Professor Richardson S E G M E N T A T I O N slide 1

Professor Richardson S E G M E N T A T I O N slide 2 Purpose of this section 1. Introduce the Concept of the MARKETING PLAN 2. To Define Market Segmentation 3. Present 4 types of market segmentation 4. Aspects of the Canadian market 5. Main types of segmentation in industrial markets

Professor Richardson S E G M E N T A T I O N slide 3 Baby Boomers & Chicken Purpose of this discussion is to explain the advantages of carefully watching how a market segment acts as it becomes older You have to watch consumption trends and match this - (eg. This is the wrong time to open a steak house) “ Companies must plan constantly and the plan must be based on an understanding of market trends and marketing segments”

Professor Richardson S E G M E N T A T I O N slide 4 Marketing Plan - many factors involved Consumer Analysis Environmental Analysis 1. Target Market - you have to decide on which segment 2. Look at competitors, what are they doing 3. Market research required 4. Develop a unique marketing plan

Professor Richardson S E G M E N T A T I O N slide 5 Fundamental Tasks in Developing a Marketing Plan 1. Target Market ** 2. Implement a Marketing Program ** this recognizes that you are “consumer oriented (to be able to do this, you have to recognize the difference among people and understand there are different segments)

Professor Richardson S E G M E N T A T I O N slide 6 What is a Market? PEOPLE

Professor Richardson S E G M E N T A T I O N slide 7 What is a Market? PEOPLE ANY BUT - not just ANY people, they have to have Willingness to buy Purchasing power (money) Authority to buy

Professor Richardson S E G M E N T A T I O N slide 8 Types of Markets Consumer Goods and Services Industrial Goods and Services

Professor Richardson S E G M E N T A T I O N slide 9 Classes of Consumer Products ConvenienceShoppingSpecialty Goods Services POP 14-1 $ $ ATM

Professor Richardson S E G M E N T A T I O N slide 10 Various Classes of Consumer and Industrial Goods and Services industrial goods Def’n - industrial goods are products used in the production of other products

Professor Richardson S E G M E N T A T I O N slide 11 Industrial Goods Industrial goods are things used in the production of other products Some products are both industrial and consumer goods - eg. electricity, water, desktop PCs 2 categories of industrial goods Production GoodsProduction Goods Support GoodsSupport Goods

Professor Richardson S E G M E N T A T I O N slide 12 Market Segmentation With a large country Many different types of people - it is too difficult to create a product that will satisfy everybody, that is why we focus on a segment of the total market

Professor Richardson S E G M E N T A T I O N slide 13 Market Segmentation Defn “Grouping people according to their similarity related to a particular product category”

Professor Richardson S E G M E N T A T I O N slide 14 Market Segmentation Characteristics age gender geographic location income spending patterns cultural background demographics marital status education language mobility

Professor Richardson S E G M E N T A T I O N slide 15 Market Segmentation 4 commonly used bases for Segmentation Descriptive geographic location demographic Behavioural psychographic benefits

Professor Richardson S E G M E N T A T I O N slide 16 Figure 3.1 Bases for Market Segmentation Slide 3-7

Professor Richardson S E G M E N T A T I O N slide 17 Market Segmentation geographic location - based upon where people live (historically a popular way of dividing markets) demographic - based upon age, gender and income level (very often used)

Professor Richardson S E G M E N T A T I O N slide 18 Market Segmentation Psychographic / lifestyles - based on people’s opinions, interests, lifestyles eg, people who like hard rock music probably prefer beer to wine benefits - based on the different expectation that customers have about what a product/service can do for them eg. People who want to but “lite” food cause ti will help them lose weight

Professor Richardson S E G M E N T A T I O N slide 19 Geographic location of Canadians most live in Toronto - Montreal axis + Vancouver most live along east-west line close to the American border

Professor Richardson S E G M E N T A T I O N slide 20 Percentage Distribution of the Population of Canada by Province Slide 3-8 +, Ontario contains 52% of foreign born people in Canada Geographic Segmentation

Professor Richardson S E G M E N T A T I O N slide 21 Impact of Immigration Ontario contains 51.8% of Canada’s living foreign-born people Most of these people live in Toronto Canada’s urban population is growing for 2 reasons 1. Immigrants come to Canada and make their homes in the cities 2. Canadians are moving out of the rural areas and in to the cities

Professor Richardson S E G M E N T A T I O N slide 22 Figure 3.4 Urban–Rural Population Distribution, 1871–1991 Slide 3-9 Geographic Segmentation

Professor Richardson S E G M E N T A T I O N slide 23 Geographic Segmentation The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns. Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND based upon their address. This helps people plan store locations and the location of other services.

Professor Richardson S E G M E N T A T I O N slide 24 Geographic Segmentation Climate: winter equipment and recreation are effected by geographic location you will sell more snow shovels in Northern Ontario than southern Ontario, BUT, population in Northern Ontario is very small clothing purchases are also effected by climate/geography

Professor Richardson S E G M E N T A T I O N slide 25 Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: age gender (male/female) income occupation education household (family - style) size

Professor Richardson S E G M E N T A T I O N slide 26 Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: gender (male/female) gender is an obvious way to divide the market into segments since so many products are gender-specific clothing medical products sports products/services entertainment Examples ??

Professor Richardson S E G M E N T A T I O N slide 27 Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: age age is another obvious way to divide the market into segments since so many products are based upon “time of life” diapers for babies toys for children entertainment for “over 19” Examples ??

Professor Richardson S E G M E N T A T I O N slide 28 Demographic Segmentation age also, people have different consumption patterns at different ages eg. Milk products children and teens drink a lot of milk adults don’t older adults need calcium, but don’t drink milk (they take pills) Examples ??

