1. Competition is Everywhere
Chapter 7

2. In what ways is Apple trying to use this advertisement to build an image as a company that offers different and better products than its competitors?
In your view, is the very simple ad effective in accomplishing that goal?
Why or why not?

3. Focus on Market Segments
7.1

4. Learning Objectives
Describe the benefits and categories of market segmentation.
Explain how to evaluate market potential.
Calculate market share.

5. MARKET segmentation
Process of dividing a large group of consumers into subgroups based on specific characteristics and common needs.
Business can develop marketing strategies to match needs
Takes time and money to gather info

6. Mass Marketing
Directs company’s marketing mix at a large and heterogeneous group of consumers
All consumers = potential customers
Competition = business offering similar product/service
Could be more difficult to succeed
Lead to higher sales volumes

7. Segmentation Categories
Geographic Segmentation
Demographic Characteristics
Psychographics
Product Usage
Benefit Expectations

8. Geographic Segmentation
Dividing consumers into markets based on where they live.
Large as country
Small as zip code
People who live in the same area might have the same wants and needs

9. Demographic Characteristics
Descriptive characteristics such as age, gender, race, income, education level
Education and Income

10. Psychographics People’s interests and values. Way you spend your time
Way you make your lifestyle choices
Type of housing
Preferred transportation
Where you live
How often you eat out

11. Product Usage
How frequently consumers use products and the quantity of products used.
Examples
Types of beverages
Sizes of beverages
Cell phone plans

12. Benefit Expectations
Divides consumers into groups depending on specific values or benefits they expect or require from the use of a product or service.

13. Reasons to segment
Better understanding of the market and potential customers.
Identify the best market opportunities
Market Opportunity – identified market with excellent potential based on careful research.

14. Identify Possible Segments
Select a market or product category to study
Choose a basis for segmenting the market
Gather information for analysis
Identify the segments that exist in the market
Use market information to choose the markets that present the greatest and least amount of potential

15. Determine Market Potential
Total revenue that can be obtained from a market segment.
Number of potential consumers
Customers’ interest in the product or service and other mix elements
Money customers have available to make the purchase
Business’s ability to communicate with and distribute the product to consumers

16. Market Share = Total Market Potential x Total Market %
Portion of the total market potential that each company expects in relation to its competitors.
Market Share = Total Market Potential x Total Market %

17. Activity Pass out: Calculating market potential and market share WS
WORK OUT: Problem #1 as a class

18. Example… in $
The total market potential for disposable cameras in one city is estimated to be at $1,850,000 per year. One manufacturer that is introducing a new disposable camera in the city expects to capture 12% of the total market. What is the company’s planned market share in dollars?
$1,850,000 x .12
$220,000

19. Example cont… in UNits
If the average price of a disposable camera is $9.25, what is the market potential and market share?
Market Potential
Market Share
200,000 x .12
1,850,000 / 9.25
200,000 units
24,000 cameras

20. A mass market is ______ than a market segment.
Exit Ticket
A mass market is ______ than a market segment.
larger
more homogeneous
more profitable
all of the above
On a scratch piece of paper, determine the best answer.

21. Age, income, education, and gender are examples of
Exit Ticket
Age, income, education, and gender are examples of
geographic factors
demographics
psychograpics
lifestyles
On a scratch piece of paper, determine the best answer.

22. ______ segmentation is based on the value customers expect to receive from using a product or service.
Economic
Market
Benefit
Consumer
Exit Ticket
On a scratch piece of paper, determine the best answer.

23. All market segments present a market opportunity.
Exit Ticket
True or False?
All market segments present a market opportunity.
On a scratch piece of paper, determine the best answer.

24. Exit Ticket
The market _________ is the total revenue that can be obtained from the market segment.
On a scratch piece of paper, determine the best answer.