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Foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Market Segmentation: Finding a Base to Start.

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Presentation on theme: "Foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Market Segmentation: Finding a Base to Start."— Presentation transcript:

1 foundations of Chapter M A R K E T I N G Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Market Segmentation: Finding a Base to Start 3

2 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Objectives 1. Explain the concept of the marketing plan. 2. Define market segmentation. 3. Discuss and apply five types of market segmentation in consumer markets. 4. Illustrate some aspects of the Canadian market in terms of the five types of consumer market segmentation. 5. Discuss and apply the main types of segmentation in industrial markets. Market Segmentation: Finding a Base to Start 3 3-1

3 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Implementation and Control Measurable goals Benchmarks Feedback Marketing Plan Product or service management Price Distribution Communications The Strategic Marketing Planning Process 3 Market Segmentation: Finding a Base to Start Figure 3.1 Marketing Objectives & Strategies Objectives Strategies –Retrenchment –Status quo –Growth Situation Analysis Internal Environmental Customer Competitive Input from Corporate Strategies Mission Corporate objectives Strategic business unit(SBU) objectives 3-2

4 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Fundamental Tasks in Developing a Strategic Marketing Plan 1. Target Market 2. Implement a Marketing Program 3 Market Segmentation: Finding a Base to Start 3-3

5 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. What is a Market? People with the willingness, purchasing power, and the authority to buy. 3 Market Segmentation: Finding a Base to Start 3-4

6 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Goods Those products and services purchased by the ultimate consumer for personal use. 3 Market Segmentation: Finding a Base to Start 3-5

7 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Industrial Goods Those products purchased to be used, either directly or indirectly, in the production of other goods or for resale. 3 Market Segmentation: Finding a Base to Start 3-6

8 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Market Segmentation Grouping people according to their similarity in one or more dimensions related to a particular product category. 3 Market Segmentation: Finding a Base to Start 3-7

9 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Bases for Market Segmentation 3 Market Segmentation: Finding a Base to Start Potential Markets Demographic Segmentation Gender Age Family life cycle Race/Ethnic group Education Income Occupation Family size Religion Home ownership DescriptiveBehavioural Figure 3.2 Geographic Segmentation Country Region Urban/Suburban/Rural Population density City size Climate Psychographic Segmentation Lifestyles Psychological variables: Personality Self-image Benefit Segmentation Expected benefits from product use Usage Rate Heavy users Brand loyalty 3-8

10 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 3 Market Segmentation: Finding a Base to Start Figure 3.3 3-9 Main Inhabited Areas in Canada

11 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Percentage Distribution of the Canadian Population by Province 3 Market Segmentation: Finding a Base to Start Figure 3.4 3-10 2001

12 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 3 Market Segmentation: Finding a Base to Start Provincial and Territorial Populations, 1981, 1991, 2001 POPULATION (THOUSANDS) Source: Provincial and Territorial Populations, 1981, 1991, 2001 adapted from the Statistics Canada Website http://geodepot.ca/English/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada. Region198119912001 Newfoundland568 513 Prince Edward Island123130135 Nova Scotia847900908 New Brunswick696724729 Quebec6 4386 8967 237 Ontario8 62510 08511 410 Manitoba1 0261 0921 120 Saskatchewan968989979 Alberta2 2382 5462 975 British Columbia2 7443 2823 908 Yukon232829 Northwest Territories463637 Nunavutn/a2127 Canada24 34327 29730 007 Table 3.1 3-11

13 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Urban - Rural Population Distribution, 1871-2001 3 Market Segmentation: Finding a Base to Start Figure 3.5 3-12

14 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The 25 Largest Metro Areas in Canada, 1996, 2001 Toronto Montreal Vancouver Ottawa-Hull Calgary Edmonton Quebec Winnipeg Hamilton London Kitchener St. Catharines-Niagara Halifax Victoria Windsor Oshawa Saskatoon Regina St. Johns Chicoutimi-Jonquière Sudbury Sherbrooke Trois-Rivières Saint John Thunder Bay 3 Market Segmentation: Finding a Base to Start 1996 Population (Thousands) 4881 3512 2079 1107 972 935 693 685 681 426 432 393 359 319 314 305 231 198 176 159 157 155 142 128 125 2001 Population (Thousands)Area 4445 3359 1891 1031 852 392 698 677 650 416 403 390 347 313 292 281 222 199 178 167 166 150 144 129 131 Source: Adapted from the Statistics Canada publication Canada Year Book 1999, Catalogue No. 11-402, page 94 and from the Statistics Canada Website http:www.statcan.ca/english/Pgdb/People/Population/demo05.htm. Reprinted with permission of the Minister of Industry Canada. Table 3.2 3-13

