Part 2 Reaching Your Market

1. Part 2 Reaching Your Market

2. Reaching Your Market • How does a company identify its market? • Why do customers buy certain products? • How can competitors influence a company’s decisions? • How does marketing research influence marketing decisions? • How are for-profit and not-for profit companies similar and different? Friends or Food? • Burger King – Whopper Sacrifice Campaign

3. Part 2 Reaching Your Market Chapter 5 Targeting a Market

4. Learning Goals • define business opportunity • explain the components of a marketing strategy • describe the four qualities of a target market • identify the four strategies in the marketing mix • define mass marketing and target marketing and state the advantages and disadvantages of each (Continued)

5. Learning Goals • explain how segmentation helps to determine which market to target • explain each of the four segmentation categories and list the variables for each • describe how marketers create and use a market segment profile

6. Marketing Terms • geographic segmentation • census • demographic information • demographic segmentation • generation • business opportunity • mass marketing • target marketing • market segmentation • segmentation variable (Continued)

7. Marketing Terms • behavioural segmentation • 80/20 rule • market segment or consumer profile • disposable income • discretionary income • psychographic segmentation

8. Business Opportunity Business opportunity a chance for success based on a product idea and a market that will buy it To turn a business opportunity into a successful business, develop a business plan and a marketing plan. The marketing plan includes the marketing strategy.

9. Target Market Target market segment of a larger market whose wants and needs you will try to meet with a specific marketing mix Marketers focus on the target market while making marketing mix decisions. (Continued)

10. Target Market Qualities of a good target market clearly defined needs and wants that your company can meet money to buy your product willingness and authority to buy your product enough customers in the market to be profitable

11. Marketing Mix Marketing mix decisions are marketing mix strategies. Both are made with the target market in mind.

12. Product Strategies Product strategies decisions about goods, services, or ideas made with the target market in mind Types of decisions quality, quantity, size, colour, features, technical support, packaging, warranties, brand name, and brand image

13. Price Strategies Price strategies decisions about price made with the target market and profit in mind Types of decisions list price and discounts

14. Place Strategies Place strategies • decisions about where the product will be sold • made with the target market in mind Types of decisions • what types of stores will carry the product, whether to sell online, and how to transport the product

15. Promotion Strategies Promotion strategies • decisions about how to tell the customer about the product and the company • made with the target market in mind Types of decisions • advertising, personal selling, customer service, publicity, promotional events, and design and layout of stores

16. Mass Marketing Mass marketing • only one marketing mix • assumes that everyone’s wants and needs for a product are exactly the same It is difficult to be successful with a mass marketing strategy. (Continued)

17. Mass Marketing Two problems with mass marketing diversity of consumer markets profitability problems (Continued)

18. Mass Marketing Consumer markets are diverse. contain many subgroups with very different needs and wants needs within a mass market differ example: one type of shoe will not meet the needs of everyone who wears shoes (Continued)

19. Mass Marketing Profitability • if a product doesn’t meet enough consumers’ needs, there might not be enough sales to make a profit • advertising to a mass market is expensive Target marketing is the answer to problems with mass marketing.

20. Target Marketing When target marketing • choose a subgroup of the mass market that has the same needs and wants for your product • this subgroup is your target market • create a unique marketing mix for your target market

21. Choosing Your Target Market Four ways to choose a target market target market first product idea first product and target market together old product, new target market (Continued)

22. Choosing Your Target Market Target market first choose a target market create a product that this market wants and needs Approach works well when there is a large and distinct target market that has money to spend. Teens are a popular target market. (Continued)

23. Choosing Your Target Market Product idea first develop a product idea find a target market that would buy the product Potential problem: You might never find a market. Potential benefit: You might create a huge market. (Continued)

24. Choosing Your Target Market Product and target market together • usually occurs when you observe a need in a particular group Example • MAC cosmetics line developed specifically for make-up artists (Continued)

