Competition is Everywhere Chapter 7

In what ways is Apple trying to use this advertisement to build an image as a company that offers different and better products than its competitors? In your view, is the very simple ad effective in accomplishing that goal? Why or why not?

Focus on Market Segments 7.1

Learning Objectives Describe the benefits and categories of market segmentation. Explain how to evaluate market potential. Calculate market share.

MARKET segmentation Process of dividing a large group of consumers into subgroups based on specific characteristics and common needs. Business can develop marketing strategies to match needs Takes time and money to gather info

Mass Marketing Directs company’s marketing mix at a large and heterogeneous group of consumers All consumers = potential customers Competition = business offering similar product/service Could be more difficult to succeed Lead to higher sales volumes

Segmentation Categories Geographic Segmentation Demographic Characteristics Psychographics Product Usage Benefit Expectations

Geographic Segmentation Dividing consumers into markets based on where they live. Large as country Small as zip code People who live in the same area might have the same wants and needs

Demographic Characteristics Descriptive characteristics such as age, gender, race, income, education level Education and Income

Psychographics People’s interests and values. Way you spend your time Way you make your lifestyle choices Type of housing Preferred transportation Where you live How often you eat out

Product Usage How frequently consumers use products and the quantity of products used. Examples Types of beverages Sizes of beverages Cell phone plans

Benefit Expectations Divides consumers into groups depending on specific values or benefits they expect or require from the use of a product or service.

Reasons to segment Better understanding of the market and potential customers. Identify the best market opportunities Market Opportunity – identified market with excellent potential based on careful research.

Identify Possible Segments Select a market or product category to study Choose a basis for segmenting the market Gather information for analysis Identify the segments that exist in the market Use market information to choose the markets that present the greatest and least amount of potential

Determine Market Potential Total revenue that can be obtained from a market segment. Number of potential consumers Customers’ interest in the product or service and other mix elements Money customers have available to make the purchase Business’s ability to communicate with and distribute the product to consumers

Market Share = Total Market Potential x Total Market % Portion of the total market potential that each company expects in relation to its competitors. Market Share = Total Market Potential x Total Market %

Activity Pass out: Calculating market potential and market share WS WORK OUT: Problem #1 as a class

Example… in $ The total market potential for disposable cameras in one city is estimated to be at $1,850,000 per year. One manufacturer that is introducing a new disposable camera in the city expects to capture 12% of the total market. What is the company’s planned market share in dollars? $1,850,000 x .12 $220,000

Example cont… in UNits If the average price of a disposable camera is $9.25, what is the market potential and market share? Market Potential Market Share 200,000 x .12 1,850,000 / 9.25 200,000 units 24,000 cameras

A mass market is ______ than a market segment. Exit Ticket A mass market is ______ than a market segment. larger more homogeneous more profitable all of the above On a scratch piece of paper, determine the best answer.

Age, income, education, and gender are examples of Exit Ticket Age, income, education, and gender are examples of geographic factors demographics psychograpics lifestyles On a scratch piece of paper, determine the best answer.

______ segmentation is based on the value customers expect to receive from using a product or service. Economic Market Benefit Consumer Exit Ticket On a scratch piece of paper, determine the best answer.

All market segments present a market opportunity. Exit Ticket True or False? All market segments present a market opportunity. On a scratch piece of paper, determine the best answer.

Exit Ticket The market _________ is the total revenue that can be obtained from the market segment. On a scratch piece of paper, determine the best answer.