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S E G M E N T AT I O N
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Professor Richardson
S E G M E N T AT I O N
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Professor Richardson
S E G M E N T AT I O N
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Professor Richardson
S E G M E N T AT I O N
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Professor Richardson
S E G M E N T AT I O N
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What is a Market?
PEOPLE
Professor Richardson
S E G M E N T AT I O N
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What is a Market?
PEOPLE
BUT - not just ANY people, they have to have
Willingness to buy
Purchasing power (money)
Authority to buy
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Types of Markets
Consumer Goods and Services
Industrial Goods and Services
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Goods
Shopping
Specialty
POP
Convenience
ATM
Services
$
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C onsum er G oods
C o n s u m e r S e r v ic e s
C o n v e n ie n c e G o o d s
S h o p p in g G o o d s
S p e c ia l t y S e r v ic e s
C o n v e n ie n c e S e r v i c e s
e g . M a c ' s M il k
e g . c l o t h in g
e g . b a n k in g
e g . fa s t fo o d s
e g . g r o c e r ie s
e g . tra v e l
r a w m a t e r ia l
g r a in , s te e l
In d u s tr ia l G o o d s
In d u s tr ia l S e r v ic e s
P r o d u c t io n G o o d s
S u p p o r t S e r v ic e s
com ponent
p a rts
m a t e r ia l s
n u ts , b o lts
a c c e s s o r y e q u ip m e n t
to o ls , c o m p u te rs
in s t a l l a t i o n s
e g . b u il d in g s
e g . c ir c u it b o a r d
e g . w ir in g
h a rn e s s
S E G M E N T AT I O N
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Industrial Goods
Industrial goods are things used in the
production of other products
Some products are both industrial and consumer
goods - eg. electricity, water, desktop PCs
S E G M E N T AT I O N
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Market Segmentation
With a large country
Many different types of people
- it is too difficult to create a product that
will satisfy everybody, that is why we
focus on a segment of the total market
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Market Segmentation
Characteristics
age
gender
geographic location
income
spending patterns
cultural background
demographics
marital status
education
language
mobility
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Market Segmentation
4 commonly used bases for Segmentation
Descriptive
geographic location
demographic
Behavioural
psychographic
benefits
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Market Segmentation
geographic location - based upon where people
live (historically a popular way of dividing markets)
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Market Segmentation
Psychographic / lifestyles
- based on peoples
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Slide 3-8
+, Ontario
contains
52% of
foreign born
people in
Canada
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Impact of Immigration
Ontario contains 51.8% of Canadas
living foreign-born people
Most of these people live in Toronto
Canadas urban population is growing
for 2 reasons
1. Immigrants come to Canada and
make their homes in the cities
2. Canadians are moving out of the
rural areas and in to the cities
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Slide 3-9
Geographic Segmentation
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Geographic Segmentation
The reason why we study geographic segmentation is
because WHERE people live has a big effect on their
consumption patterns.
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Geographic Segmentation
Climate:
winter equipment and recreation are effected by
geographic location
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
age
gender (male/female)
income
occupation
education
household (family - style) size
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
gender (male/female)
gender is an obvious way to divide the market into
segments since so many products are gender-specific
clothing
medical products
sports products/services
entertainment
Professor Richardson
Examples ??
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
age
age is another obvious way to divide the market into
segments since so many products are based upon
time of life
diapers for babies
toys for children
entertainment for over 19
Professor Richardson
Examples ??
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Demographic Segmentation
age
also, people have different consumption patterns at
different ages
eg. Milk products
children and teens drink a lot of milk
adults dont
older adults need calcium, but dont drink milk
(they take pills)
Examples ??
