Structure Of Consumer Markets

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  • Structure Of Consumer Markets

    1. 1. A Market A group of people who need and want a particular product, and have the buying power, willingness, and authority to purchase the product.
    2. 2. What’s a Market? <ul><li>Need </li></ul><ul><li>Ability </li></ul><ul><li>Willingness </li></ul><ul><li>Authority </li></ul>
    3. 3. Two Basic Types of Markets <ul><li>HOMOGENOUS consumers have similar product needs </li></ul>“ Mass Market Approach”
    4. 4. Two Basic Types of Markets <ul><li>HETEROGENEOUS consumers have dissimilar product needs </li></ul>“ Target Market Approach”
    5. 5. A fairly homogenous (similar) group of consumers to whom a company wishes to appeal What is a Target Market?
    6. 6. A Target Marketing Approach: implies that a firm’s marketing mix ( product, place, price, promotion ) is focused on a single market segment
    7. 7. Market Segment A group of individuals that share one or more characteristic in common that cause them to have relatively similar product needs.
    8. 8. Target Market Select i on Process 2. Determine Which Segmentation Variables to Use 1. Identify the Appropriate Targeting Strategy 3. Develop Market Segment Profiles 4. Evaluate Relevant Market Segments 5. Select Specific Target Markets
    9. 9. Undifferentiated Strategy Single Marketing Mix Target Market Organization
    10. 10. Concentrated Strategy Single Marketing Mix Target Market Organization
    11. 11. Concentrated Strategy Single Marketing Mix Target Market Organization
    12. 12. Concentrated Strategy Single Marketing Mix Target Market Organization
    13. 13. Differentiated Strategy Organization Marketing Mix 1 Target Market Marketing Mix 2
    14. 14. Target Marketers have Specific Aims In a product-market area A segmenter A combiner The Strategy Strategy one strategy Strategy three Strategy two The Using single target market approach  can aim at one sub- market with one marketing mix Using multiple target market approach  can aim at two or more sub- markets with different marketing mixes. Using combined target market approach  can aim at two or more submarkets with the same marketing mixes.
    15. 15. What is the conceptual philosophy underlying target marketing?
    16. 16. That there are different demand curves in different market segments P Q 0 D P Q 0 P Q 0 0 0 0 0 0 0 0 0 A. Mass marketer sees one demand curve for its target market B. Combiner sees one demand curve for its combined target market C. Segmenter sees one demand curve for each submarket
    17. 17. Detailed View of Demographic Variables <ul><li>Age </li></ul><ul><li>Gender </li></ul><ul><li>Race </li></ul><ul><li>Ethnicity </li></ul><ul><li>Income </li></ul><ul><li>Education </li></ul><ul><li>Occupation </li></ul><ul><li>Family Size </li></ul><ul><li>Family Life Cycle </li></ul><ul><li>Religion </li></ul><ul><li>Social Class </li></ul>
    18. 18. Detailed View of Geographic Variables <ul><li>Region </li></ul><ul><li>Urban, Sub- urban, Rural </li></ul><ul><li>City Size </li></ul><ul><li>County Size </li></ul><ul><li>State Size </li></ul><ul><li>Market Density </li></ul><ul><li>Climate </li></ul><ul><li>Terrain </li></ul>
    19. 19. Detailed View of Psychographic Variables <ul><li>Personality Attributes </li></ul><ul><li>Motives </li></ul><ul><li>Lifestyles </li></ul>
    20. 20. Detailed View of Behavioristic Variables <ul><li>Volume Usage </li></ul><ul><li>End Use </li></ul><ul><li>Benefit Expectations </li></ul><ul><li>Brand Loyalty </li></ul><ul><li>Price Sensitivity </li></ul>
    21. 21. Target Market Select i on Process 2. Determine Which Segmentation Variables to Use 1. Identify the Appropriate Targeting Strategy 3. Develop Market Segment Profiles 5. Select Specific Target Markets 4. Evaluate Relevant Market Segments
    22. 22. How to Evaluate Market Segments <ul><li>Market Potential (growth in overall market) </li></ul><ul><li>Company Sales Potential (market share) </li></ul><ul><li>Competitive Assessment (nature of competition) </li></ul><ul><li>Cost Estimates (competitive advantage) </li></ul>
    23. 23. How is target marketing accomplished?
