unit 2: reaching your market ch 5: targeting a market
TRANSCRIPT
Unit 2:Reaching Your Market
Ch 5: Targeting A Market
Learning Goals
Define business opportunity Explain the components of a marketing strategy Describe the four qualities of a target market Identify the four strategies in the marketing mix Define mass marketing and target marketing and
state the advantages and disadvantages of each Explain how segmentation helps to determine which
market to target Explain each of the four segmentation categories and
list the variables for each Describe how marketers create and use a market
segment profile
Day 1 Response Journal
The Burger King "Whopper Sacrifice" campaign encouraged people to give up Facebook friends in exchange for a Whopper burger coupon. Deleted friends were notified by Burger King that they had
been "dumped" for a Whopper.
Would you have participated in the "Whopper Sacrifice" campaign?
Do you think this campaign succeeded or failed? Why or why not?
*** Save As Feb 25 in your Response Journal Folder ***
Video
Business Opportunity
An ______________ is a chance for success
A _______________________ is the chance for success based on a product idea and a market that is willing and able to buy it
Many great business ideas start with one person who has a need or observes a need in others, and others come from personal hobbies or interests Read the examples in paragraph 1 on page 55
Opportunity
Business Opportunity
Marketing Strategy
To turn a business opportunity into a successful business, you need to develop a business plan and a marketing plan
An important part of the marketing plan is the marketing strategy A ____________ is a plan developed to reach a goal A ____________________ consists of the target
market and all the decisions in the marketing mix
Marketing Strategy = Target Market + Marketing Mix
Strategy
Marketing Strategy
Target Market
When you develop a marketing strategy, you must first choose the target market
A __________________ is segment of a larger market whose wants and needs you will try to meet with a specific marketing mix
Choosing a target market is one of the most important decisions a marketer makes If the target market is does not want or need your product it will not be
successful If the target market does not have the money to buy your product it will
not be successful If your target market is too small, you will not sell enough to make a
profit
Marketers focus on the target market while making marketing mix decisions
Target Market
Target Market
Qualities of a good target market include; Clearly defined needs and wants that your company can meetMoney to buy your productWillingness and authority to buy your productEnough customers in the market to be profitable
Marketing Mix
Remember the Marketing Mix consists of the 4 Ps;
Product Place Price Promotion
When you plan your marketing mix, you should think “How will my target market respond to this?”For each P in the 4 Ps, marketers need to select a strategyMarketing mix decisions are ______________; decisions for one of the Ps will affect decisions made for the other Ps
Interrelated
Product Strategies
Decisions made about __________ the product has to offer Remember the term product includes
goods, services, and ideas These decisions are made with the target
market in mind
Types of decisions include; Quality, quantity, size, colour, features,
technical support, packaging, warranties, brand name, brand image, etc.
What
Price Strategies
Decisions made about pricing a product These decisions are made with the target
market and profit in mind Pricing can also have an impact on the
_________ of a product
Types of decisions include; The selling price and any discounts that may
be offered at certain times
Image
Place Strategies
Decisions made about _________ the product will be sold Made with the target market in mind
Types of decisions include; What types of stores will carry the product,
whether to sell online, how to transport the product, etc.
Where
Promotion Strategies
Decisions about _______________ the customer about the product and the company Made with the target market in mind
Types of decisions include; Advertising, personal selling, customer
service, publicity, promotional events, store design and layout, etc.
How To Tell
Mass Marketing
A _______________ consists of all the customers for a specific type of product E.g. everyone who wants and is able and will
to buy a car is part of the mass market for cars
_________________ is the development of only one marketing mix for a specific product It assumes that everyone’s wants and needs for a
product are exactly the same It is difficult to be successful with a mass
marketing strategy
Mass Market
Mass Marketing
Mass Marketing
Two types of problem can arise when you use mass marketing;
1. Diversity of consumer markets
2. Profitability problems
1. Diversity of Consumer Markets
Consumer markets are diverse and contain many subgroups with very different needs and wants Whereas, mass marketing looks at the market as
a mass (as one) E.g. one type of shoe will not meet the needs of
everyone who wears shoes Read the example in paragraph 4 on page 57
2. Profitability Problems
Every business wants to make a profit But mass marketing can get in the way of
profit, as it is often very ______________ and _____________ Read the example in paragraph 3 on page 58
InefficientExpensive
Day 1 Assigned Work
Students please complete the following; K & U Questions #2 & 4 on page 71Thinking Questions #1, 2 & 3 on page 71
*** Save As Ch 5 Day 1 in your U2 Folder ***
Day 2 Response Journal
Could one style of car meet the needs of everyone in the market for a car?
Explain.
*** Save As Mar 3 in your Response Journal Folder ***
Target Marketing
Target marketing is the answer to problems that may arise with mass marketing As outlined in yesterday’s lesson
In the target market approach, marketers analyze the whole (mass) market first. They then segment (divide up) the market based on different needs and wants. The company will then choose a segment of the mass market that has the same needs and wants for their product Once a target market has been selected,
marketers create a unique marketing mix for that target market
Target Marketing
The development of a unique marketing mix for a target market is called ______________
Some companies will choose two or more segments to target, but will develop a unique marketing mix for each What makes a marketing mix unique?
