Foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada...

Copyright © 2003 by Nelson, a division of Thomson Canada Limited.

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M A R K E T I N G

Market Segmentation: Finding a Base to Start

3


Chapter

Objectives

1. Explain the concept of the marketing plan.

2. Define market segmentation.

3. Discuss and apply five types of market segmentation in consumer markets.

4. Illustrate some aspects of the Canadian market in terms of the five types of consumer market segmentation.

5. Discuss and apply the main types of segmentation in industrial markets.

Market Segmentation: Finding a Base to Start 3

3-1


Chapter

Implementation and Control• Measurable goals• Benchmarks • Feedback

Marketing Plan• Product or service

management• Price • Distribution• Communications

The Strategic Marketing Planning Process

3Market Segmentation: Finding a Base to Start

Figure 3.1

Marketing Objectives & Strategies

• Objectives• Strategies

– Retrenchment– Status quo– Growth

Situation Analysis• Internal• Environmental• Customer• Competitive

Input from Corporate Strategies

• Mission• Corporate objectives • Strategic business

unit(SBU) objectives

3-2


Chapter

Fundamental Tasks in Developing a Strategic Marketing Plan1. Target Market

2. Implement a Marketing Program


3-3


Chapter

What is a Market?

• People with the willingness, purchasing power, and the authority to buy.


3-4


Chapter

Consumer Goods

• Those products and services purchased by the ultimate consumer for personal use.


3-5


Chapter

Industrial Goods

• Those products purchased to be used, either directly or indirectly, in the production of other goods or for resale.


3-6


Chapter

Market Segmentation

• Grouping people according to their similarity in one or more dimensions related to a particular product category.


3-7


Chapter

Bases for Market Segmentation


PotentialMarkets

Demographic SegmentationGenderAgeFamily life cycleRace/Ethnic groupEducationIncomeOccupationFamily sizeReligionHome ownership

Descriptive Behavioural

Figure 3.2

Geographic SegmentationCountryRegionUrban/Suburban/RuralPopulation densityCity sizeClimate

Psychographic SegmentationLifestylesPsychological variables:

PersonalitySelf-image

Benefit SegmentationExpected benefits from product

use

Usage RateHeavy usersBrand loyalty

3-8


Chapter 3Market Segmentation: Finding a Base to Start

Figure 3.3

3-9

Main Inhabited Areas in Canada


Chapter

Percentage Distribution of the Canadian Population by Province


Figure 3.4

3-10

Manitoba 3.7%

Saskatchewan 3.3%

Alberta 9.9%

British Columbia 13.0%

Northwest Territories 0.1%

Nunavut 0.1%

Newfoundland 1.7%

Prince Edward Island 0.4%

Nova Scotia 3.0%

New Brunswick 2.4%

Quebec 24.1%

Ontario 38.0%

2001



Provincial and Territorial Populations, 1981, 1991, 2001

POPULATION (THOUSANDS)

Source: “Provincial and Territorial Populations, 1981, 1991, 2001” adapted from the Statistics Canada Website http://geodepot.ca/English/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada.

Region 1981 1991 2001Newfoundland 568 568 513Prince Edward Island 123 130 135Nova Scotia 847 900 908New Brunswick 696 724 729Quebec 6 438 6 896 7 237Ontario 8 625 10 085 11 410Manitoba 1 026 1 092 1 120Saskatchewan 968 989 979Alberta 2 238 2 546 2 975British Columbia 2 744 3 282 3 908Yukon 23 28 29Northwest Territories 46 36 37Nunavut n/a 21 27Canada 24 343 27 297 30 007

Table 3.1

3-11


Chapter

Urban - Rural Population Distribution, 1871-2001


Figure 3.5

3-12


Chapter

The 25 Largest Metro Areas in Canada, 1996, 2001

TorontoMontrealVancouverOttawa-HullCalgaryEdmontonQuebecWinnipegHamiltonLondonKitchenerSt. Catharines-NiagaraHalifaxVictoriaWindsorOshawaSaskatoonReginaSt. John’sChicoutimi-JonquièreSudburySherbrookeTrois-RivièresSaint JohnThunder Bay


1996 Population (Thousands)

4881351220791107

972935693685681426432393359319314305231198176159157155142128125

2001 Population (Thousands)Area

4445335918911031

852392698677650416403390347313292281222199178167166150144129131

Source: Adapted from the Statistics Canada publication Canada Year Book 1999, Catalogue No. 11-402, page 94 and from the Statistics Canada Website http:www.statcan.ca/english/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada.