15 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 3 Market Segmentation: Finding a Base to Start Figure 3.6 3-14 Population Projections by Age Group

16 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Buying Patterns for Different Age Groups Age Name of Age Group Merchandise 0 - 5 Young childrenBaby food, toys, nursery, furniture, childrens wear 6 - 19School childrenClothing, sports equipment, records, (including teenagers)school supplies, food, cosmetics, used cars 20 - 34Young adultsCars, furniture, houses, clothing, recreational equipment, purchases for younger age groups. 35 - 49Younger middle-agedLarger homes, better cars, second adultscars, new furniture, recreational equipment 50 - 64Older middle-aged Recreational items, purchases for adultsyoung marrieds and infants 65+Senior adultsMedical services, travel, drugs, purchases for younger age groups 3 Market Segmentation: Finding a Base to Start Table 3.3 3-15

17 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Family Life Cycle The process of family formation, development, and dissolution. 3 Market Segmentation: Finding a Base to Start 3-16

18 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. SSWDs Single, separated, widowed, or divorced people. 3 Market Segmentation: Finding a Base to Start 3-17

19 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Engels Laws As family income increases 1. a smaller percentage goes for food 2. the percentage spent on housing and household operations and clothing will remain constant, and 3. the percentage spent on other items will increase. 3 Market Segmentation: Finding a Base to Start 3-18

20 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 3 Market Segmentation: Finding a Base to Start Figure 3.7 3-19 Percentage Annual Expenditures by Income Groups, 1999

21 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Lifestyle The mode of living 3 Market Segmentation: Finding a Base to Start 3-20

22 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Psychographics The use of psychological attributes, lifestyles, attitudes, and demographics in determining the behavioural profiles of different consumers. 3 Market Segmentation: Finding a Base to Start 3-21

23 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. AIO Statements Statements about activities, interests, and opinions that are used in developing psychographic profiles. 3 Market Segmentation: Finding a Base to Start 3-22

24 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. VALS TM Network 3 Market Segmentation: Finding a Base to Start ACTUALIZERS FULFILLEDS STRUGGLERS EXPERIENCES STRIVERS ACHIEVERS BELIEVERSMAKERS PrincipleOrientedStatusOrientedActionOriented High Resources High Innovation Low Resources Low Innovation Figure 3.8 3-23 Source: SRI Consulting Business Intelligence. Http://www.sric-bi.com/VALS/types.shtml

25 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. The Environics Segments Elders Boomers Generation X 3 Market Segmentation: Finding a Base to Start 3-24

26 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Provides choice for family members X X Convenient to use X Tastes good XX Good quality X XXX Healthy XXXX Helps digestion X Helps diet X Spend less money X Benefit Segmentation Applied to Yogurt 3 Market Segmentation: Finding a Base to Start Attributes of Yogurt BENEFITS SOUGHT FROM YOGURT Individually packaged With fruit High- priced MildOrganic Contains bio-bifidus Low fat Low- priced Table 3.5 3-25 Source: Adapted from Marco Vriens and Ter Hofseted, Linking Attributes, Benefits, and Consumer Values, Marketing Research, Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association.

27 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Consumer Marketing Decisions Affected by Segmentation Choices Segmentation Basis Geographic Demographic Psychographic Benefit Product Usage Rates 3 Market Segmentation: Finding a Base to Start Decisions Affected Choice of sales region Sales force location Retail location Estimates of segment size Choice of local distribution channels or channels that cater to different age, income, and education groups Product/service positioning Advertising themes Sales training Product/service design--different models with different features Advertising themes Sales training Special products (sizes and quality) Special services Frequent-user promotions Special financial terms Table 3.6 3-26 Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.

28 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. Segmentation Bases for Industrial Markets 3 Market Segmentation: Finding a Base to Start End-Use Application Segmentation Product Segmentation Account Size and Potential Segmentation Geographic Segmentation Potential Industrial Markets 3-27

29 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. 3 Market Segmentation: Finding a Base to Start Consumer Marketing Decisions Affected by Segmentation Choices Segmentation Basis Geographic Product (including NAICS) End-Use Application Account Size & Growth Potential Decisions Affected Choice of sales region Sales force organization Product design Media choices Trade show choices Product design Sales force training Advertising emphasis Account and relationship management Table 3.7 3-28 Source: Adapted from Marketing Management, 2nd ed. By Peter R.Dickson, p. 187. Copyright © 1997. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com Fax 800-730-2215.

30 Chapter Copyright © 2003 by Nelson, a division of Thomson Canada Limited. North American Classification System (NAICS) A coding system used to categorize different types of business and products (formerly the Standard Industrial Classification, or SIC) 3 Market Segmentation: Finding a Base to Start 3-29


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