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Section 2.2 – Market Segmentation What You’ll Learn What market segmentation is and the four methods used to segment a market Analyze a target market Differentiate.

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Presentation on theme: "Section 2.2 – Market Segmentation What You’ll Learn What market segmentation is and the four methods used to segment a market Analyze a target market Differentiate."— Presentation transcript:

1 Section 2.2 – Market Segmentation What You’ll Learn What market segmentation is and the four methods used to segment a market Analyze a target market Differentiate between mass marketing and market segmentation

2 Identifying and Analyzing Markets Businesses look for ways to connect with current and potential customers. Marketers must know where their customers live(region), their income level, age, ethnic background, activities, values, and what interests them.

3 Analyzing Markets Market segmentation is a way of analyzing a market by specific characteristics in order to create a target market

4 Analyzing Markets Companies study data generated by governments, private research firms, trade associations, and their own research to determine if a given target market is large enough to justify expense.

5 Types of Segmentation: Demographics Psychographics Geographics Behavioral

6 Demographics – statistics that describe a population in terms of personal characteristics. Demographics include –Age –Gender –Income –Marital Status Age –Baby Boom Generation Born between 1946-1964 Targets for all types of products, such as technological gadgets, cosmetics and products to enhance lifestyle.

7 Demographics Generation X –Known as the baby bust generation –Most members are children of dual career households or divorced parents –Savvy purchasers and skeptical consumers. –To reach this group marketers must use sharp images, music, a sense of humor and meet them on their terms.

8 Demographics Generation Y –Sons and daughters of the later baby boomers –Known as Echo Boomers or Millennium Generation –More racially and ethnically diverse with spending power. –Most members of this generation use email and surf the Web

9 Income Marketers want to know how much money they have to spend on different products. Disposable income – money left after taking out taxes Discretionary income – money left after paying for basic living necessities such as food, shelter, and clothing Demographics

10 Gender –Helps create market segments.

11 Marital Status – US Census reports 49.7% of total households are married couples. Down from 80% in 1950. Married couples with kids represent 25% of the population. Demographics

12 Ethnic Background – US is becoming more diverse

13 U.S. Trend – The percentage of the Caucasian population is declining, while other ethnic populations increase.

14 Psychographics Involves grouping people with similar lifestyles, as well as shared attitudes, values, and opinions. –Activities: ex. Magazines –Attitudes: Consumers attitudes, such as taking responsibility for one’s health, eating healthier, and becoming physically fit, are trend setting issues –Personality & Values

15 Music teachers, dancers, and other music lovers would be one category of people who share psychographic characteristics.

16 Behavioral Segmentation Looking at the benefits desired by consumers, shopping patterns, and usage rate. Market benefits, not just the physical characteristics of a product. Many people regardless of status, desire luxury and premium merchandise

17 Behavioral Segmentation Research shows that teenagers spend $50 a month on entertainment. Girls spend $15 more than boys on music. Many businesses find that the 80/20 rule applies. 80 % of a company’s sales are generated by 20 % of its loyal customers.

18 Geographics – Segmentation based on where people live -May market locally, regionally, nationally, or globally

19 Mass Marketing Vs Segmentation Mass marketing not as popular as it once was. Niche marketing (the current trend) – markets are narrowed down and defined with extreme precision.


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