1. MARKET SEGMENTATION UNIT 2, LESSON 2 Copyright © Texas Education Agency, 2012. All rights reserved.

2. Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2)Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3)Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4)No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee. 2 Copyright © Texas Education Agency, 2012. All rights reserved.

3. MARKET SEGMENTATION Goals Students will:  Compare and contrast the advantages and disadvantages of market segmentation and mass marketing.  Distinguish among geographic, demographic, psychographic and behavioral segmentation  Explain the nature of marketing planning Copyright © Texas Education Agency, 2012. All rights reserved. 3

4. MARKET SEGMENTATION Terms to know  Market segmentation  Demographics  Geographics  Psychographics  Product Benefits  Disposable Income  Discretionary Income  Affluent Copyright © Texas Education Agency, 2012. All rights reserved. 4

5. MARKET SEGMENTATION Mass Marketing is when marketers attempt to appeal to an entire market with one basic marketing strategy utilizing mass distribution and mass media. Market Segmentation is way of analyzing a market by specific characteristics in order to create a target market. Copyright © Texas Education Agency, 2012. All rights reserved. 5

6. MARKET SEGMENTATION Demographics refers to statistics that describe a population by personal characteristics.  Age  Baby Boomers – 76 million babies born 1946-1964  Control 51% of wealth.  Spending power increases as boomers get older.  Prime targets for luxuries and recreational items.  Growing senior services and healthcare fields. Copyright © Texas Education Agency, 2012. All rights reserved. 6

7. MARKET SEGMENTATION  Generation X – 40 million babies born 1965-1976  Dual-income households or divorced parents.  Tend to be savvy and skeptical consumers, better educated than previous generations.  Prime targets of cosmetics, fashionable clothing, movies, and electronic items. Copyright © Texas Education Agency, 2012. All rights reserved. 7

8. MARKET SEGMENTATION  Generation Y – 77 million babies born 1977-1997  Growing up during computer revolution.  Accustomed to interactivity and multi-tasking.  Strive to be different from parents.  Very comfortable with computers and “surfing the net”.  Influence big ticket family purchases and have spending power. Copyright © Texas Education Agency, 2012. All rights reserved. 8

9. MARKET SEGMENTATION  Gender  Male  Female  Income  Disposable Income – Money left after paying taxes.  Discretionary Income – Money left after paying for basic living necessities such as food, shelter and clothing.  Affluent; small percentage, but account for half of all discretionary spending in U.S. Copyright © Texas Education Agency, 2012. All rights reserved. 9

10. MARKET SEGMENTATION Ethnic Background – U.S. population becoming more diverse.  Caucasian population declining, while other ethnic populations increasing.  By 2025, African-American, Hispanic, and Asian- American populations are expected to represent 37.2% of all Americans. Copyright © Texas Education Agency, 2012. All rights reserved. 10

11. MARKET SEGMENTATION Ethnic Background – con’t  To reach African-Americans, marketers may use magazines such as Essence or Black Enterprise. Marketers have learned that they must backup their promotional activities with community support, such as sponsoring Black History Month.  Marketers must understand that Hispanics are a very diverse group and comprises 21 nations. Copyright © Texas Education Agency, 2012. All rights reserved. 11

12. MARKET SEGMENTATION Ethnic Background – cont’d.  Approximately 70% of Hispanics are Roman Catholic and the culture centers around family. Families tend to be larger then the average U.S. family. Food marketers know that when they sell products in Hispanic neighborhoods, the package sizes must be large.  Marketers should consider Spanish language television, radio, and magazines. Copyright © Texas Education Agency, 2012. All rights reserved. 12

13. MARKET SEGMENTATION Ethnic Background – con’t  Asian-American population represents about 4% of U.S. population.  Americans of Asian decent is the fastest growing and most affluent population group.  Very diverse encompassing 16 countries.  More Asian-Americans are college graduates then other ethnic groups and higher percentage hold professional jobs. Copyright © Texas Education Agency, 2012. All rights reserved. 13

14. MARKET SEGMENTATION Psychographics – studies of consumers based on social and psychological characteristics.  Shared common interests such as golfing, fishing, cars, and sports.  Trends change based on generations, such as healthy eating and exercising trends have increased in recent years.  Time is a commodity, people want time saving products. Copyright © Texas Education Agency, 2012. All rights reserved. 14

15. MARKET SEGMENTATION Geographics refers to segmentation based on where people live.  Markets can be  Local – Dallas  Regional – Texas, Southwest  National – United States  Global – World Copyright © Texas Education Agency, 2012. All rights reserved. 15

16. MARKET SEGMENTATION Product Benefits is segmenting the market by the consumers needs and wants.  Sports shoes based on people who jog, walk, play basketball, etc.  Shampoo that makes your hair shine or increases volume for oily, dry, or normal hair.  Foods that help you lose weight Copyright © Texas Education Agency, 2012. All rights reserved. 16

17. PICTURE SOURCES http://www.sxc.hu/photo/519288 http://www.sxc.hu/photo/667713 http://www.sxc.hu/photo/834151 http://www.sxc.hu/photo/774483 http://www.sxc.hu/photo/910348 http://www.sxc.hu/photo/1262463 Copyright © Texas Education Agency, 2012. All rights reserved. 17