Table 3.2

3-13



Figure 3.6

3-14

Population Projections by Age Group


Chapter

Buying Patterns for Different Age GroupsAge Name of Age Group Merchandise

0 - 5 Young children Baby food, toys, nursery, furniture,

children’s wear

6 - 19 School children Clothing, sports equipment, records, (including teenagers) school supplies, food, cosmetics,

used cars20 - 34 Young adults Cars, furniture, houses, clothing,

recreational equipment, purchases for younger age groups.

35 - 49 Younger middle-aged Larger homes, better cars, second

adults cars, new furniture, recreational

equipment

50 - 64 Older middle-aged Recreational items, purchases for adults young marrieds and infants

65+Senior adults Medical services, travel, drugs, purchases for younger age groups


Table 3.3

3-15


Chapter

Family Life Cycle

• The process of family formation, development, and dissolution.


3-16


Chapter

SSWDs

• Single, separated, widowed, or divorced people.


3-17


Chapter

Engel’s Laws

As family income increases

1. a smaller percentage goes for food

2. the percentage spent on housing and household operations and clothing will remain constant, and

3. the percentage spent on other items will increase.


3-18



Figure 3.7

3-19

Percentage Annual Expenditures by Income

Groups, 1999


Chapter

Lifestyle

• The mode of living


3-20


Chapter

Psychographics

• The use of psychological attributes, lifestyles, attitudes, and demographics in determining the behavioural profiles of different consumers.


3-21


Chapter

AIO Statements

• Statements about activities, interests, and opinions that are used in developing psychographic profiles.


3-22


Chapter

VALSTM Network


ACTUALIZERS

FULFILLEDS

STRUGGLERS

EXPERIENCES

STRIVERS

ACHIEVERS

BELIEVERS MAKERS

Principle Oriented Status Oriented Action Oriented

High Resources

High Innovation

Low Resources

Low Innovation

Figure 3.8

3-23 Source: SRI Consulting Business Intelligence. Http://www.sric-bi.com/VALS/types.shtml


Chapter

The Environics Segments

• Elders

• Boomers

• Generation X


3-24


Chapter

Provides choice

for family members X X

Convenient to use X

Tastes good X X

Good quality X X X X

Healthy X X X X

Helps digestion X

Helps diet X

Spend less money X

Benefit Segmentation Applied to Yogurt


Attributes of Yogurt

BE

NE

FIT

S S

OU

GH

T F

RO

M

YO

GU

RT

Individually packaged

With

fruit

High-

pricedMild Organic Contains

bio-bifidus

Low

fat

Low-

priced

Table 3.5

3-25

Source: Adapted from Marco Vriens and Ter Hofseted, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research,

Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association.


ChapterConsumer Marketing Decisions Affected by Segmentation Choices

Segmentation Basis

Geographic

Demographic

Psychographic

Benefit

Product Usage Rates


Decisions Affected• Choice of sales region• Sales force location• Retail location

• Estimates of segment size• Choice of local distribution channels or channels that cater to different

age, income, and education groups

• Product/service positioning• Advertising themes• Sales training

• Product/service design--different models with different features• Advertising themes• Sales training

• Special products (sizes and quality)• Special services• Frequent-user promotions• Special financial terms

Table 3.6

3-26 Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of

South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.


Chapter

Segmentation Bases for Industrial Markets


End-Use Application Segmentation

Product Segmentation

Account Size and Potential Segmentation

GeographicSegmentation

Potential Industrial Markets

3-27



Consumer Marketing Decisions Affected by Segmentation ChoicesSegmentation Basis

Geographic

Product (including NAICS)

End-Use Application

Account Size & Growth Potential

Decisions Affected

• Choice of sales region

• Sales force organization

• Product design

• Media choices

• Trade show choices

• Product design

• Sales force training

• Advertising emphasis

• Account and relationship management

Table 3.7

3-28 Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of

South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.


Chapter

North American Classification System (NAICS)• A coding system used to categorize

different types of business and products (formerly the Standard Industrial Classification, or SIC)


3-29

Foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada...

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