Market Segmentation Section 2.2 p.37 - 41. Market Segmentation Market Segmentation is the process...

Market SegmentationSection 2.2

p.37 - 41

Market Segmentation Market Segmentation is the process of

identifying a target market by dividing the market into segments according to customer needs and characteristics. Basically you take a target market and break

down into even smaller markets. This process is done so that marketers can sell

their products or services more effectively.

Market Segmentation Facts Very costly to target all groups Must find the group of consumers who you have a

clear competitive advantage Use research to determine if the costs of

development are effective Specific information allows you to know your

customers: Buying Behavior, Values, Fashion Interests, etc…

Market Segmentation How does market segmentation get accomplished?

Demographics Geographic Variables Psychographic Variables Buying Behavior

Demographics Demographics: Refers to statistics that describe a

population in terms of personal characteristics. Age (Baby Boom, Generation X, Generation Y, Generation Z) Gender (Male v. Female) Income

Disposable: Money left after taxes Discretionary: Money left after taxes & basic needs have been paid

Marital Status (Married couples with kids represent 25% of U.S.)

Ethnic Background Education Occupation

Geographics Geographics: Refers to segmenting

customers based on where they live. Segment a market geographically can be

done: Locally, Regionally, Nationally, or Globally

Hispanic cultures are prevalent in L.A., Miami, New York, Texas, Arizona, etc..

African American cultures are prominent in the south

Psychographics Psychographics involves grouping people with

similar lifestyles, as well as shared attitudes, values, & opinions.

Examples: Latest Diet Trends Environmental Concerns

Behavioral Buyers: Accounting for the type of shopping they prefer. Online, In-Store, Catalog Safety Issues concerning identity

Mass Marketing v. Segmentation Mass Marketing: Occurs when a products have

universal appeal and few features to differentiate them from competitors. Not as popular as it used to be because companies prefer

to cluster consumers.

Niche Marketing: Narrowing down your market and using precision to create your products

Market Segmentation

Age: Old lady jeans v. Flared, Bootleg, low rise, stretch

Price: High roller v. cost cutter Desired Features: Pockets, belt loops, faded,

washed out, style (carpenter, cargo, etc..)

Market Segmentation Example Product: Jeans

According to Forbes Magazine, Americans are willing to spend the following amount on a pair of jeans $20-$40 48% $40-$60 25% $80-$100 13% $100-$200 10% Over $200 4%

Market Segmentation Example Most Expensive Jeans

Market Segmentation Example Least Expensive Jeans

Bell Work Why does Market Segmentation exist?

What is the point of breaking down a large group of customers into a smaller, more specific group? Develop products that meet specific wants & needs

versus coming up with something you hope everyone will like.

Jean Example

Market Segmentation Assignment You must construct a market segmentation

grid based on the music industry

Age must be one of the criteria you use to segment your market In my movie example I used

13 and under (PG) 14-17 (PG-13) 18 and Over ®

Market Segmentation Assignment The other category for segmentation is of your

choosing and needs to have at least 5 criteria Gender or Group Size

Male Solo Artist Male Duo Male Group Female Sole Artist Female Group Female Duo

Genre of Music Rap, Top 40, Classical, Country, Rock, R&B, Latin, etc…

Market Segmentation Example

Market Segmentation Example

Market Music Segmentation You will need to print out a blank version &

an answer key

Your grade will be determined by how well someone in the class does on your market segmentation

Bell Work What is the difference between disposable &

discretionary income? Disposable is your income after taxes are taken

out Discretionary is the amount of money you have

left after taxes are taken out and your basic necessities are paid for

Bell Work What are two things that go into an

environmental scan? Political Socio-Culture Technology Economics