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Professor Richardson S E G M E N T A T I O N Slide 1
Professor Richardson S E G M E N T A T I O N Slide 1
SEGMENTATION
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Professor Richardson
SEGMENTATION
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Companies must plan constantly and the plan must be based on an understanding of market trends and marketing segments
Professor Richardson
SEGMENTATION
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Environmental Analysis
1. Target Market - you have to decide on which segment
Professor Richardson
SEGMENTATION
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**
Professor Richardson
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What is a Market?
PEOPLE
Professor Richardson
SEGMENTATION
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What is a Market?
PEOPLE
BUT - not just ANY people, they have to have Willingness to buy
Types of Markets
Consumer Goods and Services
Industrial Goods and Services
Professor Richardson
SEGMENTATION
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Convenience
Shopping
Specialty
Goods
ATM
Services
$
POP
Professor Richardson
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Consumer Goods
Consumer Services
Industrial Goods
Industrial Services
Convenience Goods
Shopping Goods
Specialty Services
Convenience Services
Production Goods
Support Services
eg. clothing
eg. banking
component parts
installations
eg. newspaper
eg. groceries
eg. travel
eg. buildings
Defn - industrial goods are products used in the production of other products
Professor Richardson
SEGMENTATION
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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
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
Professor Richardson
SEGMENTATION
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Professor Richardson
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Market Segmentation
Characteristics
age gender geographic location income spending patterns cultural background demographics marital status education language mobility
Professor Richardson SEGMENTATION slide 14
Market Segmentation
4 commonly used bases for Segmentation
Descriptive
psychographic benefits
Professor Richardson SEGMENTATION slide 15
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Professor Richardson
SEGMENTATION
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Market Segmentation
geographic location - based upon where people
live (historically a popular way of dividing markets)
Professor Richardson
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Market Segmentation
Psychographic / lifestyles - based on peoples
opinions, interests, lifestyles eg, people who like hard rock music probably prefer beer to wine
Professor Richardson
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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
Professor Richardson SEGMENTATION slide 21
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Geographic Segmentation
Professor Richardson
SEGMENTATION
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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.
Professor Richardson SEGMENTATION slide 23
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
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SEGMENTATION
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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
Professor Richardson SEGMENTATION slide 25
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
Professor Richardson
Examples ??
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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
Professor Richardson
Examples ??
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SEGMENTATION
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 ??
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Demographic Segmentation
Professor Richardson
SEGMENTATION
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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
Professor Richardson SEGMENTATION slide 30
Demographic Segmentation
household (family - style) size BUYING PATTERNS 0-5 6-19 young children school children
20-34
35-49 50-64 65+ 80+
young adults
younger middle-aged older middle-aged seniors SUPER seniors
SEGMENTATION slide 31
Professor Richardson
Demographic Segmentation
household (family - style) size THE CHANGING HOUSEHOLD half of the households in Canada are only one, or two people
Professor Richardson
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Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 1. Young Single 2. Young Married with no Children (DINKS)
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Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 4. Middle Aged a. married without children
Demographic Segmentation
household (family - style) size FAMILY LIFE CYCLE STAGES 5. Older a. older married
6. other
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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.
Professor Richardson
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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
Professor Richardson SEGMENTATION slide 37
Professor Richardson
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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
Professor Richardson SEGMENTATION slide 39
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
Professor Richardson SEGMENTATION slide 40
Psychographic Segmentation
The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers TEXT
psychological The use of detailed information to understand differences in what people buy WTGR
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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
http://ourworld.compuserve.com/homepages/finkleman/psychogr.htm
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Psychographic Segmentation
2. Mature
3. Home Economists 4. Active/Convenience 5. Modern Shoppers 6. Traditional Home/Family Oriented http://www.goldfarbconsultants.com/who. Professor Richardson S E G M E N T A T I O N
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Psychographic Segmentation
LIFESTYLE PROFILES
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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
Professor Richardson
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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 planmodern example would be price of PCs for home use biggest use is entertainment NOT schoolwork or home based businesses
Professor Richardson
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Benefit Segmentation
The Sensory Segment Principal benefit sought Demographic strengths Special behavioural characteristics Flavour, product appearance Children Users of spearmintflavoured toothpaste
Segment Name The Sociables Brightness of teeth Teens, young people Smokers
Colgate, Stripe
High selfinvolvement Hedonistic
Crest
Brands on sale
High autonomy Valueoriented
Professor Richardson
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Geographic Segmentation
useful for the automotive industry
Product Segmentation
ie. Special parts and components
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