© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 1 Segmentation

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 2 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 3 Segmentation Market Segmentation Defn “Grouping people according to their similarity related to a particular product category”

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 4 Segmentation Market Segmentation Two Step Process 1. Naming broad product-markets 2. Segmenting these to select target markets

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 5 Segmentation Clustering Marketing-Oriented managers know that segmenting involves clustering people with similar needs into a market

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 6 Segmentation Market Segmentation Four Criteria for determining if the segment you have is useful 1. Homogenous 2. Heterogenous 3. Substantial 4. Operational

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 7 Segmentation Market Segmentation Four Criteria 1. Homogenous - the people within the segment are all similar 2. Heterogenous - the people between segments should be very different 3. Substantial - the segment should have enough people to make to worthwhile 4. Operational - the dimensions should be useful

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 8 Segmentation Market Segmentation Characteristics age gender geographic location income spending patterns cultural background demographics marital status education language mobility

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 9 Segmentation Market Segmentation 4 commonly used bases for Segmentation Descriptive geographic location demographic Behavioural psychographic benefits

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 10 Segmentation Figure 3.1 Bases for Market Segmentation Slide 3-7

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 11 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 12 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 13 Segmentation Geographic location of Canadians most live in Toronto - Montreal axis + Vancouver most live along east-west line close to the American border

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 14 Segmentation Percentage Distribution of the Population of Canada by Province Slide 3-8 +, Ontario contains 52% of foreign born people in Canada Geographic Segmentation

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 15 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 16 Segmentation Figure 3.4 Urban–Rural Population Distribution, 1871–1991 Slide 3-9 Geographic Segmentation

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 17 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 18 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 19 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 20 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 21 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 22 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 23 Segmentation Figure 3.5 Population Projections by Age Group Slide 3-10 Demographic Segmentation

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 24 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 25 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 26 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 27 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 28 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 29 Segmentation Demographic Segmentation household (family - style) size FAMILY LIFE CYCLE STAGES 5. Older a. older married b. older unmarried (divorced, widowed) 6. other

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 30 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 31 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 32 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 33 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 34 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 35 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 36 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 37 Segmentation Psychographic Segmentation Goldfarb Segments 1. Day2day watchers 2. Old fashioned Puritans 3. Responsible survivors 4. Joiner-Activists 5. Aggressive Achievers 6. Disinterested Self-Indulgents More traditional Less traditional

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 38 Segmentation Psychographic Segmentation Page 51~52 Thompson Lightstone Segments 1. Passive/Uncertain 2. Mature 3. Home Economists 4. Active/Convenience 5. Modern Shoppers 6. Traditional Home/Family Oriented

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 39 Segmentation Psychographic Segmentation LIFESTYLE PROFILES Table HOW DO YOU FIT?

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 40 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 41 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 42 Segmentation 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 Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 43 Segmentation Figure 3.9 Segmentation Bases for Industrial Markets Slide 3-12 Segmentation for Industrial Markets

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 44 Segmentation 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

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 45 Segmentation Criteria for Segmenting Single Target Market approach Multiple Target Market approach Combined Target Market approach

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 46 Segmentation Criteria for Segmenting Combined Target Market approach Eg. A company that makes garlic flavoured cream cheese competition is companies that use single market approach and make roasted garlic and garlic and herb cream cheese “… too much combining is risky …”

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 47 Segmentation Segmenting “...Should you Segment, or Combine …” the text says it is better to segment - also, depends on which gives you the best profit TR - it also depends on what competition does !

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 48 Segmentation Profit is the Balancing Point In trying to determine whether you should divide the market up into many segments, and sell variations of the product to different segments, or sell the same product to everybody, the deciding factor is based on which option will give you the most profit

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 49 Segmentation Market Segmentation “… cost considerations encourage more aggregating to obtain economies of scale … demand considerations suggest less aggregating to satisfy needs more exactly…” …” what does this mean ?

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 50 Segmentation Market Segmentation “… Segmenting is an aggregating process …” what does this mean ?

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 51 Segmentation Market Segmentation Aggregate - 1. collected; collective, total 2. Sum total 3. Unite - Oxford Pocket Dictionary TR. - all the stuff together Aggregating - putting things together which are similar

© Professor Tim Richardson matches some of Chpt 3 in Wong, 11 th ed. slide 52 Segmentation Market Segmentation Aggregating “… how far should the aggregating go …”? - sometimes not everybody will fit, you can leave them out, or just call it “other” “… these people are simply too few … may have to be ignored unless they are willing to pay a high price for special treatment…”