Professor Richardson S E G M E N T A T I O N slide 29 Figure 3.5 Population Projections by Age Group Slide 3-10 Demographic Segmentation

Professor Richardson S E G M E N T A T I O N slide 30 Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: household (family - style) size Segmenting by the “stages in the family life cycle” (page 45) There are different buying characteristics of people in each stage of the family

Professor Richardson S E G M E N T A T I O N slide 31 Demographic Segmentation household (family - style) size BUYING PATTERNS 0-5young children 6-19school children 20-34young adults 35-49younger middle-aged 50-64older middle-aged 65+seniors 80+ SUPER seniors

Professor Richardson S E G M E N T A T I O N slide 32 Demographic Segmentation household (family - style) size THE CHANGING HOUSEHOLD half of the households in Canada are only one, or two people number of married couples forming a household is decreasing many unmarried people, and old widowed people, live by themselves

Professor Richardson S E G M E N T A T I O N slide 33 Demographic Segmentation household (family - style) size FAMILY LIFE CYCLE STAGES 1. Young Single 2. Young Married with no Children (DINKS) 3. Young - married with children - divorced without children - divorced with children

Professor Richardson S E G M E N T A T I O N slide 34 Demographic Segmentation household (family - style) size FAMILY LIFE CYCLE STAGES 4. Middle Aged a. married without children b. divorced without children c. married with children d. divorced with children e. married without dependent children f. divorced without dependent children

Professor Richardson S E G M E N T A T I O N slide 35 Demographic Segmentation household (family - style) size FAMILY LIFE CYCLE STAGES 5. Older a. older married b. older unmarried (divorced, widowed) 6. other

Professor Richardson S E G M E N T A T I O N slide 36 Demographic Segmentation household (family - style) size SSWD s single separated widowed divorced in Canada, 1.6 million people live alone - they buy different sizes of products eg. Single serving soup, etc.

Professor Richardson S E G M E N T A T I O N slide 37 Demographic Segmentation Demographic Segmentation is the most common approach to Market Segmentation Variables are: age gender (male/female) income occupation education household (family - style) size

Professor Richardson S E G M E N T A T I O N slide 38 Demographic Segmentation income Segmenting markets on the basis of income and expenditure patterns - The number of single mom families has increased by 12.8% between 1985 and Male single parent families have more income, on average, than Female single parent families (chart 3.6)

Professor Richardson S E G M E N T A T I O N slide 39 Engel’s Laws As family income increases …… a smaller % goes for food - TRUE the % spent on housing and household operations and clothing will remain constant (that is grow as total income grows) - FALSE in reality this amount declines the % spent on recreation, education will increase - TRUE, but there are exceptions

Professor Richardson S E G M E N T A T I O N slide 40 Engel’s Laws Why is this important…… because marketing managers can use this law to figure out what will happen (ie. What kinds of spending patterns will develop) if people’s incomes increase also, if you are planning on going into a new market, where people have more money - this “law” helps you to plan how people’s spending patterns will be different

Professor Richardson S E G M E N T A T I O N slide 41 Psychographic Segmentation “The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers” TEXT The use of detailed information to understand differences in what people buy WTGR psychological

Professor Richardson S E G M E N T A T I O N slide 42 Psychographic Segmentation Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions AIO - activities, interests, and opinions

Professor Richardson S E G M E N T A T I O N slide 43 Psychographic Segmentation Thompson Lightstone Segments 1. Passive/Uncertain 2. Mature 3. Home Economists 4. Active/Convenience 5. Modern Shoppers 6. Traditional Home/Family Oriented html

Professor Richardson S E G M E N T A T I O N slide 44 Psychographic Segmentation LIFESTYLE PROFILES Table HOW DO YOU FIT?

Professor Richardson S E G M E N T A T I O N slide 45 Benefit Segmentation “It is based on the Attributes (characteristics) of products, as seen by the customers” example, people buy something because it causes a benefit ie. Diet coke - less sugar, lose weight ie. Extra white toothpaste, whiter teeth, better smile

Professor Richardson S E G M E N T A T I O N slide 46 Benefit Segmentation “Many marketers now consider benefit segmentation one of the most useful methods of classifying markets” ie. Watches - the benefits customers looked for where durability and product quality- older research was based on dividing the watch market according to a different segment - once they used the new segment, they changed the marketing plan- modern example would be price of PCs for home use - biggest use is entertainment NOT schoolwork or home based businesses

Professor Richardson S E G M E N T A T I O N slide 47 Benefit Segmentation of the Toothpaste Market Segment Name The The SensoryTheIndependent SegmentSociablesThe WorkersSegment Principal benefit soughtFlavour, productBrightnessDecayPrice appearanceof teethprevention Demographic strengthsChildrenTeens, youngLarge familiesMen people Special behaviouralUsers ofSmokersHeavy usersHeavy users characteristicsspearmint- flavoured toothpaste Brands disproportionatelyColgate,MacLean’s,CrestBrands flavouredStripePlus White,on sale Ultra Brite Personality characteristicsHigh self-HighHighHigh involvementsociabilityhypochondriasisautonomy Lifestyle characteristicsHedonisticActiveConservativeValue- oriented Benefit Segmentation

Professor Richardson S E G M E N T A T I O N slide 48 Figure 3.9 Segmentation Bases for Industrial Markets Slide 3-12 Segmentation for Industrial Markets

Professor Richardson S E G M E N T A T I O N slide 49 Geographic Segmentation useful for the automotive industry Product Segmentation ie. Special parts and components Segmentation by End-Use Application ie. Paint mfg. Paint for waterproof applications, paint for rust prevention, paint which sticks to glass Segmentation for Industrial Markets