor Richardson
30/49
Professor Richardson S E G M E N T A T I O N slide 30
Demographic Segmentation
Demographic Segmentation isthe most common
approachto 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
-
8/14/2019 Professor Richardson
31/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
32/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
33/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
34/49
Professor Richardson S E G M E N T A T I O N slide 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
-
8/14/2019 Professor Richardson
35/49
Professor Richardson S E G M E N T A T I O N slide 35
Demographic Segmentation
household (family - style) size
FAMILY LIFE CYCLE STAGES
5. Older
a. older married
b. older unmarried (divorced, widowed)
6. other
-
8/14/2019 Professor Richardson
36/49
Professor Richardson S E G M E N T A T I O N slide 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.
-
8/14/2019 Professor Richardson
37/49
Professor Richardson S E G M E N T A T I O N slide 37
Demographic Segmentation
Demographic Segmentation isthe most commonapproachto Market Segmentation
Variables are:
age gender (male/female)
income
occupation
education
household (family - style) size
-
8/14/2019 Professor Richardson
38/49
Professor Richardson S E G M E N T A T I O N slide 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)
-
8/14/2019 Professor Richardson
39/49
Professor Richardson S E G M E N T A T I O N slide 39
Engels Laws
As family income increases
a smaller % goes for food - TRUE
the % spent on housing and householdoperations 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
-
8/14/2019 Professor Richardson
40/49
Professor Richardson S E G M E N T A T I O N slide 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 peoplesincomes increase
also, if you are planning on going into a new
market, where people have more money - this
law helps you to plan how peoplesspending patterns will be different
-
8/14/2019 Professor Richardson
41/49
Professor Richardson S E G M E N T A T I O N slide 41
Psychographic Segmentation
The use of psychological attributes,
lifestyles and attitudes in determining
the behavioral profiles of differentcustomersTEXT
The use of detailed information to understanddifferences in what people buy
WTGR
psychological
-
8/14/2019 Professor Richardson
42/49
Professor Richardson S E G M E N T A T I O N slide 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://ourworld.compuserve.com/homepages/finkleman/psychogr.htm
-
8/14/2019 Professor Richardson
43/49
Professor Richardson S E G M E N T A T I O N slide 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.goldfarbconsultants.com/who
-
8/14/2019 Professor Richardson
44/49
Professor Richardson S E G M E N T A T I O N slide 44
Psychographic Segmentation
LIFESTYLE PROFILES
Table 3.8 - HOW DO YOU FIT?
-
8/14/2019 Professor Richardson
45/49
Professor Richardson S E G M E N T A T I O N slide 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 benefitie. Diet coke - less sugar, lose weight
ie. Extra white toothpaste, whiter teeth, better smile
-
8/14/2019 Professor Richardson
46/49
Professor Richardson S E G M E N T A T I O N slide 46
Benefit Segmentation
Many marketers now consider benefit
segmentation one of the most useful methodsof classifying markets
ie. Watches
- the benefits customers looked for where durability andproduct 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
-
8/14/2019 Professor Richardson
47/49
Professor Richardson S E G M E N T A T I O N slide 47
Benefit Segmentation of theToothpaste Market
Segment Name
The
The Sensory The IndependentSegment Sociables The Workers Segment
Principal benefit sought Flavour, product Brightness Decay Price
appearance 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 Brands
flavoured Stripe Plus White, on sale
Ultra BritePersonality characteristics High self- High High High
involvement sociability hypochondriasis autonomy
Lifestyle characteristics Hedonistic Active Conservative Value-
oriented
Benefit Segmentation
Slide 3-12
-
8/14/2019 Professor Richardson
48/49
Professor Richardson S E G M E N T A T I O N slide 48
Figure 3.9 Segmentation Bases forIndustrial Markets
Segmentation for Industrial Markets
-
8/14/2019 Professor Richardson
49/49
Geographic Segmentationuseful for the automotive industry
Product Segmentationie. 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
Segmentation for Industrial Markets