• One or more of the 4 Ps are changed to meet the target market’s unique needs and wants
Read the GM and house cleaning examples in paragraph 2 on page 59
Target Marketing
Choosing Your Target Market
There are four general approaches to choosing a target market;
1. Target market first
2. Product idea first
3. Product and target market together
4. Old product, new target market
1. Target Market First
Choose a target market first and then create a product that this market will want and/or need
This approach works well when there is a large and distinct target market that has money to spend E.g. teens are a popular target market
• In Canada, there are more than 4.5 million young people between the ages of 15 – 24, many with part-time or full-time jobs
• This makes teens an attractive target market
2. Product Idea First
Develop a product idea first and then find a target market that would be willing and able to buy the product
Potential Problem: You might never find a market
Potential Benefit: You might create a huge market
Read the example in paragraph 5 on page 60
3. Product & Target Market Together
Usually occurs when you observe a need in a particular group of consumers
Read the MAC cosmetics example in paragraph 1 on page 61
4. Old Product, New Target Market
Usually occurs when a long-existing product is losing sales
The company then attempts to promote the old product to a new market or for a new use
Example: Baking Soda Was promoted as a baking ingredient Now promoted as a cleaning product
Read the example in paragraph 2 on page 61
Advantages of Targeting a Market
For a business to be successful, it does not have to sell to every customer in the entire market
Advantages
1.Allows a business to focus on meeting the needs of one smaller group of customer
• This is often more profitable than trying to meet the needs of everyone in a large group
Advantages of Targeting a Market
2. Enables smaller businesses to compete with larger companies
Smaller businesses can target a group whose needs are not being met by the larger companies
A ____________________ is a smaller segment of a larger market whose needs are not being met by the main providers
Read the Kaepa Inc. example in paragraph 6 on page 61
Kaepa has found a niche market in the larger athletic shoe market
Market Niche
Disadvantages of Targeting a Market
If you target a market that is too small, there will not be enough sales to make a profit. You will…
Need to broaden your market
If you choose the wrong target market, it won’t buy your product. You will…
Need to find a new target market
These 2 problems can be avoided by appropriately segmenting the market through market research
Disadvantages of Targeting a Market
If sales for a business all come from one small market, what happens if that market has a financial setback? Then the business will suffer financially
too
Despite the potential disadvantages, most companies use target marketing
Day 2 Assigned Work
Students please complete the following; Targeting The Right Market Worksheet
A hardcopy will be provided for you
Day 3 Response Journal
Imagine that there is $100 available to spend.
How might a teenaged boy spend that money?
How might a 30 year old mom spend that money?
*** Save As Mar 4 in your Response Journal Folder ***
Segmenting a Market
___________________ is the process of dividing a large market into smaller parts
Each of these smaller parts is called a _____________
Mass
Market
Market Segments
Market Segmentation
Segment
Segmenting a Market
The purpose of market segmentation is to find a target market with;
Similar wants and needs for your product
Money to buy your product The will and authority to buy your
product Enough size to be profitable
Segmenting a Market Marketers use characteristics of customers
to segment the market E.g. Age and Income
A customer characteristic used to segment a market is called a _____________________
Baby
Child
Teen
Senior
Adult
Age Income
High
Low
Medium
Segmentation Variable
Segmenting a Market
Segmentation variables are organized into the following four categories;
1.Geographic
2.Demographic
3.Psychographic
4.Behavioural
1. Geographic Variables
Dividing a market based on where customers live is called ________________________
Geographic variables include; Climate Location Community Size
Geographic Segmentation
Climate
Climate has a huge impact on what customers need
Different climates require different types of products, such as; Clothing Tires Heating and air conditioning
Location
A customer’s need for products often vary based on where they live
Based on the customs or rules of place Not the same as climate
Those who live in downtown areas have different needs from those who live in the country E.g. riding lawn mower, subway pass, etc.
Example: Car Manufacturers Canadian market: metric system indicators
• KM per hour
U.S. market: imperial system indicators• Miles per hour
Community Size
Some communities are too small to be profitable for certain businesses E.g. some restaurant chains won’t open
restaurants in cities that have a population under 200,000 – as small cities don’t provide enough customers to be profitable
Other businesses prefer to focus on the needs of small towns E.g. Wal-Mart – originally opened in only smaller
communities
2. Demographic Variables
Most countries want to know basic information about their citizens E.g. how many people are in each age group As a result most countries count the number in their country
A _____________ is a count of the people in a country made by the government on a regular basis Statistics Canada: conducts census every 5 years A census collects demographic information
________________________ consists of statistics (numbers) that describe the characteristics of a population
Segmenting the market based on demographic variables is called ____________________________
Census
Demographic Information
Demographic Segmentation
2. Demographic Variables
Demographic information is organized into demographic variables, including;
A. Age
B. Gender
C. Ethnicity
D. Income
E. Family size and make-up
A. Age
Age is a common segmentation, because people of different ages have different needs and wants E.g. babies require special food An important variable related to age is generation
A __________________ is a group of people who were born or grew up during a particular period of time People in the same generation generally have similar attitudes,
wants, and needs E.g. people born between 1977 – 1994 are known as
_________________ - they were the first generation to grow up with a computer in the home and use social networking
The Canadian consumer market is often segmented by generations
Generation
Millennials
B. Gender
Men and women differ in their wants and needs for many products E.g. Lady Foot Locker stores providing running
shoes and other athletic equipment that meet the specific needs of women
Other examples????
