1. Marketing Segmentation
Lesson 2.2

2. Market Segmentation Objectives
Key Terms
market segmentation
demographics
disposable income
discretionary income
geographics
psychographics
mass marketing
Objectives
Explain the concept of market segmentation
Understand Mass marketing
Continue to Analyze a target market
Differentiate between mass marketing and market segmentation
Marketing Essentials Chapter 2, Section 2.2

3. Mass Marketing versus Segmentation
When products have universal appeal and few features differentiate them from competitors, mass marketing is used.
Mass marketing X involves using a single marketing strategy to reach all customers
Marketing Essentials Chapter 2, Section 2.2

4. Mass Marketing Example
Coca-Cola television ads that appear during the winter holidays. The polar bears cavorting and drinking Coca-Cola are designed to appeal to just about everyone,

5. Current Trend
The current trend is niche marketing, meaning that marketing targets extremely specific markets, utilizes market segmentation processes to find the target market

6. Identifying and Analyzing Markets
market segmentation X process of classifying or identifying groups of people who have common interests and traits
Businesses use these groups to create market-specific ads and products that connect with potential customers on a personal level
Marketing Essentials Chapter 2, Section 2.2

7. Identifying and Analyzing Markets
Think of market segmentation as a puzzle
A whole puzzle = mass market
Each piece = one of the smaller, more precise groups, or market segmentation
Marketing Essentials Chapter 2, Section 2.2

8. Think about it
You are selling jeans. Think about who is the whole market? Think of what things you would ask and how you would “segment” this market into pieces. Give three ways you could segment this.
Student Answers
By Age: kids, teens, and adults
By Price: reach different income levles (socio-economic groups)
By Desired Features: tight fit, comfortable fit, newest fashion, low waist, high waist, mid rise or unique design)

9. Jean Segmentation Answer: By age – kids, teens, adults
By price – different income levels
Desired features – tight fit, comfortable fit, low rise etc.

10. Identifying and Analyzing Markets
The four factors that help segment a market and describe a target market are:
Demographics
Geographics
Psychographics
Behavioral factors

11. 1. Demographics
Demographics X refer to statistics that describe a population in terms of personal characteristics
What are some personal characteristics that can be used to segment (divide out) a market as a demographic?

12. Demographics X refer to statistics that describe a population in terms of personal characteristics such as:
Age
Gender
Marital status
Ethnic background
Education
Occupation
Income

13. 2. Geographics
Geographics X segmentation of the market based on where people live
What are some examples of segmentation based on geographics?

14. Examples of geographics include: Local State Regional National Global
Marketing Essentials Chapter 2, Section 2.2

15. 3. Psychographics
Psychographics X involves grouping consumers based on social and psychological characteristics.
What are some examples of segmenting by psychographics?

16. Examples of Psychographics
Activities
Opinions
Interests
Attitudes
Personalities
Values

17. Separating the market based on product-related behavior Examples:
4. Behavioral
Separating the market based on product-related behavior
Examples:
Benefits desired by consumers
Shopping patterns
Usage rate
The brand they buy
many consumers define themselves more by what they own or the brand they buy
Luxury and premium items are a growing market as a result

18. By studying consumer behavior, many businesses find that 80 percent of a company’s sales are generated by 20 percent of its loyal customers. This phenomenon is known as the “80/20" rule.

19. Income Demographics Is your target Market Low, Middle, or High Income.
Marketers look at two types of income measurements for price decisions
disposable income X - Money left after subtracting taxes from your gross wage (net wage). Must first pay for basic living necessities (utilities, rent, food, clothing)
discretionary income X - Money left after you subtract your taxes and costs for basic living necessities (use as you like)
If I market products that are necessities such as food and clothing, what income type am I focused on?
disposable income
If I market luxury products, like a car, what income type do I focus on?
discretionary income

20. Market Segmentation Study Organizer
Use a chart like the one below to list differences between mass marketing and market segmentation.
Marketing Essentials Chapter 2, Section 2.2