1. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski MARKET SEGMENTATION AND THE MARKETING ENVIRONMENT

2. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-2 Market segmentation and the marketing environment At the end of this session, you should understand : What is meant by the marketing environment and its relationship to consumer behaviour The trends in consumption behaviour and the marketing environment in the ‘noughties’ The underlying principles of consumer behaviour and how to explain the concept of segmentation The broad approaches to segmentation in consumer and business markets The conditions for effective segmentation and the advantages and limitations of segmenting markets The ways that various target marketing strategies are used to satisfy customer needs

3. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-3 The marketing environment in the ‘noughties’ The marketing environment includes all factors that influence the operation of a business and its effectiveness in the marketplace See EXHIBIT 2.1 Peppercorn Food Company addresses the trend towards healthier eating, page 35. PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

4. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-4 Technology boom Technology - affordable, accessible and user friendly – Changing the way consumers, live, buy and consume, i.e. SMS competition promotions, searching for products and buying them online (globally), match to lifestyle

5. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-5 Social/cultural factors Focus on healthier lifestyles – nutritional issues, natural medicine, healthy fast food, psychology, relaxation therapies Multicultural – wide variety of foods, activities and product/service experiences from all over the world Time poor consumers – work to leisure time ratio, fast paced lifestyle Changing gender roles – role changes in family units, single families Household consumption – media consumption becoming fragmented, Internet buying Environmental issues

6. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-6 Changing gender roles See EXHIBIT 2.10 Marketers of skin care products are now successfully targeting men, page 40. PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

7. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-7 Segmentation The process of dividing the market into different groups Allows the marketer to better respond to the needs of the consumer through different marketing mixes Five steps 1. Research needs or buying motivations i.e. for toilet paper - price conscious, softest and best quality, or environmentally friendly 2. Consider how the needs relate to the segmentation bases  Geographic  Demographic  Psychographic  Product-related benefit segmentation 3. Describe segments as distinct groups i.e. ‘budget conscious’ 4. Determine which segment will be targeted and the positioning approach 5. Develop an appropriate marketing mix

8. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-8 Geographic Grouping people according to their geographic location International country or region, state, regional area within a state, city/town, suburb, rural, urban

9. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-9 Demographic Age Gender Family life cycle Occupation Education Ethnic background EXHIBIT 2.11 Using demographic criteria to segment the market, page 43 PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

10. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-10 Geodemographic Combining geographic and demographic information Based on the assumption that people living in similar areas have similar needs, wants and purchasing behaviour

11. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-11 Psychographic Profiles developed by considering attitudes, interests and opinions Grouping consumers according to similar lifestyle traits, i.e health conscious, environmentally aware, adventure seekers See EXHIBIT 2.12 American Express appeals to lifestyle segments, page 43 PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

12. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-12 Product-related benefit segmentation Based on the benefits desired from the product category These can vary with usage situation See EXHIBIT 2.13 An example of product- related segmentation, page 44. PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

13. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-13 Describe segments - activity List the needs and motives for: ‘budget conscious’ or ‘home beautifuls’

14. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-14 Determine which segments to target and the positioning approach All segments? One segment? A couple of segments? What should an organisation do when customers can be clearly segmented? Considering ‘home beautifuls’ or ‘budget conscious’ renovation segments, how could an organisation serve both with its approach to meeting their needs? Would this be different if they chose to only serve one of these segments? How?

15. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-15 Determine the appropriate marketing mix The target market is that group of customers chosen as the focus of the organisation’s marketing effort A clear or distinct identity must be achieved, showing clear benefits to the target market – this is the positioning strategy The marketing mix is used to: – Communicate and deliver this strategy – Differentiate the organisation’s offering from competitors’ – Maximise satisfaction with the offering

16. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-16 Market aggregation Market aggregation: – Treating the total market as one unit – Useful when customers have similar perceptions about the offering – Profitable if economies of scale can be achieved

17. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-17 Broad approaches to segmentation What business is the company really in? What is the psychological basis of the wants and needs of the customers? What is happening in the market? Is the structure changing? Will technology, new products, or competitor threats change the market?

18. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-18 Changes in the market and impact for marketers See EXHIBIT 2.15 Yates provides water-saving solutions, page 48. PowerPoint slides supplied on the Instructor Resource CD to accompany Consumer Behaviour include advertisement images.

19. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-19 Conditions for effective segmentation Measurable Accessible Large enough to be profitable

20. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-20 Advantages and limitations of segmenting markets Benefits – Allows better satisfaction of customers – More efficient use of marketing resources Limitations – Expensive to produce small quantities for limited market size – Difficult to know where to identify a segment – Smaller business may have difficulty segmenting

21. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour by Karen Webb Slides prepared by Sarah Fletcher and Morena Dobrowolski 2-21 Business market segmentation Geographic segmentation – Regional variables  Customer concentration  Regional industrial growth  International macroeconomic factors – Useful if customers have similar needs – Not effective where customers’ needs not considered Customer type and size – Size of organisation – Industry of customer – The offering of the customer (what they make or sell)