Professor Richardson

8/14/2019 Professor Richardson

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Professor Richardson S E G M E N T A T I O N slide 1


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Purpose of this section

1. Introduce the Concept of the MARKETING PLAN

2. To Define Market Segmentation

3. Present 4 types of market segmentation

4. Aspects of the Canadian market

5. Main types of segmentation in industrial markets


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Baby Boomers & Chicken Purpose of this discussion is to explain the

advantages of carefully watching how a

market segment acts as it becomes older

You have to watch consumption trends andmatch this - (eg. This is the wrong time to open asteak house)

Companies must plan constantly and the

plan must be based on an understanding ofmarket trends and marketing segments


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Marketing Plan - many factors

involved Consumer Analysis

Environmental Analysis

1. Target Market - you have to decide on which segment

2. Look at competitors, what are they doing

3. Market research required

4. Develop a unique marketing plan


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Fundamental Tasks in Developing aMarketing Plan

1. Target Market **

2. Implement a Marketing Program

** this recognizes that you are consumer oriented(to be able to do this, you have to recognize the difference amongpeople and understand there are different segments)


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What is a Market?

PEOPLE


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What is a Market?

PEOPLEBUT - not just ANYANY people, they have to have

Willingness to buy

Purchasing power (money)

Authority to buy



Types of Markets

Consumer Goods and Services

Industrial Goods and Services



Classes of Consumer ProductsClasses of Consumer Products

ConvenienceConvenience ShoppingShopping SpecialtySpecialty

GoodsGoods

ServicesServices

POP

14-1

$$

ATM



Various Classes of Consumer and

Industrial Goods and Services

e g . n e w

e g . M a c '

C o n v e n i e n

e g . g r o c

e g . c l o t h

S h o p p i n g

C o n s u m e

e g . t r a v

e g . b a n k

S p e c i a l t y

e g . f a s t f

C o n v e n i e n

C o n s u m e r i

r a w m a

g r a i n , s

e g . w

h a r n

e g . c i r c

c o m p o n

p a r t s

m a t e r i a

n u t s , b o

P r o d u c t i o

I n d u s t r i a l

a c c e s s o r y

t o o l s , c o m

e g . b u i l

i n s t a l l a t i

S u p p o r t

I n d u s t r i a l

G o o d s a n

Defn - industrial goodsindustrial goods are products used in the production of other

products



Industrial GoodsIndustrial Goods

Industrial goods are things used in theIndustrial goods are things used in theproduction of other productsproduction of other products

Some products are both industrial and consumerSome products are both industrial and consumergoods - eg. electricity, water, desktop PCsgoods - eg. electricity, water, desktop PCs

2 categories of industrial goods2 categories of industrial goods

Production GoodsProduction Goods

Support GoodsSupport Goods



Market Segmentation

With a large country

Many different types of people

- it is too difficult to create a product that

will satisfy everybody, that is why we

focus on a segment of the total market



Market SegmentationDefn

Grouping people according to their

similarity related to a particular

product category



Market SegmentationCharacteristics age

gender

geographic location

income

spending patterns

cultural background

demographics

marital status

education

language

mobility



Market Segmentation

4 commonly used bases for Segmentation

Descriptive

geographic locationdemographic

Behavioural

psychographic

benefits

i 3 f k



Figure 3.1 Bases for MarketSegmentation

Slide 3-7



Market Segmentation

geographic location - based upon where peoplelive (historically a popular way of dividing markets)

demographic - based upon age, gender and incomelevel (very often used)



Market Segmentation

Psychographic / lifestyles - based on peoplesopinions, interests, lifestyles

eg, people who like hard rock music probably prefer

beer to wine

benefits - based on the different expectation thatcustomers have about what a product/service can do

for themeg. People who want to but lite food cause ti will help

them lose weight



Geographic location of Canadians

most live in Toronto - Montreal axis

+ Vancouver

most live along east-west line close

to the American border

P t Di t ib ti f th



Percentage Distribution of thePopulation of Canada by Province

Slide 3-8

+, Ontario

contains

52% of

foreign born

people in

Canada

Geographic Segmentation


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Impact of Immigration

Ontario contains 51.8% of Canadasliving foreign-born people

Most of these people live in Toronto

Canadas urban population is growingfor 2 reasons

1. Immigrants come to Canada and

make their homes in the cities2. Canadians are moving out of the

rural areas and in to the cities


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Figure 3.4 UrbanRural PopulationDistribution, 18711991

Slide 3-9



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The reason why we study geographic segmentation isbecause WHERE people live has a big effect on their

consumption patterns.

Additionally, WHERE people live in a city is also a

reflection of their income level and we can make

certain assumptions about their ABILITY TO SPEND

based upon their address.

This helps people plan store locations and the location

of other services.


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Climate:

winter equipment and recreation are effected by

geographic location

you will sell more snow shovels in Northern Ontario

than southern Ontario , BUT, population in Northern

Ontario is very small

clothing purchases are also effected by

climate/geography


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Demographic Segmentation

Demographic Segmentation isthe most common

approachto Market Segmentation

Variables are:

age

gender (male/female)

income

occupation

education

household (family - style) size


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Demographic Segmentation isthe most commonapproachto Market Segmentation

Variables are:

gender (male/female)gender (male/female)

gender is an obvious way to divide the market into

segments since so many products are gender-specific

clothing

medical products

sports products/services

entertainment Examples ??


