MKT 230 1st Edition Lecture 9 Outline of Last Lecture I. Step 3: Collecting Dataa. Probability and Non-Probabilityb. Survey MethodsII. Step 4: Interpret Research FindingsIII. Step 5: Report Research FindingsIV. TechnologyV. Marketing EthicsOutline of Current Lecture - Monday, February 16, 2015I. Target Marketsa. Market SegmentationII. Step 1: Identify Appropriate Targeting StrategiesIII. Step 2: Determining Which Segmentation and Variables to UseIV. Step 3: Develop Market Segment ProfileCurrent LectureI. Target Markets- 2 Basic Types of Marketso Consumer Markets: People that buy products are consumers, usually largeo Business Markets: People that buy the products use them for business, can be small but can get somewhat large as well- Consumer Marketso DO NOT buy products to make profitso Products are for personal useThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Business Marketso DO buy products to make a profit or accomplish organizational objectives- Cross Over Productso Example: Bag Balm – intended for Business market for the dairy industry and crossed over to the consumer market to meet a variety of consumer needs- Target Market Selection Process1. Identify appropriate targeting strategy2. Determine which segmentation variables to use3. Develop market segment profiles4. Evaluate relevant market segments5. Select specific target marketso Target Market – A group that we put together a marketing mix foro Market Segment – Individuals, groups, or organizations with one or more similar characteristics that cause them to have similar needso Market Segmentation – process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches these needs- Why do we segment?o To avoid wasting time marketing to the wrong target marketo To break down a large target market into smaller groups that are more specifico Who is buying our products now? Who could be in the future?o Allows a company to personalize the productso You can get better information for a specific group- Market Segmentation o Reason for using market segmentation: firms are better able to develop a marketing mix that satisfies a small portion of a heterogeneous marketo Segmentation variables – characteristics of individuals, groups, or organizations used to divide a market into segments1. Example: Age, race, gender, location, average household incomeII. Step 1: Identify Appropriate Targeting Strategies- Undifferentiated Targeting Strategieso Should be a homogeneous market (customers have similar needs for a product)o A single marketing mix is directed at the entire marketo Organization  Single Marketing Mix  1 target market- Differentiated Targeting Strategyo Applied to a heterogeneous marketo Targets two or more segments with a separate marketing mix for eacho Organization  Marketing Mix 1 and Marketing Mix 2  Target Market with different Segments- Concentrated Targeting Strategyo Heterogeneous market (individuals or organizations with diverse needs for a product in the same class)o Targets a single market segment using 1 marketing mixo Organization  Single Marketing Mix  Different Target MarketsIII. Step 2: Determine which segmentation variables to use- Segment Variables – Characteristics of individuals, groups, or organizations used to divide a market into segmentso Demographico Psychographico Geographico Behavioristic- Easiest variable to find: Demographic or Geographic because there is already secondary data that exists to aid the company in their research- Hardest variable to find: Behavioristic or Psychographic, both require more primary research and data, they take more work and time to find than demographic or geographic varibles would- Demographico Examples: people of the age 65+ spend a lot of money on health care, marketing health care to a different age group would require different marketing mix than one that a company would use to market the to 65+ age group- Geographic o Market Density – Number of potential customers within a unit of land area1. Example: housing in South Dakota is extremely expensive because of the Market Density (high volume of oil workers looking for housing)o Geodemographic segmentation – Market segmentation that clusters people in units (zip code, neighborhoods, etc.) based on lifestyle and demographic informationo Micromarketing – approach to market segmentation in which organizations focusprecise market efforts on very similar geographic markets1. Example: snow mobiles in Alaska vs. hereo Different geographic variables1. Climate2. Population Density3. Terrain4. Urban/Rural Areas5. City Size- Values, Attitudes, and Lifestyles (VALs)o Developed by SRI Consulting Business Intelligenceo Different psychographic types that make different buying decisions- Behavioristic Variableso Usage Rages (like people who shampoo twice because the bottle tells them to)o Benefits Soughto Usage or Application Type- Benefit Segmentation – division of a market according to the benefits that the customers want from a producto Different than other segmentation methods because the benefits that customers seek are their needso Can I see the difference?  How the customer could perceive the benefits of a specific producto 3 Conditions must be met1. Benefits must be identifiable2. Customers must be divisible into segments3. At least one segment must be accessible to marketing effortsa. Example: The drinking age in Jamaica versus the US, you can’t market alcohol to people under 21 here so that market is not accessible- Variables for Segmenting Business Marketo Geographic locationo How the product is usedo Customer sizeo Types of organizationsIV. Step 3: Develop Market Segment Profiles- A market segment profile describes the similarities among potential customers within asegment- These explain the differences among