Understanding the World
of Marketing
Market Segmentation
Analyzing Markets
► Market segmentation is a way of analyzing a
market by specific characteristics in order to create a
target market
► Market Segmentation: Separating larger groups
into smaller groups based on certain characteristics
Target Market
• The specific group of people to whom
you are trying to sell your products or
services.
• A target market is a set of individuals
who share common characteristics.
Target Market
5 Types of Market Groups:
Demographic
–
Psychographic
– Music enthusiasts
Use-based
Benefit
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–
Geographic
Teachers
Athletes
Bargain hunters
–
Southerners
Types of Segmentation:
• Demographics
• Psychographics
• Geographics
• Behavioral
Demographics –
Statistics & facts that describe a population in
terms of personal characteristics.
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Age
Gender
Income
Marital Status
Ethnic Background
Occupation
Education, etc…
U.S. Demographic 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
• Attitudes
• Personality & Values
Geographics
Segmentation based on where people live
Behavioral
• Looking at the benefits desired by consumers (status),
shopping patterns, and usage rate.
• Market benefits…not just the physical characteristics
of a product
Behavioral Segmentation
• Many businesses find that the 80/20 rule applies.
• 80% of a company’s sales are generated by 20% of
its loyal customers.
Mass Marketing VS. Segmentation
• Mass Marketing
Using a single market strategy to reach all
customers…not as popular as it once was
• Niche Marketing (the current trend)
Markets are narrowed down and defined
with extreme precision
Niche Marketing
• Idea is to advertise and market
products to a specific target
market..... (narrow demographics)
• This is often used by small
companies as it is a way of avoiding
competition who may not be
interested in such a small segment
Niche Marketing
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Examples:
Gardening magazines
Nascar
Montessori schools
MTV focuses on youth
Lifetime television focuses on women
Mass Marketing
• Mass marketing strategies aim the
strategy at the whole market
• This is generally used by larger
companies whose products appeal to
everyone
Mass Marketing
• Examples:
• Tide detergent
• TV magazines
• HP all in one
Printer/fax/copy/scanner
• (American Idol, Olympics, Super bowl)
Mass Marketing
• To Reach the Largest amount of people
possible.
• Focus on high sales and low prices
• Products for everyone
• Less risky
• Marketing research costs and
Advertising costs relatively low.
Product Life Cycle
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The Product Life Cycle shows the life of a product from its conception
to its death
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There are five stages in the product life cycle:
1. Research and development
• the product is being developed, high costs
2. Introduction –
• product is introduced to the market
• sales are low
• profit is negative as research and development
costs are being met
Product Life Cycle
3. Growth – Sales increase rapidly, firm
starts to make a profit
4. Maturity – Sales reach their peak, profits
start to decline as competition increases
5. Decline – Sales fall, profits begin to fall,
the product might be taken off the
market