Market Segmentation Section 2.2 p

Market Segmentation  Market Segmentation is the process of identifying a target market by dividing the market into segments according to customer needs and characteristics. Basically you take a target market and break down into even smaller markets. This process is done so that marketers can sell their products or services more effectively.

Market Segmentation Facts  Very costly to target all groups  Must find the group of consumers who you have a clear competitive advantage  Use research to determine if the costs of development are effective  Specific information allows you to know your customers: Buying Behavior, Values, Fashion Interests, etc…

Market Segmentation  How does market segmentation get accomplished? Demographics Geographic Variables Psychographic Variables Buying Behavior

Demographics  Demographics: Refers to statistics that describe a population in terms of personal characteristics. Age (Baby Boom, Generation X, Generation Y, Generation Z) Gender (Male v. Female) Income  Disposable: Money left after taxes  Discretionary: Money left after taxes & basic needs have been paid Marital Status (Married couples with kids represent 25% of U.S.) Ethnic Background Education Occupation

Geographics  Geographics: Refers to segmenting customers based on where they live.  Segment a market geographically can be done: Locally, Regionally, Nationally, or Globally  Hispanic cultures are prevalent in L.A., Miami, New York, Texas, Arizona, etc..  African American cultures are prominent in the south

Psychographics  Psychographics involves grouping people with similar lifestyles, as well as shared attitudes, values, & opinions.  Examples: Latest Diet Trends Environmental Concerns  Behavioral Buyers: Accounting for the type of shopping they prefer. Online, In-Store, Catalog Safety Issues concerning identity

Mass Marketing v. Segmentation  Mass Marketing: Occurs when a products have universal appeal and few features to differentiate them from competitors. Not as popular as it used to be because companies prefer to cluster consumers.  Niche Marketing: Narrowing down your market and using precision to create your products

Market Segmentation Age: Old lady jeans v. Flared, Bootleg, low rise, stretch Price: High roller v. cost cutter Desired Features: Pockets, belt loops, faded, washed out, style (carpenter, cargo, etc..)

Market Segmentation  Example Product: Jeans  According to Forbes Magazine, Americans are willing to spend the following amount on a pair of jeans $20-$40 48% $40-$60 25% $80-$100 13% $100-$200 10% Over $200 4%

Market Segmentation Example  Most Expensive Jeans Most Expensive Jeans

Market Segmentation Example  Least Expensive Jeans Least Expensive Jeans

Bell Work  Why does Market Segmentation exist? What is the point of breaking down a large group of customers into a smaller, more specific group?  Develop products that meet specific wants & needs versus coming up with something you hope everyone will like.

Jean Example

Market Segmentation Assignment  You must construct a market segmentation grid based on the music industry  Age must be one of the criteria you use to segment your market In my movie example I used  13 and under (PG)  (PG-13)  18 and Over ®

Market Segmentation Assignment  The other category for segmentation is of your choosing and needs to have at least 5 criteria Gender or Group Size  Male Solo Artist  Male Duo  Male Group  Female Sole Artist  Female Group  Female Duo Genre of Music  Rap, Top 40, Classical, Country, Rock, R&B, Latin, etc…

Market Segmentation Example

Market Music Segmentation  You will need to print out a blank version & an answer key  Your grade will be determined by how well someone in the class does on your market segmentation

Bell Work  What is the difference between disposable & discretionary income? Disposable is your income after taxes are taken out Discretionary is the amount of money you have left after taxes are taken out and your basic necessities are paid for

Bell Work  What are two things that go into an environmental scan? Political Socio-Culture Technology Economics