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Chapter 2 Basic Marketing Concepts 1
Marketing EssentialsMarketing Essentials
Chapter 2 Basic Marketing Concepts
Section 2.2 Market Segmentation
Chapter 2 Basic Marketing Concepts 2
SECTION 2.2SECTION 2.2
What You'll LearnWhat You'll Learn
Market segmentation and the four methods commonly used to segment a market
Current demographic, psychographic, and geographic trends
Market SegmentationMarket Segmentation
Chapter 2 Basic Marketing Concepts 3
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Why It's ImportantWhy It's Important
Businesses must know who their customers are to achieve success. In other words, they must know their markets. This section will introduce you to the U.S. marketplace and the different ways businesses classify and characterize its segments.
Chapter 2 Basic Marketing Concepts 4
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Key TermsKey Terms
market segmentation demographics Baby Boom Generation Generation X Generation Y disposable income discretionary income psychographics geographics
Chapter 2 Basic Marketing Concepts 5
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Dividing the total market into smaller groups of people who share specific needs and characteristics is the essence of market segmentation.
Market Segmentation
Chapter 2 Basic Marketing Concepts 6
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Businesses may segment a market by:
Analyzing Markets
demographics
psychographics
geographics
product benefits
Chapter 2 Basic Marketing Concepts 7
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Demographics refers to statistics that describe a population in terms of personal characteristics. These include:
Demographics
age
gender
income
ethnic background
Chapter 2 Basic Marketing Concepts 8
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
When marketers study age, they classify everyone according to certain generations, because each generation tends to have shared experiences and common bonds.
Baby Boom Generation: 1946-1964 Generation X: 1965-1976 Generation Y: 1977-1997
Demographics: Age
Chapter 2 Basic Marketing Concepts 9
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Companies can expand their markets by marketing to the other gender, or by marketing their products differently to men and women.
Example: Jockey entered the women’s market with Jockey underwear for women and doubled its sales.
Demographics: Gender
Chapter 2 Basic Marketing Concepts 10
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Marketers want to know how much money is available for spending on different products. They look at two types of income measurement:
Demographics: Income
disposable income
discretionary income
Slide 1 of 2
Chapter 2 Basic Marketing Concepts 11
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Disposable Income = money left over after taxes.
Important for companies that produce and distribute necessities
Discretionary Income = money left after paying for food, shelter, and clothing.
Important for companies that produce and distribute luxury items
Demographics: Income
Slide 2 of 2
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SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Marketers often segment the market by ethnicity. The three largest ethnic groups within the United States are African-Americans, Hispanics, and Asian-Americans. These three groups will account for 33 percent of the U.S. population in 2005.
Demographics: Ethnicity
Chapter 2 Basic Marketing Concepts 13
Census 2000
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
The United States conducts a census every ten years to determine the characteristics of the population. Which ethnic group is declining? Which ethnic groups are increasing? What effects will these ethnic changes have on marketing in the United States?
Chapter 2 Basic Marketing Concepts 14
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Psychographics involves studies of consumers based on social and psychological characteristics.
In addition to segmenting people by their leisure time interests, marketers observe trends and changes in households, the economy, politics, and the workplace.
Psychographics
Chapter 2 Basic Marketing Concepts 15
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Geographics refers to segmentation of the market based on where people live. Marketers study geographics in relation to:
Geographics
ethnic concentrations
age
ethnic background
income
Chapter 2 Basic Marketing Concepts 16
SECTION 2.2SECTION 2.2Market SegmentationMarket Segmentation
Segmenting a market by product benefits involves studying consumers' needs and wants.
Product Benefits
Example: Different shampoos are marketed to people with different hair care needs.
Chapter 2 Basic Marketing Concepts 17
2.2 ASSESSMENTASSESSMENT
Reviewing Key Terms and Concepts
1. What do demographics, psychographics, geographics, and product benefits have in common?
2. How can a market be segmented using demographics?
3. What does the study of psychographics involve?
Slide 1 of 2
Chapter 2 Basic Marketing Concepts 18
2.2 ASSESSMENTASSESSMENT
Reviewing Key Terms and Concepts
4. Provide one example of how a marketer can segment a market based on product benefits.
5. Of what significance are the combined African-American, Hispanic, and Asian-American populations to marketers?
Slide 2 of 2
Chapter 2 Basic Marketing Concepts 19
2.2 ASSESSMENTASSESSMENT
Thinking Critically
How can Procter and Gamble market household products to a male market segment?What problems might P&G encounter in that endeavor?
Chapter 2 Basic Marketing Concepts 20
Marketing EssentialsMarketing Essentials
End of Section 2.2
