1. Unit 2 Understanding the Consumer
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2. What is a Business Opportunity?
A chance for success based on a product idea and a market that will buy it
Developing a business plan and a marketing plan are important to a business’ success
The marketing plan includes the marketing mix

3. Target Market Target market
segment of a larger market whose wants and needs you will try to meet with a specific marketing mix
Ask students: Why does a marketing strategy include the target market?
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4. Marketing Mix
Marketing mix decisions are made with the target market in mind.

5. Target Market Qualities of a good target market
clearly defined needs and wants that your company can meet
money to buy your product
willingness and authority to buy your product
enough customers in the market to be profitable
Ask students: What problems could arise if the target market does not have all four qualities?
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6. Mass Marketing
A mass market consists of all the customers for a specific type of product (e.g. Pepsi,).
Mass marketing is the development of only one market mix for a specific product.
assumes that everyone’s wants and needs for a product are exactly the same
Ask students: Why do you think mass marketing campaigns are usually unsuccessful?
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7. Mass Marketing Example
Automotive
All customers – are considered to have the same wants and needs for a car.

8. Mass Marketing Commercial
Volvo Commercial

9. Mass Marketing Two problems with mass marketing
diversity of consumer markets
profitability problems
Ask students: How could diversity and profitability be problems for mass marketers?
(Continued)
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10. Mass Marketing Consumer markets are diverse.
contain many subgroups with very different needs and wants
needs within a mass market differ
one type of shoe will not meet the needs of everyone
One type of car will not meet the needs of everyone
Ask students: Why would you and your parents want different types of cars?
(Continued)
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11. Target marketing is the answer to problems with mass marketing.
Profitability
if a product doesn’t meet enough consumers’ needs, there might not be enough sales to make a profit
advertising to a mass market is expensive
Target marketing is the answer to problems with mass marketing.

12. Target Marketing When target marketing
choose a subgroup of the mass market that has the same needs and wants for your product
this subgroup is your target market
create a unique marketing mix for your target market

13. Target Market Commercial

14. Target Market Commercial
Toyota – Lets Go Summer

15. Segmented Markets for Cars
Customers can be organized into many market segments based on wants for a specific type of car:
Some want an economy car
Some want a luxury car
Some want a truck
Some want a sports car

16. Segmenting a Market Market segmentation
process of dividing a large market into smaller parts
each of these smaller parts is called a segment
Market
Market Segments
(Continued)

17. Segmenting a Market
The purpose of market segmentation is to find a target market with
similar wants and needs for your product
money to buy your product
the will and authority to buy your product
enough size to be profitable
Ask students: How is a target market different from a mass market?
(Continued)
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18. Segmenting a Market Segmentation variable
customer characteristic used to segment a market
Age
Income
(Continued)

19. Segmenting a Market
Segmentation variables are organized into four categories.
geographic
demographic
psychographic
behavioural
Ask students: What customer characteristics come to mind when you consider these categories?
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20. Geographic Variables Geographic segmentation
dividing a market based on where customers live
Geographic variables include
location
climate
community size

21. Location Location customs of place (not the same as climate)‏
Example: car manufacturer
Canadian market: metric system indicators
U.S. market: imperial system indicators
Ask students: What products do we need where we live in Canada that are not needed in other locations?
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22. Climate
Different climates require different types of products, such as
clothing
automobile tires
housing
heating and air conditioning

23. Demographic Variables
Demographic information
statistics (numbers) that describe the characteristics of a population
collected in a census
Census
count of the people in a country made by the government on a regular basis
Statistics Canada: conducts census every 5 years
(Continued)

24. Demographic Variables
Demographic information is organized into demographic variables, including
age
gender
ethnicity
income
family size and make-up
Ask students: Choose a demographic variable. How would you use it to segment a market?
(Continued)
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25. Age People of different ages have different needs and wants.
Generation
group of people who were born or grew up during a particular period of history
people in the same generation generally have similar attitudes, wants, and needs.
the Canadian consumer market is often segmented by generations.
Ask students: Think of the market for clothing. How is it segmented by age?
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26. Ethnicity Needs for many products vary with culture and ethnicity.
Examples
ingredients for culture-specific dishes
items for religious practices
In Canada, people enjoy products produced for a wide range of cultures.
Ask students: What products do you enjoy that were produced for cultures other than your own?
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27. Income Marketers are interested in two categories of income.
disposable income
money left after taxes are taken out
discretionary income
money left after taxes are taken out and after necessities are paid for
A market is often segmented based on income levels.

28. Family Make-up Families of different sizes have different needs.
Ask students: Describe the differences in purchases between a single person and a large family.
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29. Psychographic Variables
Psychographic segmentation
based on psychological characteristics of customers
Psychographic variables include
hobbies
social activities
lifestyle
interests
attitudes

30. Hobbies and Activities
People who participate in the same hobbies and activities often buy similar things.
Examples of hobbies and activities
photography
crafts
stamp collecting
sports
cultural events
Ask students: Name a hobby or activity. What kinds of products would people in this hobby or activity buy?
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31. Lifestyle
To discover lifestyle and values, marketers may use the VALS™ Survey.
eight VALS™ segments
organized by level of resources and personal motivation
information used to meet the unique needs of the target market
Take the VALS™ survey
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32. Behavioural Variables
Behavioural segmentation
dividing a market based on the way customers use a product
Behavioural variables include
features desired
usage rate
brand loyalty

33. Usage Rate
80/20 rule
most of the profits (80%) come from a few customers (20%) who show the greatest brand loyalty
Marketers often segment the market based on customer usage rates.
heavy, moderate, light, nonuse
Ask students: Do you have any experiences that would support the 80/20 rule?
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34. Combining Variables
Marketers often target a market based on two or more segmentation variables.
Geographic location and income is a common combination.

35. Market Segment Profile
a detailed description of the typical customer in a market segment
includes information on
geographic variables
demographics
psychographics
behaviour relevant to the product