    24. 24. Narrowing Down to Target Markets All needs in the world Some generic needs Some “broad” product-markets One “broad” product-market Homogeneous “narrow” product markets Single target market approach Multiple target market approach Combined target market approach Disaggregating i.e., NAMING broad product-markets Aggregating i.e., SEGMENTING into possible target markets Selecting target marketing approach
    25. 25. Every individual has his or her own unique position in a market - those with similar positions can be aggregated into potential target markets C A B A. Product-market showing three segments B. Product-market showing six segments A B C D E F Dependability dimension Status dimension Dependability dimension Status dimension
    26. 26. Requirements for Effective Market Segmentation <ul><li>Is the market heterogeneous? </li></ul><ul><li>Is the segment identifiable and divisible? </li></ul><ul><li>Can you compare and estimate the sales potential, costs, and profits from the segments? </li></ul><ul><li>Do one or more of the segments offer enough profit? </li></ul><ul><li>Is it possible to reach the segment? </li></ul>
    27. 27. Segmentation Base A characteristic of individuals or groups that is related to product use and that can be used to divide the total market into segments.
    28. 28. Finding the Relevant Segmenting Dimensions Determining dimensions (product type) Determining dimensions (brand specific) All potential dimensions Qualifying dimensions Generally relevant to purchasing behavior Relevant to including a customer type in the product-market Affect the customer’s purchase of a specific type of product Affect the customer’s choice of a specific brand
    29. 29. Two approaches to choosing a segmentation base
    30. 30. Single-variable Segmentation Less than $10,000 $10,000- $19,999 $20,000- $40,000 More than $40,000 e.g., Annual household income
    31. 31. Multivariable Variable Segmentation Light User Moderate User Heavy User Urban Suburban Rural Less than $10,000 $10,000- $19,999 $20,000- $40,000 More than $40,000 Annual Income Population Density Volume Usage
    32. 32. Demographic Trends
    33. 33. U.S. Age Distribution and Projections
    34. 34. Birth Rates (1976 and 2000) 3,665 2,797 69.7% 67.2% 33% 19% 54% 34% TOTAL BIRTHS (IN THOUSANDS) OVERALL FERTILITY RATE (PER 1,000 WOMEN) PERCENTAGE OF BIRTHS TO WOMEN IN THEIR 30s CHILDLESS WIVES, 30-40 PLANNING TO HAVE CHILDREN 2000 1976
    35. 35. Boom and Bust <ul><li>1945 - 1965 Baby “boom” </li></ul><ul><li>1965 - 1976 Baby “bust” </li></ul><ul><li>1976 - 1996 “Eco” Boom </li></ul><ul><li>2008 - another boom???? </li></ul>
    36. 36. Impact of slowing birth rates <ul><li>Markets affected? </li></ul><ul><li>Is it the same across all population groups? </li></ul><ul><li>When will it recover? </li></ul>
    37. 37. Me, Myself, and I <ul><li>29 million Americans live alone </li></ul><ul><li>25% of Americans who love alone are divorced </li></ul><ul><li>60% of Americans who live alone are over 50 </li></ul><ul><li>80% of women who live alone are over 65 </li></ul><ul><li>Boomer women will begin to turn 65 in 2011 </li></ul>
    38. 38. Cohort Analysis
    39. 39. The Kids Market (4 - 10 years) “ Children are the brightest stars in the consumer constellation”
    40. 40. The Kids Market (4 - 10 years)
    41. 41. Why are they so important? <ul><li>They have their own buying power </li></ul><ul><li>They influence family sending </li></ul><ul><li>They are the future consumer markets </li></ul>“ Cradle-to-Grave” Marketing
    42. 42. Eco Boomers (11 - 23), a.k.a. Generation Y
    43. 43. The “About to be……..” generation
    44. 44. To Be About to Be <ul><li>Inside the head of a 21 year old: </li></ul><ul><ul><li>Sophisticated </li></ul></ul><ul><ul><li>Challenge authority </li></ul></ul><ul><ul><li>Close to parents physically and emotionally </li></ul></ul><ul><ul><li>Skeptical consumers </li></ul></ul><ul><ul><li>Hardened to advertising </li></ul></ul><ul><ul><li>Less brand loyal </li></ul></ul><ul><ul><li>Attached to technology </li></ul></ul>
    45. 45. <ul><li>Automobiles: “home Sweet Car” </li></ul><ul><ul><li>View driving as a social activity </li></ul></ul><ul><ul><li>And as a means of escape </li></ul></ul><ul><ul><li>And a home on wheels </li></ul></ul><ul><li>Technology: “Going Mobile” </li></ul><ul><ul><li>Integrated in the very fabric of their lives </li></ul></ul><ul><ul><li>Full spectrum users </li></ul></ul>To Be About to Be
    46. 46. <ul><li>Fashion: “More than midriffs” </li></ul><ul><ul><li>Both males and females are into shopping </li></ul></ul><ul><ul><li>Lifestyle clothing </li></ul></ul><ul><li>Media and advertising: “Lifestyle interruptions” </li></ul><ul><ul><li>Heavy media users </li></ul></ul><ul><ul><li>Lifestyle interruptions </li></ul></ul><ul><ul><li>Immune to ads – prefer entertainment </li></ul></ul>To Be About to Be
    47. 47. <ul><li>Ethnic influences: </li></ul><ul><ul><li>Multicultural roots </li></ul></ul><ul><ul><li>Ethnic influences on popular culture </li></ul></ul><ul><li>Customization: “Having it their way” </li></ul><ul><ul><li>Customized products to suits own tastes and whims </li></ul></ul><ul><ul><li>Having it now </li></ul></ul>To Be About to Be
    48. 48. College Crowd+ (20-24) a.k.a. Generation Xers “ Marketers realize that, when it comes to buying, college students lose their virginity over and over again!”
