1. Section 2.2 Market Segmentation
Marketing Essentials
n Chapter 2 Basic Marketing Concepts
Section 2.2 Market Segmentation

2. Market Segmentation SECTION 2.2
What You'll Learn
Market segmentation and the four methods commonly used to segment a market
Current demographic, psychographic, and geographic trends

3. Market Segmentation SECTION 2.2
Why It's Important
Businesses must know who their customers are to achieve success. In other words, they must know their markets. This section will introduce you to the U.S. marketplace and the different ways businesses classify and characterize its segments.

4. Market Segmentation SECTION 2.2 market segmentation demographics
Key Terms
market segmentation
demographics
Baby Boom Generation
Generation X
Generation Y
disposable income
discretionary income
psychographics
geographics

5. Market Segmentation SECTION 2.2 Market Segmentation
Dividing the total market into smaller groups of people who share specific needs and characteristics is the essence of market segmentation.

6. Market Segmentation SECTION 2.2 Analyzing Markets
Businesses may segment a market by:
demographics
psychographics
geographics
product benefits

7. Market Segmentation SECTION 2.2 Demographics
Demographics refers to statistics that describe a population in terms of personal characteristics. These include:
age
gender
income
ethnic background

8. Market Segmentation SECTION 2.2 Demographics: Age
When marketers study age, they classify everyone according to certain generations, because each generation tends to have shared experiences and common bonds.
Baby Boom Generation: Generation X: Generation Y:

9. Market Segmentation SECTION 2.2 Demographics: Gender
Companies can expand their markets by marketing to the other gender, or by marketing their products differently to men and women.
Example: Jockey entered the women’s market with Jockey underwear for women and doubled its sales.

10. Market Segmentation SECTION 2.2 Demographics: Income
Marketers want to know how much money is available for spending on different products. They look at two types of income measurement:
disposable income
discretionary income
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11. Market Segmentation SECTION 2.2 Demographics: Income
Disposable Income = money left over after taxes.
Important for companies that produce and distribute necessities
Discretionary Income = money left after paying for food, shelter, and clothing.
Important for companies that produce and distribute luxury items
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12. Market Segmentation SECTION 2.2 Demographics: Ethnicity
Marketers often segment the market by ethnicity. The three largest ethnic groups within the United States are African-Americans, Hispanics, and Asian-Americans. These three groups will account for 33 percent of the U.S. population in 2005.

13. Market Segmentation SECTION 2.2 Census 2000
The United States conducts a census every ten years to determine the characteristics of the population. Which ethnic group is declining? Which ethnic groups are increasing? What effects will these ethnic changes have on marketing in the United States?

14. Market Segmentation SECTION 2.2 Psychographics
Psychographics involves studies of consumers based on social and psychological characteristics.
In addition to segmenting people by their leisure time interests, marketers observe trends and changes in households, the economy, politics, and the workplace.

15. Market Segmentation SECTION 2.2 Geographics
Geographics refers to segmentation of the market based on where people live. Marketers study geographics in relation to:
ethnic concentrations
age
ethnic background
income

16. Market Segmentation SECTION 2.2 Product Benefits
Segmenting a market by product benefits involves studying consumers' needs and wants.
Example: Different shampoos are marketed to people with different hair care needs.

17. Reviewing Key Terms and Concepts
ASSESSMENT
2.2
Reviewing Key Terms and Concepts
1. What do demographics, psychographics, geographics, and product benefits have in common?
2. How can a market be segmented using demographics?
3. What does the study of psychographics involve?
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18. Reviewing Key Terms and Concepts
ASSESSMENT
2.2
Reviewing Key Terms and Concepts
4. Provide one example of how a marketer can segment a market based on product benefits.
5. Of what significance are the combined African-American, Hispanic, and Asian-American populations to marketers?
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19. ASSESSMENT Thinking Critically 2.2
How can Procter and Gamble market household products to a male market segment?
What problems might P&G encounter in that endeavor?

20. Marketing Essentials
End of Section 2.2