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Variables are:

age age is another obvious way to divide the market into

segments since so many products are based upon

time of life

diapers for babies

toys for children

entertainment for over 19Examples ??


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age

also, people have different consumption patterns at

different ages

eg. Milk products

children and teens drink a lot of milk

adults dont

older adults need calcium, but dont drink milk(they take pills)

Examples ??

Slide 3 10


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Figure 3.5 Population Projectionsby Age Group

Slide 3-10



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Demographic Segmentation isthe most common

approachto Market Segmentation

Variables are:


Segmenting by the stages in the family life cycle

(page 45)

There are different buying characteristics of people

in each stage of the family


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BUYING PATTERNS

0-5 young children

6-19 school children

20-34 young adults

35-49 younger middle-aged

50-64 older middle-aged

65+ seniors

80+ SUPER seniors


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THE CHANGING HOUSEHOLD

half of the households in Canada are only one, or

two people number of married couples forming a household is

decreasing

many unmarried people, and old widowed people,

live by themselves


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FAMILY LIFE CYCLE STAGES

1. Young Single

2. Young Married with no Children (DINKS)

3. Young - married with children

- divorced without children

- divorced with children


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4. Middle Aged

a. married without children

b. divorced without children

c. married with children

d. divorced with children

e. married without dependent children

f. divorced without dependent children


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5. Older

a. older married

b. older unmarried (divorced, widowed)

6. other


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SSWDs

single separated widowed divorced

in Canada, 1.6 million people live alone- they buy different sizes of products

eg. Single serving soup, etc.


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Variables are:

age gender (male/female)

income

occupation

education



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income

Segmenting markets on the basis of income and

expenditure patterns

- The number of single mom families has increased by

12.8% between 1985 and 1994

- Male single parent families have more income, on

average, than Female single parent families

(chart 3.6)


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Engels Laws

As family income increases

a smaller % goes for food - TRUE

the % spent on housing and householdoperations and clothing will remain

constant (that is grow as total income

grows) - FALSE in reality this amount declines

the % spent on recreation, education will

increase - TRUE, but there are exceptions


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Engels Laws

Why is this important

because marketing managers can use this law

to figure out what will happen (ie. What kinds

of spending patterns will develop) if peoplesincomes increase

also, if you are planning on going into a new

market, where people have more money - this

law helps you to plan how peoplesspending patterns will be different


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Psychographic Segmentation

The use of psychological attributes,

lifestyles and attitudes in determining

the behavioral profiles of differentcustomersTEXT

The use of detailed information to understanddifferences in what people buy

WTGR

psychological


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Psychographic profiles on a target market segment are

obtained by doing a lot of questionnaires and surveys to

ask people if they agree/disagree with certain statements

made about particular activities, interests or opinions

AIO - activities, interests, and opinions

http://ourworld.compuserve.com/homepages/finkleman/psychogr.htm


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Thompson Lightstone

Segments

1. Passive/Uncertain

2. Mature

3. Home Economists

4. Active/Convenience

5. Modern Shoppers

6. Traditional Home/Family Oriented

http://www.goldfarbconsultants.com/who


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LIFESTYLE PROFILES

Table 3.8 - HOW DO YOU FIT?


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Benefit Segmentation

It is based on the Attributes (characteristics) of

products, as seen by the customers

example, people buy something because it

causes a benefitie. Diet coke - less sugar, lose weight

ie. Extra white toothpaste, whiter teeth, better smile


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Many marketers now consider benefit

segmentation one of the most useful methodsof classifying markets

ie. Watches

- the benefits customers looked for where durability andproduct quality- older research was based on dividing the

watch market according to a different segment - once they

used the new segment, they changed the marketing plan-

modern example would be price of PCs for home use -biggest use is entertainment NOT schoolwork or home based

businesses


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Benefit Segmentation of theToothpaste Market

Segment Name

The

The Sensory The IndependentSegment Sociables The Workers Segment

Principal benefit sought Flavour, product Brightness Decay Price

appearance of teeth prevention

Demographic strengths Children Teens, young Large families Men

people

Special behavioural Users of Smokers Heavy users Heavy users

characteristics spearmint-

flavoured

toothpaste

Brands disproportionately Colgate, MacLeans, Crest Brands

flavoured Stripe Plus White, on sale

Ultra BritePersonality characteristics High self- High High High

involvement sociability hypochondriasis autonomy

Lifestyle characteristics Hedonistic Active Conservative Value-

oriented


Slide 3-12


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Figure 3.9 Segmentation Bases forIndustrial Markets

Segmentation for Industrial Markets


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Geographic Segmentationuseful for the automotive industry

Product Segmentationie. Special parts and components

Segmentation by End-Use Application

ie. Paint mfg. Paint for waterproof applications,paint for rust prevention, paint which sticks to glass

Segmentation for Industrial Markets

Professor Richardson

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