C. Ethnicity
The need for jeans may not vary based on a person’s ethnic background, however the needs for many other products can vary with culture and ethnicity
Examples; Ingredients for culture-specific foods Items for religious practices
• For example, a rosary
In Canada, many people enjoy products produced for a by other of cultures that they are not a part of
D. Income
Income level has a major influence on what people buy
People with similar income levels often buy similar products
People in __________ income groups often spend a large portion of their money on necessities such as food, shelter and clothing
Whereas, people with __________ incomes tend to spend more on recreation, education and luxuries
Lower
Higher
D. Income
Marketers are interested in two categories of income; ____________________: the money left over after taxes are taken out
Usual the first things disposable income is spent on are the necessities of life
______________________: the money left over after taxes are taken out and after necessities are paid for
This is the money a person can spend on their wants, such as vacations, going out to eat, etc.
Disposable Income
Discretionary Income
E. Family Size & Make-Up
Families come in all different sizes and therefore have different needs
How might purchases differ between a single person household and a two parent, 3 child household?
Day 3 Assigned Work
Students please complete the following; Segmenting the Market by Generations Worksheet
A hardcopy will be provided for you K & U Question #13 on page 71Thinking Questions #6 & 8 on page 71
*** Save As Ch 5 Day 3 in your U2 Folder ***
Day 4 Response Journal
List a minimum of 3 brands that you are you loyal to. Why do you stay loyal to these
brands? Explain.
*** Save As Mar 5 in your Response Journal Folder ***
3. Psychographic Variables
Psychographic segmentation involves segmenting the market based on the psychological characteristics of customers
Aspects included in psychographic variables are; Hobbies Social activities Lifestyle Interests Attitudes
Hobbies and Activities
People who participate in the same hobbies and activities often buy similar things
Examples of hobbies and activities include; Photography Crafts Stamp collecting Sports Cultural events Attending concerts, etc.
Lifestyle
Lifestyle and values are often difficult to measure and define
To discover lifestyle and values, marketers may use the VALS™ Survey Based on psychological characteristics that correlate
purchase behaviour and key demographics Divides consumers into eight VALS™ segments Organized by level of resources and personal
motivation This information is then used to meet the unique
needs of the target market
VALS Consumer Segments
4. Behavioural Variables
Dividing a market based on the way customers use a product or behave towards it is called _________________________
Behavioural variables include; Features desired Usage rate Brand loyalty
Behavioural Segmentation
Features Desired
Consumers vary in the features they want in a product E.g. Personal Computers
• Some computer users want a basic computer for word processing and e-mail only
• Other computer users want a computer with a few more features so they can play games and surf the Internet
• Other computer users want advanced features so they can edit videos and create 3D graphics
• As a result, personal computer manufacturers often segment the market based on the features that customers want
Usage Rate
Research shows, that for many businesses 80% of sales come from 20% of customers; called the _____________
The majority of most business’s profit come from a small number of customers
For this reason, marketers often segment the market based on how often the customer uses or buys the product; called _______________
Usage rate categories include; Heavy Moderate Light Nonuser
80/20 Rule
Usage Rate
Brand Loyalty
Customers vary in how loyal they are to a particular brand
The value of brand loyalty is related to the 80/20 Rule, as loyal customers are often the source of most of a company's sales
As a result, marketers often segment the market based on the degree of loyalty E.g. Airlines have developed frequent flyer
programs to reward airline customers who use their airline frequently
Combining Variables
Marketers often target a market based on ______ or _______ segmentation variables
Geographic location and income is a common combination E.g. Marketers of luxury products can get
the postal codes of people with the highest income levels
Two More
Market Segment Profile
Once marketers have divided a market into segments, they must choose the segment(s) to target
Once a segment has been picked, marketers develop a market segment profile
A __________________________ (sometimes called a Consumer Profile), is a detailed description of the typical customer in a market segment This profile includes;
• Geographic location
• Demographics
• Psychographics
• Behaviour relevant to the product This profile outlines the “typical” customer
Market Segment Profile
Day 4 Assigned Work
Students please complete the following; Variables Used to Segment the Market Worksheet
A hardcopy will be provided for you
Take the VALS™ survey Click on the link posted under the Useful Links section of
our ClassNet page After you complete the survey write down your primary and
secondary VALS type Read the description of each type and briefly summarize
what the VALS survey says about you
*** Save As Ch 5 Day 4 in your U2 Folder ***