Marketing Test 2 Study Guide Chapter 8 Market People consumer markets or organizations business markets with needs or wants and the ability and willingness to buy willing to exchange their resources money or credit for desired products Market Segment A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs Two extremes o Can define every person and every organization in the world as a market segment because each is unique o Can define the entire consumer market as one large market segment and the business market as another large segment Market Segmentation The process of dividing a market into meaningful relatively similar and identifiable segments or groups Purpose is to enable the marketer to tailor marketing mixes to meet the needs of one or more specific segments Importance of Market Segmentation o Markets have a variety of product needs and preferences Coca Cola offers more than a dozen different products to market segments based on diverse consumer preferences for flavors and calorie and caffeine content o Marketers can better define customer needs and needs more precisely o Decision makers can define objectives and allocate resources more Performance can be better evaluated when objectives are more accurately precise Criteria for Successful Segmentation a segmentation scheme must produce segments that meet four basic criteria 1 Substantiality a Segment must be large enough to warrant a special marketing mix 2 Identifiability and Measurability a Segments must be identifiable data about population and their size measurable 3 Accessibility 4 Responsiveness a Members or targeted segments must be reachable with marketing mix senior citizens individuals who don t speak English and the illiterate are hard to reach a Unless segment responds to a marketing mix differently no separate treatment is needed if all customers are equally price conscious about a product there is no need to offer high medium and low priced versions to different segments Bases for Segmentation Marketers use segmentation bases variables which are characteristics of individuals groups or organizations to divide a total market into segments o Key is to identify bases that will produce substantial measurable and accessible segments that exhibit different response patterns to marketing mixes Single variable segmentation age simpler and easier to use Multiple variable segmentation age gender education harder to use usable secondary data are less likely to be available as the number of segmentation bases increases the size of individual segments decreases more precise current trend 1 Geography Region of the country or world market size market density number of people within a unit of land and climate a Benefits i New ways to generate sales in sluggish and competitive markets ii Scanner data allow assessment of best selling brands in region give an accurate assessment of which brands sell best in their region iii Regional brands appeal to local preferences iv Allows consumer goods companies to react quicker to competition 2 Demographics a Age i Newborns infants young children tweens Generation Y teens young adults 1979 1994 large purchasing power try whatever is trendy and new covet brand status Generation X disloyal to brands skeptical of big business desire an experience baby boomers 1946 1964 want attention and service when they shop not particularly brand loyal very diverse group and seniors living longer and healthier i Women make over 70 of purchases of consumer goods Income level influences consumers wants and determines their buying power b Gender c Income i d Ethnic i Largest ethnic markets are 1 Hispanic Americans 2 African Americans 3 Asian Americans as they continue to expand e Family Life Cycle ii Companies must make products geared toward specific ethnic groups i A series of stages determined by a combination of age marital status and the presence or absence of children single adults are increasingly in the majority consumers are especially receptive to marketing efforts at certain points in the lifestyle Young single Few financial burdens fashion opinion leaders recreation oriented Buy basic kitchen equipment basic furniture cars equipment for mating game vacations Young married or divorced without children Better off financially than they will be in the near future highest purchase rate and highest average purchase of durables Buy cars refrigerators stoves sensible and durable furniture vacations Young married or divorced with children Home purchasing at peak liquid assets low dissatisfied with financial position and amount of money saved interested in new products like advertised products Buy washers dryers televisions baby food chest rubs cough medicine vitamins dolls wagons sleds skates Middle aged married or divorced with or without children Financial position still better more wives work some children get jobs hard to influence with advertising high average purchase of durables Buy new and more tasteful furniture auto travel unnecessary appliances boats dental services magazines Middle aged married or divorced without dependent children Home ownership at peak most satisfied with financial position and money saved interested in travel recreation self education make gifts and contributions not interested in new products Buy vacations luxuries home improvements Older married Drastic cut in income keep home Buy medical appliances medical care products that aid health sleep and digestion Older unmarried Drastic cut in income special need for attention affection and security Buy same medical and product needs as other older group 3 Psychographics Market segmentation on the basis of personality reflects a person s traits attitudes and habits motives lifestyles the way people spend their time the importance of things around them their beliefs and socioeconomic characteristics and geodemographics clusters potential customers into neighborhood lifestyle categories 4 Benefits Sought The process of grouping customers into market segments according to the benefits they seek from the product ex for snack industry nutritional snackers weight watchers guilty snackers party snackers indiscriminate snackers and economical snackers 5 Usage Rate Divides a market by the amount of product bought or consumed former uses potential users first time users light or irregular users medium users and heavy users 80 20 principle 20 of all customers generate 80
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