Understanding the World of Marketing

Market Segmentation

Analyzing Markets► Market segmentation is a way of analyzing a market by specific characteristics in order to create a target market

► Market Segmentation: Separating larger groups into smaller groups based on certain characteristics

Target Market

• The specific group of people to whom you are trying to sell your products or services.

• A target market is a set of individuals who share common characteristics.

Target Market

5 Types of Market Groups:Demographic – Teachers

Psychographic – Music enthusiasts

Use-based – Athletes

Benefit – Bargain hunters

Geographic – Southerners

Types of Segmentation:

•Demographics

• Psychographics

•Geographics

• Behavioral

Demographics –Statistics & facts that describe a population in terms of personal

characteristics.• Age

• Gender

• Income

• Marital Status

• Ethnic Background

• Occupation

• Education, etc…

U.S. Demographic TrendThe percentage of the Caucasian

population is declining, while other ethnic populations increase.

Psychographics • Involves grouping people with

similar lifestyles, as well as shared attitudes, values, and opinions.• Activities

• Attitudes

• Personality & Values

Geographics

Segmentation based on where people live

Behavioral• Looking at the benefits desired by

consumers (status), shopping patterns, and usage rate.

• Market benefits…not just the physical characteristics of a product

Behavioral Segmentation

• Many businesses find that the 80/20 rule applies.

• 80% of a company’s sales are generated by 20% of its loyal customers.

Mass Marketing VS. Segmentation

• Mass Marketing

Using a single market strategy to reach all customers…not as popular as it once was

• Niche Marketing (the current trend)

Markets are narrowed down and defined

with extreme precision

Niche Marketing

• Idea is to advertise and market products to a specific target market..... (narrow demographics)

• This is often used by small companies as it is a way of avoiding competition who may not be interested in such a small segment

Niche Marketing

Examples:

• Gardening magazines

• Nascar

• Montessori schools

• MTV focuses on youth

• Lifetime television focuses on women

Mass Marketing• Mass marketing strategies aim

the strategy at the whole market

• This is generally used by larger companies whose products appeal to everyone

Mass Marketing• Examples:

• Tide detergent

• TV magazines

• HP all in one Printer/fax/copy/scanner

• (American Idol, Olympics, Super bowl)

Mass Marketing• To Reach the Largest amount of people possible.

• Focus on high sales and low prices

• Products for everyone

• Less risky

•Marketing research costs and Advertising costs relatively low.

Product Life Cycle• The Product Life Cycle shows the life of a product from its

conception to its death

• There are five stages in the product life cycle:

1. Research and development • the product is being developed, high

costs

2. Introduction –

• product is introduced to the market

• sales are low

• profit is negative as research and development costs are being met

Product Life Cycle

3. Growth – Sales increase rapidly, firm starts to make a profit

4. Maturity – Sales reach their peak, profits start to decline as competition increases

5. Decline – Sales fall, profits begin to fall, the product might be taken off the market