    49. 49. Generation Xers <ul><li>more than half have cars </li></ul><ul><li>two-thirds have credit cards </li></ul><ul><li>two-thirds have telephone calling cards </li></ul><ul><li>half own a computer </li></ul><ul><li>three-quarters have cable TV premium channels </li></ul>
    50. 50. <ul><li>not prone to extravagance-dislike hype </li></ul><ul><li>savvy--no nonsense </li></ul><ul><li>demanding--cynical </li></ul><ul><li>visually driven </li></ul><ul><li>performance based consumers </li></ul><ul><li>bound to home </li></ul><ul><li>high racial/ethnic awareness </li></ul>GenXers-Psychographics
    51. 51. The Face of the New Homemaker
    52. 52. The Face of the New Homemaker <ul><li>more educated </li></ul><ul><li>more savvy </li></ul><ul><li>more hectic lifestyles </li></ul><ul><li>more hold jobs </li></ul><ul><li>more are male </li></ul><ul><li>want to shed the “home maker”image </li></ul>
    53. 53. The Mature Market
    54. 54. The Mature Market Perhaps no other consumer market justifies segmentation more than the mature market..the older they get the more dissimilar they become
    55. 55. <ul><li>Healthy Indulgers (18% of 55+ group) </li></ul><ul><li>Healthy Hermits (36% of 55+ group) </li></ul><ul><li>Ailing Outgoers (29% of 55+ group) </li></ul><ul><li>Frail Recluses (17% of 55+ group) </li></ul>The Mature Market Courtesy: American Demographics
    56. 56. Demographic Trends
    57. 57. Products Using Age Segmentation
    58. 58. Ownership of Cats and Dogs by Age
    59. 59. Products Using Race Segmentation
    60. 60. Buying Power in $bills % Market share Minority Buying Power 0.5 0.5 34.8 19.2 Native American 6.4 5.0 253.8 112.9 Asian 6.4 5.0 452.4 207.5 Hispanic 8.1 7.4 572.1 307.8 Black 12.2% 10.6% $860.6 $439.9 Total Minority 2001 1990 2001 1990 Category
    61. 61. personal care (women) personal care (men & women) personal care (men) apparel for kids under 2 hosiery women’s accessories $312 $532 41.4% $349 $530 34.2% $160 $212 24.3% $379 $456 17.0% $94 $108 12.6% $139 $157 11.4% All hhlds Black hhlds Percent diff 2000 Spending Race
    62. 62. 78 102 Food away from home 107 99 Non-alcoholic beverages. 114 99 Fats and oils 90 101 Sugars/sweets 128 97 Fruits and vegetables 132 98 Fresh milk & cream 176 91 Eggs 162 94 Fish and seafood 130 97 Poultry 143 96 Pork 146 96 Beef 103 100 Cereal & baked goods 117 99 Food at home Hispanic hhs (Index $29,333) Non-Hispanic hhs (index =$35,525) Average Annual Spending (index of 100 = all US hhs)
    63. 63. 63% 77% 75% 74% Would stop buying refreshments if they were more expensive 54% 40% 40% 42% Regularly buy refreshments 49% 52% 31% 36% High spenders $12-30/person 31% 28% 30% 30% Medium spenders $10-11/person 16% 19% 35% 30% Low spenders $1-9/person 36% 13% 13% 15% Frequent attendees (2X/months+) Hispanic Black Non-Hispanic white All Sub-cultural Differences in Movie Going Behavior
    64. 64. Shopping Preferences
    65. 65. Income
    66. 66. Ranking Products Consumers Would Cut Back on if Spending Decreased
    67. 67. Detailed View of Geographic Variables <ul><li>Region </li></ul><ul><li>Urban, Sub- urban, Rural </li></ul><ul><li>City Size </li></ul><ul><li>County Size </li></ul><ul><li>State Size </li></ul><ul><li>Market Density </li></ul><ul><li>Climate </li></ul><ul><li>Terrain </li></ul>
    68. 68. Population by State (all figures in thousands) 0-1,000 1,001-2,000 2,001-4,000 4,001-5,000 5,001-8,000 8,001-17,000 over 17,000 Note: The height of the block in each state shows its relative population level 1993 Population: 4,978 2,869 30,953 1,014 1,251 1,773 3,995 17,338 1,589 3,362 445 784 634 710 2,519 3,102 1,580 556 1,251 4,978 2,424 5,259 2,733 4,451 4,902 9,336 11,628 5,630 10,914 12,001 17,941 1,767 3,718 5,094 2,659 4,186 6,964 13,925 3,658 6,970 6,530 1,268 1,209(NH) 6,026(MA) 1,104(RI) 3,327(CT) 7,952(NJ) 5,020(MD) 710(DE) 598(DC)
