MARKET IDENTIFICATION

OBJECTIVES

EXPLAIN THE IMPORTANCE OF MARKET IDENTIFICATION

DICUSS WAYS THAT A MARKET CAN BE SEGMENTED

THE MARKET

For marketers, a market is a customer or a potential customer who has an unfulfilled desire and is financially able and willing to satisfy that desire.

Composed of customers or potential customers might be an individual who purchases a good or

service to satisfy his/her personal desires Known as the consumer market includes individuals such as yourself, your

friends, and your family.

CUSTOMERS OR POTENTIAL CUSTOMERS

Could also be businesses which purchase items for use in the operation of the business, for resale, or for making other goods. Known as the industrial market Includes producers, government agencies,

wholesalers, and retailers. More sales are made to the industrial market although

the consumer market has more members.

CUSTOMERS WITH UNFULFILLED DESIRES

These customers have desires that have not been satisfied.

Example: You are offered a job but, in order to accept the offer you must have reliable transportation.

Unsatisfied desires motivate potential customers to make purchases.

FINANCIAL ABILITY

Unless a customer has money or the ability to get the money, they cannot be considered a market.

You may need the transportation but would not be considered part of the market if you could not pay for the transportation---car, bike, cab, bus, etc.

WILLINGNESS

Composed of customers who have the financial resources available to purchase the desired products and are willing to spend money in order to satisfy their desires.

If you have the money you must be willing to spend it.

If not willing to spend the money, you are not part of the market at this time.

For businesses to satisfy their customers, they need to determine who the market is for their products.

Is it all people?Is it a select few who have a

special need?Is it somewhere in between?

TARGET MARKETING

Defined as the identification identification and and selection selection of markets for a business of markets for a business

or for a product.or for a product.

Importance of Target Marketing

When businesses determine their target markets, they can then begin to plan their marketing activities.

What promotions will best reach a market? What prices will attract the market? How can the products be made available to the market? What products are desired by the market? By knowing who their markets are and what they want,

businesses can aim all of their marketing activities toward satisfying their consumers’ desires while accomplishing company goals.

IDENTIFYING TARGET MARKETSMARKETING SURVEYS

OUESTIONNAIRES

DIRECT INTERVIEWS

Businesses can plan their target-marketing activities in two, broad ways

MASS MARKETING

MARKETING SEGMENTS

MASS MARKETING

MASS MARKETING occurs when sellers design products that will appeal to most buyers and direct their marketing activities to the whole market.

Goal is to appeal to as many types of consumers as possible through one marketing plan

EXAMPLE--Henry Ford’s Model T

ADVANTAGES OF MASS MARKETING

LOWER PRODUCTION COST

LOWER PROMOTION COST

FACTORS WHICH CAUSE A DECREASE USE OF MASS MARKETING

1. INCREASED COMPETITION (from specialized stores) forced companies to pay more attention to the

specific needs of consumers When a company isn’t meeting the needs of

its customers, it allows the competition to step in and meet those needs.

DECREASED USE OF MASS MARKETING

2. MORE KNOWLEDGEABLE CONSUMERS Tend to very discerning in the purchases that

they make Need to be convinced that a purchase will add

value to their lives They feel that products that are designed to

meet the needs of everyone do not meet their specific needs

DECREASED USE OF MASS MARKETING 3. IMPROVED MARKETING RESEARCH

METHODS Companies can better determine the specific

needs of their markets.

Increased use of a variety of marketing research methods is helping marketers determine consumers likes and dislikes so that goods and services better satisfy the product users.

MARKET SEGMENTATION

MARKET SEGMENTATION occurs when marketers divide the total market for their products into smaller, more specific groups, or segments.

A. Use of market segmentation is increasing. Marketers are increasingly aware that people

are not alike People have different product needs and

different reasons for buying.

MARKET SEGEMNTATION

B. Marketers plan their activities for specific, well-defined groups of consumers.

Tailor their product, price, place, and promotion activities to the segments with which they choose to work.

Might focus their efforts on one segment, a few segments, or all of the groups within the total market.

MARKET SEGMENTATION

C. DISADVANTAGES OF M/S

1. Can increase costs of production

2. Can increase inventory costs

3. Can increase promotion costs

MARKET SEGMENTATION

D. Use of market segmentation has benefited both large and small companies by making them use their resources more efficiently. Must focus their activities on what their

customers want Can focus efforts one one or a few markets,

rather than try to be everything to everybody.

Businesses need to know as much as possible about their customers or potential customers. Enables them to market their products

efficiently Can consider a variety of

characteristics in order to learn about their markets.

DEMOGRAPHIC GEOGRAPHIC

PSYCHOGRAPHIC BEHAVIORAL

DEMOGRAPHIC SEGMENTATION

Dividing a market by characteristics people have in common that affect their purchasing power.

DEMOGRAPHIC SEGMENTATION

INCOME Income levels tells marketers how much

money a consumer has available to spend for goods and services.

Three, broad, income levels--high, middle, low

Actual dollar amounts attached to levels will vary according to current income conditions

DEMOGRAPHIC SEGMENTATION--INCOME

Marketers could promote their products to one or more of the income levels.

As income levels rise, so does the demand for certain goods and services.

HOUSING VACATIONS

DINING OUT PREPARED FOOD ITEMS ETC

DEMOGRAPHIC SEGMENTATION--INCOME

DISPOSABLE INCOME----The money you have left in your paycheck after taxes have been taken out.

