Unit 2 Understanding the Consumer Ch5

What is a Business Opportunity? A chance for success based on a product idea and a market that will buy it Developing a business plan and a marketing plan are important to a business’ success The marketing plan includes the marketing mix

Target Market Target market segment of a larger market whose wants and needs you will try to meet with a specific marketing mix Ask students: Why does a marketing strategy include the target market? Ch5

Marketing Mix Marketing mix decisions are made with the target market in mind.

Target Market Qualities of a good target market clearly defined needs and wants that your company can meet money to buy your product willingness and authority to buy your product enough customers in the market to be profitable Ask students: What problems could arise if the target market does not have all four qualities? Ch5

Mass Marketing A mass market consists of all the customers for a specific type of product (e.g. Pepsi,). Mass marketing is the development of only one market mix for a specific product. assumes that everyone’s wants and needs for a product are exactly the same Ask students: Why do you think mass marketing campaigns are usually unsuccessful? Ch5

Mass Marketing Example Automotive All customers – are considered to have the same wants and needs for a car.

Mass Marketing Commercial Volvo Commercial

Mass Marketing Two problems with mass marketing diversity of consumer markets profitability problems Ask students: How could diversity and profitability be problems for mass marketers? (Continued) Ch5

Mass Marketing Consumer markets are diverse. contain many subgroups with very different needs and wants needs within a mass market differ one type of shoe will not meet the needs of everyone One type of car will not meet the needs of everyone Ask students: Why would you and your parents want different types of cars? (Continued) Ch5

Target marketing is the answer to problems with mass marketing. Profitability if a product doesn’t meet enough consumers’ needs, there might not be enough sales to make a profit advertising to a mass market is expensive Target marketing is the answer to problems with mass marketing.

Target Marketing When target marketing choose a subgroup of the mass market that has the same needs and wants for your product this subgroup is your target market create a unique marketing mix for your target market

Target Market Commercial

Target Market Commercial Toyota – Lets Go Summer

Segmented Markets for Cars Customers can be organized into many market segments based on wants for a specific type of car: Some want an economy car Some want a luxury car Some want a truck Some want a sports car

Segmenting a Market Market segmentation process of dividing a large market into smaller parts each of these smaller parts is called a segment Market Market Segments (Continued)

Segmenting a Market The purpose of market segmentation is to find a target market with similar wants and needs for your product money to buy your product the will and authority to buy your product enough size to be profitable Ask students: How is a target market different from a mass market? (Continued) Ch5

Segmenting a Market Segmentation variable customer characteristic used to segment a market Age Income (Continued)

Segmenting a Market Segmentation variables are organized into four categories. geographic demographic psychographic behavioural Ask students: What customer characteristics come to mind when you consider these categories? Ch5

Geographic Variables Geographic segmentation dividing a market based on where customers live Geographic variables include location climate community size

Location Location customs of place (not the same as climate)‏ Example: car manufacturer Canadian market: metric system indicators U.S. market: imperial system indicators Ask students: What products do we need where we live in Canada that are not needed in other locations? Ch5

Climate Different climates require different types of products, such as clothing automobile tires housing heating and air conditioning

Demographic Variables Demographic information statistics (numbers) that describe the characteristics of a population collected in a census Census count of the people in a country made by the government on a regular basis Statistics Canada: conducts census every 5 years (Continued)

Demographic Variables Demographic information is organized into demographic variables, including age gender ethnicity income family size and make-up Ask students: Choose a demographic variable. How would you use it to segment a market? (Continued) Ch5

Age People of different ages have different needs and wants. Generation group of people who were born or grew up during a particular period of history people in the same generation generally have similar attitudes, wants, and needs. the Canadian consumer market is often segmented by generations. Ask students: Think of the market for clothing. How is it segmented by age? Ch5

Ethnicity Needs for many products vary with culture and ethnicity. Examples ingredients for culture-specific dishes items for religious practices In Canada, people enjoy products produced for a wide range of cultures. Ask students: What products do you enjoy that were produced for cultures other than your own? Ch5

Income Marketers are interested in two categories of income. disposable income money left after taxes are taken out discretionary income money left after taxes are taken out and after necessities are paid for A market is often segmented based on income levels.

Family Make-up Families of different sizes have different needs. Ask students: Describe the differences in purchases between a single person and a large family. Ch5

Psychographic Variables Psychographic segmentation based on psychological characteristics of customers Psychographic variables include hobbies social activities lifestyle interests attitudes

Hobbies and Activities People who participate in the same hobbies and activities often buy similar things. Examples of hobbies and activities photography crafts stamp collecting sports cultural events Ask students: Name a hobby or activity. What kinds of products would people in this hobby or activity buy? Ch5

Lifestyle To discover lifestyle and values, marketers may use the VALS™ Survey. eight VALS™ segments organized by level of resources and personal motivation information used to meet the unique needs of the target market Take the VALS™ survey Ch5

Behavioural Variables Behavioural segmentation dividing a market based on the way customers use a product Behavioural variables include features desired usage rate brand loyalty

Usage Rate 80/20 rule most of the profits (80%) come from a few customers (20%) who show the greatest brand loyalty Marketers often segment the market based on customer usage rates. heavy, moderate, light, nonuse Ask students: Do you have any experiences that would support the 80/20 rule? Ch5

Combining Variables Marketers often target a market based on two or more segmentation variables. Geographic location and income is a common combination.

Market Segment Profile a detailed description of the typical customer in a market segment includes information on geographic variables demographics psychographics behaviour relevant to the product