1. Market Segmentation What You’ll Learn
Definition of Market Segmentation
Four Methods to segment a market
Differentiate between Mass Marketing and Segmentation

2. Analyzing Markets
Market segmentation is a way of analyzing a market by specific characteristics in order to create a target market.
Segment by
demographics
Psychographics
geographics
behavioral factors

3. Demographics
Demographics - Statistics that describe a population in terms of personal characteristics including
Age
Gender (male/female)
Income
Ethnic background
Education
Occupation

4. Demographics - AGE
Classify by generation which have collective shared experiences and common bonds
Baby Boomer Generation
Generation X (Baby Bust Generation)
Generation Y (Echo Boomers or Millennium Generation)
See pg 39 for description of groups

5. Demographics - GENDER Target only men or women with specific products
Gender neutral products may use gender specific promotions to appeal to each gender

6. Demographics - INCOME
Disposable income – money left after paying taxes
Discretionary income – is the money left after paying for basic living necessities such as food, shelter and clothing.
When marketing luxury items, companies must be very aware of changes in discretionary income
Income levels help to distinguish between different socioeconomic groups.
Affluent – 8 million households, income greater than $100,000 year – HALF of all discretionary spending in the US

7. Demographics – Marital Status
Married couples are 50.7% of total households in US
Down from 80% in 1950
Reasons for changes
People are older when they get married for the first time
People are divorcing more, living longer and remarrying less
Married couples with kids are 25% of population

8. Demographics - Ethnic Background
US is multi-cultural and ethnically diverse due to increased immigration

9. Geographics
Geographics is segmentation of the market based on where people live. Local, regional , national or even global markets.
Geographics is studied in relation to age, ethnic background and income.
Government created Metropolitan Statistical Areas MSA’s – defined geographical areas used for distribution of financial aid. Marketers also use to target consumers.
Sales and Marketing Management magazine reports on where people are moving and spending power of MSAs.

10. Psychographics
Psychographics involves grouping people with similar lifestyles, attitudes, values and opinions
Requires special research to learn about personality traits and motivation
Lifestyles are people’s attitudes and values. How people spend their time and money
People who share similar interests have similar attitudes. Some magazines are targeted this way.
Trends include changes in households, the economy, politics and the workplace. These changes contribute to changes in attitudes about health, time, fun and living and general.

11. Behavioral
Segmenting based on product-related behavior involves looking at
The benefits desired by the consumers
Shopping patterns of the customers
Usage rates
Examples of desired benefits
Sport shoes – jog, walk, tennis aerobics.
Shampoo – oily, dry or normal.
Soda, diet, caffeine free, etc.

12. Behavioral
Examples:
Desire for luxury goods is a growing consumer trend
MasterCard research of online consumers and their concern for security:
Confident Core Users
Cautious Shoppers
Mainstream Users
Curious but not convinced
Technological Skeptics
Teenagers spend less than $50 a month on entertainment
Teenage girls spend more on music than boys

13. Consumer Behavior 80/20 Rule
80% of a company’s sales are generated by 20% of its loyal customers

14. Mass Marketing vs Segmentation
Mass marketing is not as popular since most markets can be segmented
Current trend is toward Niche Marketing
Markets are narrowed down and defined with extreme precision
Even products with one slogan will use different models and themes to reach different segments

15. Conclusion Definition of Market Segmentation
Four Methods to segment a market
Differentiate between Mass Marketing and Segmentation