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Slide 3-10
Demographic Segmentation
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
household (family - style) size
Segmenting by the stages in the family life cycle
(page 45)
There are different buying characteristics of people
in each stage of the family
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Demographic Segmentation
household (family - style) size
BUYING PATTERNS
0-5
young children
6-19
school children
20-34
young adults
35-49
younger middle-aged
50-64
older middle-aged
65+
seniors
80+
SUPER seniors
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Demographic Segmentation
household (family - style) size
THE CHANGING HOUSEHOLD
half of the households in Canada are only one, or
two people
number of married couples forming a household is
decreasing
many unmarried people, and old widowed people,
live by themselves
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Demographic Segmentation
household (family - style) size
FAMILY LIFE CYCLE STAGES
1. Young Single
2. Young Married with no Children (DINKS)
3. Young - married with children
- divorced without children
- divorced with children
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Demographic Segmentation
household (family - style) size
FAMILY LIFE CYCLE STAGES
4. Middle Aged
a. married without children
b. divorced without children
c. married with children
d. divorced with children
e. married without dependent children
f. divorced without dependent children
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Demographic Segmentation
household (family - style) size
FAMILY LIFE CYCLE STAGES
5. Older
a. older married
b. older unmarried (divorced, widowed)
6. other
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Demographic Segmentation
household (family - style) size
SSWDs
single separated widowed divorced
in Canada, 1.6 million people live alone
- they buy different sizes of products
eg. Single serving soup, etc.
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
age
gender (male/female)
income
occupation
education
household (family - style) size
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Demographic Segmentation
income
Segmenting markets on the basis of income and
expenditure patterns
- The number of single mom families has increased by
12.8% between 1985 and 1994
- Male single parent families have more income, on
average, than Female single parent families
(chart 3.6)
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Engels Laws
As family income increases
a smaller % goes for food - TRUE
the % spent on housing and household
operations and clothing will remain
constant (that is grow as total income
grows) - FALSE in reality this amount declines
the % spent on recreation, education will
increase - TRUE, but there are exceptions
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Engels Laws
Why is this important
because marketing managers can use this
law to figure out what will happen (ie. What
kinds of spending patterns will develop) if
peoples incomes increase
also, if you are planning on going into a
new market, where people have more
money - this law helps you to plan how
peoples spending patterns will be different
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Psychographic Segmentation
The use of psychological attributes,
lifestyles and attitudes in determining
the behavioral profiles of different
customers TEXT
psychological
The use of detailed information to understand
differences in what people buy
WTGR
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Psychographic Segmentation
Psychographic profiles on a target market segment are
obtained by doing a lot of questionnaires and surveys to
ask people if they agree/disagree with certain statements
made about particular activities, interests or opinions
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Psychographic Segmentation
Thompson Lightstone
Segments
1. Passive/Uncertain
2. Mature
3. Home Economists
4. Active/Convenience
5. Modern Shoppers
6. Traditional Home/Family Oriented
http://www.goldfarbconsultants.com/who
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Psychographic Segmentation
LIFESTYLE PROFILES
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Benefit Segmentation
It is based on the Attributes (characteristics) of
products, as seen by the customers
example, people buy something because it
causes a benefit
ie. Diet coke - less sugar, lose weight
ie. Extra white toothpaste, whiter teeth, better smile
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Benefit Segmentation
Many marketers now consider benefit
segmentation one of the most useful methods
of classifying markets
ie. Watches
- the benefits customers looked for where durability and
product quality- older research was based on dividing the
watch market according to a different segment - once they
used the new segment, they changed the marketing planmodern example would be price of PCs for home use biggest use is entertainment NOT schoolwork or home based
businesses
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Benefit Segmentation
Segment Name
The
Independent
Segment
The Sensory
Segment
The
Sociables
The Workers
Flavour, product
appearance
Brightness
of teeth
Decay
prevention
Price
Demographic strengths
Children
Teens, young
people
Large families
Men
Special behavioural
characteristics
Users of
spearmintflavoured
toothpaste
Smokers
Heavy users
Heavy users
Brands disproportionately
flavoured
Colgate,
Stripe
MacLeans,
Plus White,
Ultra Brite
Crest
Brands
on sale
Personality characteristics
High selfinvolvement
High
sociability
High
hypochondriasis
High
autonomy
Lifestyle characteristics
Hedonistic
Active
Conservative
Valueoriented
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Slide 3-12
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Geographic Segmentation
useful for the automotive industry
Product Segmentation
ie. Special parts and components
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