DISCRETIONARY INCOME--The money you have left over after you have paid your bills.

DEMOGRAPHIC SEGMENTATION--AGE

Consumers in the same age group can have many of the same buying needs

EXAMPLE--Babies need baby food, teenagers wants CDs, and older adults need health-related services.

DEMOGRAPHIC SEGEMTATION--AGE

Commonly recognized markets based on age are: Children’s market--children to age 10 Teenage market--ages 10----19 Young-adult market--ages 20-----34 Middle-aged market--ages 35----54 Young old market--ages 55-----64 Middle old market--ages 65----74 Senior market--ages 75-------84 Elderly market--ages 85+

DEMOGRAPHIC SEGMENTATION--AGE

Percentage of the population in each age group varies over time. Due to changes in the birth and life-

expectancy rates. Marketers need to examine product needs for

each of the age groups. Segmentation by age groups is practical for

some products because consumer needs and wants change with age.

DEMOGRAPHIC SEGMENTATION--SEX

The roles of men and women are changing

Women are working longer and marrying later

Products that have traditionally been marketed to men are now being marketed to women, too.

Marketers need to be aware of trends so that potential markets are not overlooked.

DEMOGRAPHIC SEGMENTATION--EDUCATION

Can be an important basis for market segmentation The higher the level of education, the better

the quality of the product needs to be in order to satisfy the consumer.

These consumers are also more aware of the value received for the money that they spend.

Promotions to this group must be more truthful and technical that those to less-educated groups.

DEMOGRAPHIC SEGMENTATION--EDUCATION

Examples of education levels used for market segmentation

Eighth-grade education or less High school diploma Some college work College degree College degree plus

DEMOGRAPHIC SEGMENTATION--LIFE STAGE

The life stages of a family or household can create new markets.

Examples of life stages Young, single people Young married couples without children Families--children at home (full nest)

Older, married couples without children at home (empty nest)

Older, single people

DEMOGRAPHIC SEGMENTATION--OCCUPATION

The market for some products can be segmented on the basis of occupation

Some occupations relate to certain products Example--Auto mechanics and auto parts

Teachers and books

DEMOGRAPHIC SEGMENTATION--OCCUPATION

Marketers found it easier to work with categories of occupations than with individual occupations.

Categories of occupation used by marketers. White-collar workers---business executives,

lawyers, doctors, teachers. Blue-collar workers--plumbers, factory workers Service workers--police workers and

salespeople Farm workers--ranchers and farm workers.

GEOGRAPHIC SEGMENTATION

Grouping consumers according to where they are located.

One of the oldest methods of market segmentation

Marketers use such geographical divisions as Regions States Cities Rural Areas

GEOGRAPHIC SEGMENTATION

Use of this type of segmentation is easy to understand for some products

EXAMPLE--consumers in hot climates will prefer suntan lotions and lightweight clothing, while consumers in cold climates will be the market for heavy, warm clothing.

GEOGRAPHIC SEGMENTATION

Marketers need to be aware of the geographic shifts of our population. Our society can move from one town to

another, one state to another, or one country to another.

Recent trends indicate loss of customers from rural markets but an increase in customers for suburban markets.

PSYCHOGRAPHIC SEGMENTATION

Dividing consumers into groups based on their lifestyles and personalities.

PSYCHOGRAPHIC SEGMENTATION

LIFESTYLES refers to a person’s interests, values, and activities. EXAMPLE: A consumer who is interested in

running is a natural market for running clothes, shoes, magazines, and health products.

PERSONALITY is defined by a person’s individual qualities. EXAMPLE: An individual with a bold,

aggressive personality might be a market for fast, expensive, sports cars.

PSYCHOGRAPHIC SEGEMNTATION

Psychographic segmentation is difficult to measure.

It is much easier to determine whether is male or female.

P/S does provide valuable information to marketers. The activities consumers participate in may

determine the types of stores located in the area

BEHAVIORAL SEGMENTATION

Dividing consumers into groups according to their response to a product.

Grouped according to what consumers are looking for in a product and why they buy the product.

Types of behavioral segmentation are: Rate of Use Benefits Derived Loyalty Response Occasion Response

BEHAVIORAL SEGMENTATION

RATE OF USE Segmentation on the basis of usage rate

classifies consumers as heavy, moderate, light or nonusers of a product.

Marketers would focus on the heavy users because they will purchase more of the product than light users. Who do you send your catalogs to, a golfer

who plays four rounds a year or one that plays a hundred?

BEHAVIORAL SEGMENTATION

BENEFITS DERIVED This type of segmentation classifies

consumers on the basis of the benefits they desire from products.

EXAMPLE: some consumers might buy a sports car because of its quality while others might purchase the same car because of prestige.

BEHAVIORAL SEGMENTATION

LOYALTY RESPONSE By studying the common traits of loyal consumers,

marketers can determine what they have in common and can plan to attract other consumers who have similar traits. EXAMPLE: A mother buys only Gerber brand baby

food for her child because she believes it is the best, regardless of price or availability of other brands of baby food. The mother is exhibiting a loyalty response to the product.

BEHAVIORAL SEGMENTATION

OCCASION RESPONSE Special occasions, such as birthdays,

weddings, graduations, and ________ can prompt spending trends for some products.

By studying the occasion response of consumers, marketers can predict what special events result in demand for products.