V I SUA L
chapter
6
&
AU D I O
l
Market segmentation involves aggregating prospective buyers into groups that
have common needs and who respond similarly to marketing programs.
l In the marketing world there are two main market segments: (1) the consumer
market and (2) the business marketing approaches.
business market Products that are purchased either to run a business or to be
used as a component in another product or service
consumer market Consists of products, ideas, and services that a person can
purchase for personal use
market segmentation The aggregation of prospective buyers into groups that
have common needs and respond similarly to marketing programs
product differentiation Involves positioning a product apart from the competition in the eyes of consumers
Describe and differentiate among the different forms of
market segmentation.
2
l
Companies segment the market using mass marketing, segmented marketing,
niche marketing, or individualized marketing.
individualized marketing Involves customizing offers and, in some cases,
products that fit individual needs
mass marketing The marketing of a product to the entire market with no differentiation at all
niche marketing When a company focuses its efforts on a limited segment in
the market
segment marketing Designing different products and services to meet the
needs of different target groups
3
l
Outline the
steps involved
in segmenting a
market.
Segmenting the market
involves ten steps that
require analytical skills,
strategic thinking, an
understanding of the consumer, a vision of where
the market is heading, and
how this fits with company
objectives.
Figure 6–1
The ten-step process for segmenting a market
STEPS IN MARKET SEGMENTATION
1. Review strategic company objectives.
l
l
Geographics looks at where a target market lives using variables such as
country, region, province, city size, and types of location such as urban, suburban, or rural.
l Demographics includes identifying ranges for age, gender, family life-cycle,
income, occupation, education, ethnic background, and home ownership.
l Psychographics involves understanding consumer attitudes to life, their personalities, general interests, opinions, and activities.
l Behaviouristics looks at why consumers buy a product, the product benefit,
how the product is used, and whether consumers are brand loyal in their purchase behaviour. Usage rate also plays a role in this information.
Figure 6–2
Identifying consumer clusters
CONSUMER CLUSTERS EXAMPLE: COLD CEREALS
CONSUMER CLUSTER
CLUSTER ATTITUDES
PRODUCT EXAMPLES
Adults with dietary needs
• Feeling healthy
• Taste is secondary
• All Bran
• Fibre First
Adults focused on taste and nutrition
• Nutrition is key
• Taste is important
• Not health fanatics
• Oatmeal Crisp
• Muslix
Families looking for fun and taste
• Family-oriented
• Want kids to eat breakfast
• Taste is important
• Nutrition is not as important as taste
• Froot Loops
• Nesquik
Families focused on wholesome goodness
• Taste and nutrition are both important
• Good family health is key
• Cheerios
• Rice Krispies
behaviouristics Why consumers buy a product, the product benefit, how they
use it, and whether they are brand loyal in their purchase behaviour
demographics Ranges for age, gender, family life-cycle, income, occupation,
education, ethnic background, and home ownership
geographics Where a target market lives using variables such as country,
region, province, city size, and types of location such as urban, suburban, or rural
psychographics Understanding consumer attitudes to life, their personalities,
general interests, opinions, and activities
Figure 6–3
Segmentation variables and breakdowns for Canadian consumer markets
2. Identify specific business unit objectives.
3. Identify consumer/customer needs and common
characteristics in the market.
4. Cluster common consumer/customer variables to
create meaningful market segments.
TARGET MARKET PROFILES
CATEGORIES
VARIABLES
TYPICAL BREAKDOWNS
Geographics
Region
Atlantic; Quebec; Ontario; Prairies; British Columbia
City or census metropolitan area (CMA) size
Under 5,000; 5,000–19,999; 20,000–49,000; 50,000–99,999;
100,000–249,000; 250,000–499,999; 500,000–999,000;
1,000,000–3,999,999; 4,000,000+
Density
Urban; suburban; rural
Climate
Cold; warm
Age
Infant; under 6; 6–11; 12–17; 18–24; 25–34; 35–49; 50–64; 65+
Gender
Male; female
Family size
1–2; 3–4; 5+
Stage in family
life cycle
Teenager; young single adult; young married, no children; young married,
youngest child under 6; young married, youngest child 6 or older; older
married, with children; older married, no children under 18; older single;
other older married
Income
Under $10,000; $10,000–19,999; $20,000–29,999; $30,000–39,999;
$40,000–54,999; $55,000–74,999; $75,000+
Occupation
Professional; managerial; clerical; sales; labourer; student; retired;
housewife; unemployed
Education
Grade school or less; some high school; high school graduate;
some college; college graduate
Ethnic background
Country of origin
Home ownership
Own home; rent home
Personality
Gregarious; compulsive; extroverted; introverted
Lifestyle
Structured; discontented; fearful; assured; resentful; caring
Benefits sought
Nutrition; entertainment; status
Usage rate
Light user; medium user; heavy user
User status
Non-user; ex-user; prospect; first-time user; regular user
Loyalty status
None; some; medium; strong
5. Conduct SWOT analyses on the segments to
determine strengths, weaknesses, opportunities, and
threats.
6. Identify the segment that best meets strategic company objectives.
Demographics
7. Identify marketing programs and budget requirements needed for this segment.
8. Create a sales forecast for this segment.
9. Conduct a profit-and-loss financial analysis for this
SWOT analysis Process by
segment.
which a company can identify
10.Check financial forecasts against specific business
unit objectives.
opportunities and whether it
has the strength to compete in
a segment that may already be well served by the competition
4
CA R D
Segmentation, Targeting, and Positioning
Explain market segmentation and its relevance
to marketing.
1
STU DY
Create a target market profile.
Marketers define their target markets by looking at four main variables: (1)
geographics, (2) demographics, (3) psychographics, and (4) behaviouristics.
Psychographics
Behaviouristics
5
l
Position a product in the market and develop a
positioning map.
Product positioning refers to the image of the product in consumers’ minds
relative to the competition.
l Marketers create positioning statements to clearly and simply outline the positioning of a product.
l Repositioning includes a shifting of the product and its marketing mix to more
accurately meet consumer needs.
l Positioning maps are otherwise known as perceptual maps. They visually
represent how products or product groups are positioned within a category to
consumers.
positioning maps Visual representations of how products are positioned in a
category to consumers
positioning statement A tool that identifies the main reasons the target market
buys a product and what sets it apart in the market
product positioning The image of the product you want to establish in consumers’ minds relative to the competition
repositioning A revamping of the product and its marketing mix to more accurately meet consumer needs