MKTG 311 1st Edition Lecture 12Outline of Last Lecture I. Who makes the Purchases?II. Roles in the Buying CenterIII. Business Buying Decision ProcessIV. North American Industry Classification System (NAICS)V. Ch. 9- The Target Marketing ProcessVI. Step 1: Segmenting Consumer MarketsA. Segmenting by GeographyOutline of Current Lecture I. Step 1: Segmenting Consumer MarketsB. Segmenting by DemographicsC. Segmenting by PsychographicsD. Segmenting by BehaviorII. PRIZMneIII. Segmenting Industrial MarketsIV. Step 2: TargetingCurrent LectureI. Step 1: Segmenting Consumer MarketsB. Segmenting by Demographics (Measurable characteristics pertaining to the human population. Example: Gender, age, income, education)Gender: Example of industries that segment by gender: clothing, cosmetics, toiletries, magazines.Life stage: The stages that consumers progress through life graduation.Household size: Example: Automotive IndustryMarital Status: Example: Jewelry IndustryThese 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.Income and Education: (Prestige of the product)More ExamplesThe Wall Street Journal: Occupation and educationESPN: Gender and AgeNintendo: Age and IncomeC. Segmenting by Psychographics- Segment the market through psychographics- Goes beyond characteristics like age and income. Looks at one’s activities, interests andone’s opinions. Answers the question- How consumers may appear statistically similar, yet their needs/wants are different.- 3 Tools for Psychographic Segmentation1. Social class: 7 social classes based on income, occupation, education, and wealth. *Working class: Largest social class.2. VALS: Values and Lifestyle Segmentation. Segments US consumers into 8 psychographic segments. Based on resources and motivation type.3. Personality typeD. Segmenting by Behavior- It slices consumers on the basis of how they act toward, feel about or use a product.- User Status- User of the product: 1st time user and regular users. Non userof the product: Never used the product, Ex-User.- Usage Rate: Heavy user, moderate user, light user of the product. Relates to a marketing rule. 80/20 Rule: 80% of a company’s profits, come from 20% of its customers.- Loyalty Status: How loyal are consumers to the product? Very loyal or likely to switch?- Usage Occasions: Are there certain occasions that prompt increased usage of the product?II. PRIZMne( new edition): Geographic Segmentation tool- Segments the consumer market on both geographic and demographics factors. Segment each US zip code into 1 of 66 segments. 1- Most affluent, 66- least affluent.CharacteristicsAge, income, education, occupation, housing, race/ethnicity, family composition.III. Segmenting Industrial MarketsIV. Step 2: Targeting1. Evaluate the attractiveness of the market segments.2. Select which of the segments we want to invest our resources.What does evaluating involve?1. Determine market size and growth if large market, may be too difficult for small companies. If lot of growth, competitors will enter.2. Structural factors: How many competitors? How many substitute products?3. Cost of reaching a segment?4. Compatibility with company objectives and resources?Selecting the Target Market: 4 Ways1. Concentrated Marketing (Niche Marketing) - Focus our efforts on a small market segment/ niche and offer 1 or more products to that niche. Example: Specialty Retailers2. Undifferentiated Marketing- Target the entire market with 1 offer. To work, themarket must have similar needs or differences that are trivial. It appeals to a wide spectrum. Example: Walmart3. Differentiated Marketing- Target several market segments with a separate and distinct marketing segments with a separate and distinct marketing offer for each. Each brand has a distinctive image. Example: L’Oreal- L’Oreal and Lancôme. L’Oreal- Mass merchant retailers, Walgreens, rite aid, etc. Lancôme- Upper end department