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Market Segmentation: Finding a Base to Start

3. Market Segmentation: Finding a Base to Start. 3. Market Segmentation: Finding a Base to Start. 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.

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Market Segmentation: Finding a Base to Start

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  1. 3 Market Segmentation: Finding a Base to Start

  2. 3 Market Segmentation: Finding a Base to Start 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. 3-1

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

  4. 3 Market Segmentation: Finding a Base to Start Fundamental Tasks in Developing a Strategic Marketing Plan 1. Target Market 2. Implement a Marketing Program 3-3

  5. 3 Market Segmentation: Finding a Base to Start What is a Market? • People with the willingness, purchasing power, and the authority to buy. 3-4

  6. 3 Market Segmentation: Finding a Base to Start Consumer Goods • Those products and services purchased by the ultimate consumer for personal use. 3-5

  7. 3 Market Segmentation: Finding a Base to Start Industrial Goods • Those products purchased to be used, either directly or indirectly, in the production of other goods or for resale. 3-6

  8. 3 Market Segmentation: Finding a Base to Start Market Segmentation • Grouping people according to their similarity in one or more dimensions related to a particular product category. 3-7

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

  10. 3 Market Segmentation: Finding a Base to Start Figure 3.3 Main Inhabited Areas in Canada 3-9

  11. 3 Market Segmentation: Finding a Base to Start Figure 3.4 Percentage Distribution of the Canadian Population by Province 2001 3-10

  12. 3 Market Segmentation: Finding a Base to Start Table 3.1 Provincial and Territorial Populations, 1981, 1991, 2001 POPULATION (THOUSANDS) Region 1981 1991 2001 Newfoundland 568 568 513 Prince Edward Island 123 130 135 Nova Scotia 847 900 908 New Brunswick 696 724 729 Quebec 6 438 6 896 7 237 Ontario 8 625 10 085 11 410 Manitoba 1 026 1 092 1 120 Saskatchewan 968 989 979 Alberta 2 238 2 546 2 975 British Columbia 2 744 3 282 3 908 Yukon 23 28 29 Northwest Territories 46 36 37 Nunavut n/a 21 27 Canada 24 343 27 297 30 007 3-11

  13. 3 Market Segmentation: Finding a Base to Start Figure 3.5 Urban - Rural Population Distribution, 1871-2001 3-12

  14. 3 Market Segmentation: Finding a Base to Start Table 3.2 The 25 Largest Metro Areas in Canada, 1996, 2001 Area 1996 Population (Thousands) 2001 Population (Thousands) 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 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 Toronto Montreal Vancouver Ottawa-Hull Calgary Edmonton Quebec Winnipeg Hamilton London Kitchener St. Catharines-Niagara Halifax Victoria Windsor Oshawa Saskatoon Regina St. John’s Chicoutimi-Jonquière Sudbury Sherbrooke Trois-Rivières Saint John Thunder Bay 3-13

  15. 3 Market Segmentation: Finding a Base to Start Figure 3.6 Population Projections by Age Group 3-14

  16. 3 Market Segmentation: Finding a Base to Start Table 3.3 Buying Patterns for Different Age Groups Age Name of Age Group Merchandise 0 - 5 Young children Baby food, toys, nursery, furniture, children’s wear 6 - 19 School children Clothing, sports equipment, records, (including teenagers) school supplies, food, cosmetics, used cars 20 - 34 Young adults Cars, furniture, houses, clothing, recreational equipment, purchases for younger age groups. 35 - 49 Younger middle-aged Larger homes, better cars, second adults cars, new furniture, recreational equipment 50 - 64 Older middle-aged Recreational items, purchases for adults young marrieds and infants 65+ Senior adults Medical services, travel, drugs, purchases for younger age groups 3-15

  17. 3 Market Segmentation: Finding a Base to Start Family Life Cycle • The process of family formation, development, and dissolution. 3-16

  18. 3 Market Segmentation: Finding a Base to Start SSWDs • Single, separated, widowed, or divorced people. 3-17

  19. 3 Market Segmentation: Finding a Base to Start Engel’s 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. 3-18

  20. 3 Market Segmentation: Finding a Base to Start Figure 3.7 Percentage Annual Expenditures by Income Groups, 1999 3-19

  21. 3 Market Segmentation: Finding a Base to Start Lifestyle • The mode of living 3-20

  22. 3 Market Segmentation: Finding a Base to Start Psychographics • The use of psychological attributes, lifestyles, attitudes, and demographics in determining the behavioural profiles of different consumers. 3-21

  23. 3 Market Segmentation: Finding a Base to Start AIO Statements • Statements about activities, interests, and opinions that are used in developing psychographic profiles. 3-22

  24. 3 Market Segmentation: Finding a Base to Start Figure 3.8 VALSTMNetwork High Resources High Innovation ACTUALIZERS Principle Oriented Status Oriented Action Oriented FULFILLEDS ACHIEVERS EXPERIENCES BELIEVERS MAKERS STRIVERS Low Resources Low Innovation STRUGGLERS 3-23

  25. 3 Market Segmentation: Finding a Base to Start The Environics Segments • Elders • Boomers • Generation X 3-24

  26. 3 Market Segmentation: Finding a Base to Start Table 3.5 Benefit Segmentation Applied to Yogurt Attributes of Yogurt Individually packaged With fruit High- priced Mild Organic Contains bio-bifidus Low fat Low- priced BENEFITS SOUGHT FROM YOGURT Provides choice for family members X X Convenient to use X Tastes good X X Good quality X X X X Healthy X X X X Helps digestion X Helps diet X Spend less money X 3-25

  27. Segmentation Basis Geographic Demographic Psychographic Benefit Product Usage Rates 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 3 Market Segmentation: Finding a Base to Start Table 3.6 Consumer Marketing Decisions Affected by Segmentation Choices 3-26

  28. 3 Market Segmentation: Finding a Base to Start Segmentation Bases for Industrial Markets Product Segmentation Geographic Segmentation Potential Industrial Markets End-Use Application Segmentation Account Size and Potential Segmentation 3-27

  29. Segmentation Basis Geographic Product (including NAICS) End-Use Application Account Size & Growth Potential 3 Market Segmentation: Finding a Base to Start Table 3.7 Consumer Marketing Decisions Affected by Segmentation Choices • 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 3-28

  30. 3 Market Segmentation: Finding a Base to Start North American Classification System (NAICS) • A coding system used to categorize different types of business and products (formerly the Standard Industrial Classification, or SIC) 3-29

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