Market segmentation


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Market segmentation

  1. 1. Market Segmentation Lesson 1.4 Activity 1
  2. 2. Vocabulary <ul><li>Market Segmentation </li></ul><ul><li>Demographics </li></ul><ul><li>Baby Boom Generation </li></ul><ul><li>Generation X </li></ul><ul><li>Generation Y </li></ul><ul><li>Geographics </li></ul><ul><li>Psychographics </li></ul><ul><li>Disposable Income </li></ul><ul><li>Discretionary Income </li></ul>
  3. 3. What is Market Segmentation? <ul><li>Market segmentation is dividing the total market into smaller groups of people who share specific needs and characteristics. </li></ul>
  4. 4. Why it is Important <ul><li>Businesses must know who their customers are in order to achieve success. After all, the goal of a business is to make a profit! </li></ul><ul><li>This lesson will introduce you to the different ways a business segments their markets. </li></ul>
  5. 5. 4 Ways to Segment a Market <ul><li>Demographics </li></ul><ul><li>Psychographics </li></ul><ul><li>Geographics </li></ul><ul><li>Product Benefits </li></ul>
  6. 6. <ul><li>Demographics refers to statistics that describe a population in terms of personal characteristics such as: </li></ul><ul><ul><li>Age </li></ul></ul><ul><ul><li>Gender </li></ul></ul><ul><ul><li>Income Level </li></ul></ul><ul><ul><li>Ethnic Background </li></ul></ul>1. Demographics
  7. 7. Demographics: Age <ul><li>Marketers classify people according to the generation they were born in because each generation shares similar experiences. For example: </li></ul><ul><ul><li>Baby Boomers: Born 1946-1964 </li></ul></ul><ul><ul><li>Generation X: Born 1965-1976 </li></ul></ul><ul><ul><li>Generation Y: Born 1977-1997 </li></ul></ul>
  8. 8. Demographics: Gender <ul><li>Companies are always looking for ways to expand their markets. One common way is to market products differently to men and women. For example: </li></ul><ul><ul><li>Secret Deodorant is not just for a “woman” anymore. They have expanded their market to deodorants for men. </li></ul></ul>
  9. 9. Demographics: Income <ul><li>Marketers want to know how much money consumers have for spending on different products. There are two types of income measurement: </li></ul><ul><ul><li>Disposable Income – Money left over after paying taxes </li></ul></ul><ul><ul><li>Discretionary Income – Money left over after paying for food, shelter, and clothing </li></ul></ul>
  10. 10. Demographics Ethnicity <ul><li>The U.S. population is becoming more ethnically diverse with increasing purchasing power. </li></ul><ul><li>The three largest ethnic groups in the United States; Hispanics, African-Americans, and Asian-Americans are expected to represent 36 percent of the U.S. Population by 2025. </li></ul><ul><li>Marketers need to know how to market product and services to culturally diverse populations. </li></ul>
  11. 11. 2. Psychographics <ul><li>Psychographics involves the psychological and social characteristics of consumers. For instance: </li></ul><ul><ul><ul><ul><li>Lifestyle – Are they into sports, cooking, the theater? How do they spend their time and money? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Are they health conscience, what do they do for fun? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>What are the current work trends like? </li></ul></ul></ul></ul>
  12. 12. 3. Geographics <ul><li>This segmentation refers to where people live. This could be segmented many ways such as: </li></ul><ul><ul><li>Locally, Nationally, or Globally </li></ul></ul><ul><ul><li>In an Ethnic Neighborhood </li></ul></ul><ul><ul><li>A Retirement Community </li></ul></ul>
  13. 13. Would the same products that sell well in California, also sell well in Maine?
  14. 14. 4. Product Benefits <ul><li>Segmenting a market by the benefits a product provides. </li></ul><ul><li>For instance: </li></ul><ul><ul><li>The shampoo industry </li></ul></ul><ul><ul><li>segments the market by </li></ul></ul><ul><ul><li>types of shampoo ; dry hair, fine, dandruff, tinted, etc. </li></ul></ul>
  15. 15. Putting it all together… The Marketing Concept Consumers Marketing Research Marketing Segmentation Product Price Place Promotion