Market Segmentation The Process of dividing the market into meaningful and similar groups based needs, characteristics or behaviour

Customer vs Consumer customer consumer Person who buys the product Person who consumes/uses the product Sometimes they are the same person, sometimes not.

The 4Ps/Marketing Mix and Market Segmentation Product What is the product and who’s needs/wants does it meet? How does it meet those needs/wants?  Price how much are different market segments willing to pay? Is it different for different segments??  Place (distribution) Where are the market segment(s) you want to target? Where do they shop? How do they shop? Where are they geographically?  Promotions How will you reach your target market segment(s)? How will they know about your product? What types of promotion will different segments identify with/react to?

Market all potential customers who share needs and wants, and who have the ability and willingness to buy the product

Segmenting Your Market Sorting potential buyers into groups with common needs Groups of buyers will respond similarly to your marketing actions Market segment – the groups resulting from sorting/segmenting Target market – the market segment(s) you want to focus your marketing actions on

How do we group them? Segment Market Based On: Demographics Psychographics Geographics Put another way, we use [these above] to describe different segments of the market

Example: Apple iPhone 5s/c Market segments: Adults who are working full-time Paid for by work OR mid- to upper-income Communicate with colleagues, friends, family Tool for improving work/home efficiency Students High school, college, university Communicate with friends and family Need portable, multi-functional device

Target Marketing Evaluate each market segment’s attractiveness (profitability) Focus marketing decisions on one (or more) segment of the market

Demographics Gender Ethnic background Statistical data that describes a population in terms of personal characteristics: Income Age

Demographics Education Marital Status Home Ownership

Generational Cohorts Group of people bound together by the sharing of the experience of common historical events

Cohort: Baby Boomers Born 1946-64 (post WWII) Associated with wealth/privilege Active, physically fit Size: 9.6 m in Canada; 76 m in US

Cohort: Gen X Born 1965-80 Greater diversity: race, class, religion, ethnicity, and sexual orientation Agents of change, strong belief in individual freedom, tolerance, and human rights for all Size: 7 m in Canada; 61 m in US

Cohort: Millenials Born 1981-2000 Digital natives; trophy kids; boomerang generation “Me” Generation; narcissistic; sense of entitlement; reject social conventions Size: 9 m in Canada; 85 m in US

Other Demographic Descriptors Yuppies – Young Upwardly-mobile Professionals 20s or early 30s; middle to upper class DINKS – Dual Income, No Kids DEWKS – Dually Employed with Kids HENRYs – High Earners, Not Rich Yet

Psychographics Segmentation of a market based on peoples’: Lifestyles; attitudes; values; behaviours Don’t confuse with DEMOGRAPHICS

Geographics segmentation of a market based on where people live City, region, province/state, country, international trading areas, etc. Rural, urban, suburban

Customer Profile includes information about the target market with regard to: Demographics Psychographics Geographics Does involve stereotyping and making judgements

Examples of Customer Profiles

#1 - Customer Profile Activity Make a customer profile for 3 of these people

Sample Customer Profile Demographics: Gender: Male Age: 35-50 years old Income: $60,000-$80,000 per year Marital Status: single Level of Education: vocational/skilled trade Home Ownership: owns condominium Transportation: owns truck Psychographics: very eco-conscious, traditional values, strong work ethic Geographics: North American, urban,

#2 - Activity Think of an existing product and then think of the market for this product. Briefly describe the marketing mix for the product. Look at the entire market and try to segment the product’s market into 2 different segments. Analyze the attractiveness of each segment Example: look at each segment and think about: Which segment would buy more of the product Which segment would pay more for the product Which segment would have more money to spend on the product Compare the two segments based on your analysis Select the segment that you wish to target and explain/summarize why Write up as a report with headings, double spaced.