Basic Marketing Concepts

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Target Markets & Market
Segmentation
What is a Market?
A market is all customers who share common needs
and wants and who have the ability and
willingness to buy the product.
Market can also be a companies
percentage of total sales in their industry.
Ex: Nike sells 48% of all cross trainers
in the U.S.
How do we determine which customers share
common needs and have the ability to purchase?
Target Marketing
Is focusing all marketing decisions on a very
specific group of people you want your product
to reach.
The more information you have on this group the
easier it is to make marketing decisions.
Businesses will frequently create what they call a
CUSTOMER PROFILE, which is a breakdown of
the characteristics of the target market: age,
income, ethnic background, geography.
Market Segmentation
A way of analyzing a market by specific
characteristics in order to create a target market.
Think about a “Widget” Company. Once the owners decide
what, where, and how to make and distribute the widgets,
they need to know who has a need for them.
By using MARKET SEGMENTATION to
define our TARGET MARKET we can
focus all our marketing activities.
How do we Segment a Market?
There are 4 ways to categorize potential
customers
Demographics
Psychographics
Geographics
Product Benefits
Demographics
Refers to statistics that describe a population in
terms of personal characteristics. These include:
age, gender, income, ethnicity, education and
occupation.
It is important to understand the attributes of your
target market, so you can focus your promotional
dollars to the right group of people.
Ex: You wouldn’t advertise BMW’s to low income teenagers.
Ex: You wouldn’t advertise Barbie dolls to everyone
Demographics may also include fitness level,
language spoken, or religious affiliations.
Demographics
Age,
Gender,
Income
Ethnicity,
Education
Occupation
%'s will
differ
Age
Age is a key characteristic to consider. Many
products are age sensitive.
– Ex: Health products to older adults
Age is often broken down by generations.
People from the same generation
were born between a certain
set of years, and commonly
share similar values, lifestyles,
cultural knowledge and
experiences.
Generations
Baby Boom Generation
• 76 million Americans were born between 19461964
• Most baby boomers are in their 50’s and 60’s
• They are at the peak of their earning income
• They are great targets for luxurious and
recreational products
• Looking toward retirement:
investments, savings,
financial plans
Generations
•
•
•
•
Generation X
40 million Americans were born between 19651976
Grew up during a time of widespread media
They are considered savvy and skeptical
consumers
Reaching this group is achieved by using sharp
images, music, humor, and a little irreverence.
Generations
•
•
•
•
•
•
•
Generation Y
77 million Americans were born between 1977-1997
Fewer number of children per family
Grew up in a computer world
Extremely savvy with technology and used to doing
multiple things at a time
Young people have a huge amount of influence over
parents purchasing decisions
Marketers want to get kids hooked
early and influence buying decisions
All of you!
Gender
Surprisingly few products today are marketed to solely
women or men.
Ex: Women buy men’s cologne and clothing all the time. Frequently,
advertisements for these products are targeted at a female
demographic.
Ex: Men buy flowers or jewelry for women
as romantic gifts.
Ex: schick razors with women stealing razors
from men or vice versa.
It’s important to remember the distinction between the
customer (purchaser) and the consumer (user).
Income Level
Marketers look at two types of income
Disposable income: is the money left after
taking out taxes. The money used to pay for bills, basic
living necessities – food, shelter, clothing.
Discretionary income: is the money left after
paying for basic living necessities such as
food, shelter, and clothing. Cell Phones?
Money given to teenagers is often times
discretionary money from parent/s/guardians.
Ethnic Background
The U.S. is the Great Melting Pot.
African, Hispanic, and Asian Americans make up 28% of
the population.
Marketers reach them using targeted ads on places like
Spanish TV, BET or magazines like Ebony and Black
Enterprise.
Ethnicity and culture has a huge impact on purchasing
decisions. Marketers have to understand all of the
cultures in the U.S. in order to be successful.
Ethnic Background
http://www.usatoday.com/news/nation/census/2003-06-18-Census_x.htm
Psychographics
Categorizing people based on social and psychological
characteristics.
Consumers’ attitudes, value system, and lifestyle.
Trends are also important to look at. People
start placing value on new things like eating
healthy, being independent, or being more
casual in the workplace.
Are people’s desires in line with their means?
Ex: People want luxury even if they can’t truly afford it.
Geographics
Segmenting the market based on where people live.
Ex: local, regional, national, or global markets.
Ex: Small town restaurant – local
Ex: Coca Cola – International
Using ethnicity you can look at location by the concentration of a
particular ethnic group.
The trend in the U.S. has been for people to move South, West, or
Southwest. There is huge growth in places like Nevada, Arizona,
Colorado, Georgia, and Idaho.
Marketers also have to consider people in a specific regions likelihood to
use certain products.
Washington – Umbrellas
California/Florida – Surfboards
Product Benefits
Often potential customers are separated by the
features they are looking for.
Ex: Shampoo comes in multiple styles; w/ conditioner,
scented, dry scalp, oily hair, thick hair, etc..
Often products have several appealing features and
need to be marketed in different ways.
Ex: To one person an Audi might be fast and luxurious,
while to another the safety of passengers is paramount.
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