    69. 69. Percent Change in Population by State, 1990-2000 Decreasing 0.1-3.9% 4.0-9.9% 10.0-15.9% 16-29.9% Percent Change in population: 19.2 7.2 4.0 15.0 21.1 23.1 20.5 14.1 .1 3.0 -1.4 12.1 -2.6 -4.7 .8 17.9 -2.0 1.5 2.8 4.2 3.7 -7.6 3.8 -.5 -.5 -.3 -.9 -.3 -1.5 -7.3 5.9 6.6 5.5 19.4 20.3 10.1 11.0 11.8 11.7 -2.7 1.2 4.9 5.1 16.7 3.5 4.6 5.1 8.2 11.5 10.2 3.2
    70. 70. Detailed View of Psychographic Variables <ul><li>Personality Attributes </li></ul><ul><li>Motives </li></ul><ul><li>Lifestyles </li></ul>
    71. 71. Brain Reserve 10 MAJOR CULTURAL TRENDS AFFECTING U.S. CONSUMERS
    72. 72. 10 MAJOR CULTURAL TRENDS <ul><li>1. Cashing out </li></ul><ul><li>2. Cocooning </li></ul><ul><li>3. Down-aging </li></ul><ul><li>4. Egonomics </li></ul><ul><li>5. Fantasy/adventure </li></ul>
    73. 73. <ul><li>6. 99 lives </li></ul><ul><li>7. S. O. S </li></ul><ul><li>8. Small indulgencies </li></ul><ul><li>9. Staying alive </li></ul><ul><li>10. Vigilante consumer </li></ul>10 MAJOR CULTURAL TRENDS
    74. 74. Lifestyle
    75. 75. Demographic Geographic Psychographic Behavioristic Consumer Market Segmentation Variables
    76. 76. Detailed View of Behavioristic Variables <ul><li>Volume Usage </li></ul><ul><li>End Use </li></ul><ul><li>Benefit Expectations </li></ul><ul><li>Brand Loyalty </li></ul><ul><li>Price Sensitivity </li></ul>
    77. 77. Volume Usage
    78. 78. End Usage
    79. 79. Benefits Expectation
    80. 80. Benefit Expectations 1  Dial  Lifebuoy 6  Lava 3  Lux 5 4  Dove  Tone 7 2 8 Coast   Zest  Lever 2000  Safeguard Deoderant High Moisturizing Low Moisturizing Nondeoderant
    81. 81. Brand Loyalty
    82. 82. Minority Consumers: Brand Loyalty Statement A : spend more to get the best Statement B: buy brand to feel I’ve made it Statement C : buy brands to let others know I’ve made it
    83. 83. Price Sensitivity
    84. 84. The Market Segmentation Process
    85. 85. Target Market Select i on Process 2. Determine Which Segmentation Variables to Use 1. Identify the Appropriate Targeting Strategy 3. Develop Market Segment Profiles 4. Evaluate Relevant Market Segments 5. Select Specific Target Markets
    86. 86. Toothpaste Market Segment Description The sensory segment The sociables segment The worriers segment The independent segment Principal benefit sought Flavor, product appearance Brightness of teeth Decay prevention Price Demographic strengths Children Teens, young people Large families Men Special behavioral characteristics Users of spearmint flavored toothpaste Smokers Heavy users Heavy users Brands disproportionately flavored Colgate strip Macleans Plus White Ultra Brite Crest Brands on sale Personality characteristics High self- involvement High sociability High hypochon- driasis High autonomy Life-style characteristics Hedonistic Active Conservative Value-oriented Segment Name
    87. 87. Target Market Select i on Process 2. Determine Which Segmentation Variables to Use 1. Identify the Appropriate Targeting Strategy 3. Develop Market Segment Profiles 5. Select Specific Target Markets 4. Evaluate Relevant Market Segments
    88. 88. How to Evaluate Market Segments <ul><li>Market Potential </li></ul><ul><li>Company Sales Potential </li></ul><ul><li>Competitive Assessment </li></ul><ul><li>Cost Estimates </li></ul>
    89. 89. One-on-One Marketing

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