Market Segmentation Learning Goals Describe market segmentation and the four methods used to segment a market Analyze a target market Differentiate between mass marketing and market segmentation

Analyzing Markets Market segmentation is a way of analyzing a market by specific characteristics in order to create a target market

Types of Segmentation: Demographics Psychographics Geographics Behavioral

Demographics – statistics that describe a population in terms of personal characteristics Age Gender Income Ethnic Background Education Occupation

Age Generations have collective shared experiences and common bonds Baby Boomers (1946-64) Generation X (1965-76) Generation Y (1977-97) also kown known as Millennials Generation Z (1995-2017) tech savvy (you!)

Target Market Baby Boomers (52 – 70 yrs old) Automobiles Roomy Safety Products Toyota Avalon Buick Lacrosse Lincoln Continental

Gender Female Male Target only women or men with certain products.

Income How much money do people have to spend? Disposable income – money left after taking out taxes Discretionary income – money left after paying for basic living necessities such as food, shelter, and clothing

Marital Status Married Married with children (25% of total HH’s) Less than 50% of total households 80% in 1950 Married with children (25% of total HH’s) Divorced Single, never married Domestic Partnership

Ethnic Background We are not only marketing to one culture, or one ethnicity!!

U.S. Trend – The percentage of the Caucasian population is declining, while other ethnic populations increase.

Psychographics Involves grouping people with similar lifestyles, as well as shared attitudes, values, and opinions. Activities Attitudes Personality Values

Music teachers, dancers, and other music lovers would be one category of people who share psychographic characteristics.

VALS™ is a marketing and consulting tool that helps businesses worldwide develop and execute more effective strategies. The system identifies current and future opportunities by segmenting the consumer marketplace on the basis of the personality traits that drive consumer behavior. VALS applies in all phases of the marketing process, from new-product development and entry-stage targeting to communications strategy and advertising. Click on VALS to learn more and to take a survey to determine your VALS type

Geographics – Segmentation based on where people live Local Regional National Even Global

Geographics If you want to market snowblowers, where would you focus? If you want to reach people aged 65+ where would you focus?

Behavioral Segmentation Benefits desired by consumers Shopping patterns Usage rate. Market benefits, not just the physical characteristics of a product

Behavioral Segmentation Teenagers spend less than $75 per month on entertainment. Teen-aged girls spend 15% more on music than boys Many businesses find that the 80/20 rule applies. 80 % of a company’s sales are generated by 20 % of its loyal customers.

Mass Marketing Vs Segmentation Mass marketing not as popular as it once was. One kind of Coke Niche marketing (the current trend) – markets are narrowed down and defined with extreme precision. What happened to 7-Up? The Uncola Cee Lo Green