25. Choosing Your Target Market Old product, new target market usually occurs when a long-existing product is losing sales company promotes the old product to a new market or for a new use Example: baking soda was promoted as a baking ingredient now promoted as a cleaning product

26. Advantages of Targeting a Market Target marketing allows a business to focus on meeting the needs of one small group often more profitable than trying to meet the needs of everyone in a large group (Continued)

27. Advantages of Targeting a Market Target marketing • enables smaller businesses to compete with larger companies • smaller businesses can target a group whose needs are not being met by the larger companies • market niche: smaller segment of a larger market whose needs are not being met by the main providers (Continued)

28. Advantages of Targeting a Market Example of niche market • Kaepa athletic shoes developed specifically for cheerleaders • niche market in the larger athletic shoe market

29. Disadvantages of Targeting a Market If you target a market that is too small, there will not be enough sales to make a profit. You will… • need to broaden your market If you choose the wrong target market, it won’t buy your product. You will… • need to find a new target market (Continued)

30. Disadvantages of Targeting a Market When sales come from one small market, if that market has a setback then the business will suffer too. Despite the potential disadvantages, most companies use target marketing.

31. Segmenting a Market Market segmentation process of dividing a large market into smaller parts each of these smaller parts is called a segment Market Market Segments (Continued)

32. Segmenting a Market The purpose of market segmentation is to find a target market with similar wants and needs for your product money to buy your product the will and authority to buy your product enough size to be profitable (Continued)

33. Segmenting a Market Segmentation variable customer characteristic used to segment a market Age Income (Continued)

34. Segmenting a Market Segmentation variables are organized into four categories. geographic demographic psychographic behavioural

35. Geographic Variables Geographic segmentation dividing a market based on where customers live Geographic variables include location climate community size

36. Location Location • customs of place (not the same as climate)‏ Example: car manufacturer • Canadian market: metric system indicators • U.S. market: imperial system indicators

37. Climate Different climates require different types of products, such as clothing automobile tires housing heating and air conditioning

38. Demographic Variables Demographic information statistics (numbers) that describe the characteristics of a population collected in a census Census count of the people in a country made by the government on a regular basis Statistics Canada: conducts census every 5 years (Continued)

39. Demographic Variables Demographic information is organized into demographic variables, including age gender ethnicity income family size and make-up (Continued)

40. Age People of different ages have different needs and wants. Generation group of people who were born or grew up during a particular period of history people in the same generation generally have similar attitudes, wants, and needs. the Canadian consumer market is often segmented by generations.

41. Ethnicity Needs for many products vary with culture and ethnicity. Examples • ingredients for culture-specific dishes • items for religious practices In Canada, people enjoy products produced for a wide range of cultures.

42. Income Marketers are interested in two categories of income. • disposable income • money left after taxes are taken out • discretionary income • money left after taxes are taken out and after necessities are paid for A market is often segmented based on income levels.

43. Family Make-up Families of different sizes have different needs.

44. Psychographic Variables Psychographic segmentation based on psychological characteristics of customers Psychographic variables include hobbies social activities lifestyle interests attitudes

45. Hobbies and Activities People who participate in the same hobbies and activities often buy similar things. Examples of hobbies and activities photography crafts stamp collecting sports cultural events

46. Lifestyle To discover lifestyle and values, marketers may use the VALS™ Survey. • eight VALS™ segments • organized by level of resources and personal motivation • information used to meet the unique needs of the target market Take the VALS™ survey

47. Behavioural Variables Behavioural segmentation dividing a market based on the way customers use a product Behavioural variables include features desired usage rate brand loyalty

48. Usage Rate 80/20 rule most of the profits (80%) come from a few customers (20%) who show the greatest brand loyalty Marketers often segment the market based on customer usage rates. heavy, moderate, light, nonuse

49. Combining Variables Marketers often target a market based on two or more segmentation variables. Geographic location and income is a common combination.

50. Market Segment Profile Market segment profile • a detailed description of the typical customer in a market segment • includes information on • geographic variables • demographics • psychographics • behaviour relevant to the product