Market Planning LAP 3 Have We Met? Market Identification.

Market PlanningLAP 3

Have We Met?Market Identification

ObjectivesObjectives

Explain the importance of market identification.Explain the importance of market identification.

Discuss ways that a market can be Discuss ways that a market can be segmented.segmented.

Explain the importance of market Explain the importance of market identification.identification.

ObjectiveObjective

• Think about two very Think about two very different people.different people.

• They have several things in They have several things in common.common.

• Individuals can be grouped Individuals can be grouped based on similarities.based on similarities.

• Marketers use grouping to:Marketers use grouping to:

Find their customersFind their customers

Meet customers’ needs Meet customers’ needs

What Is a Market? What Is a Market?

• A customer or potential A customer or potential customer who:customer who:

Has an unfulfilled desire Has an unfulfilled desire

Is financially able to Is financially able to satisfy that desiresatisfy that desire

Is willing to satisfy that Is willing to satisfy that desire soon desire soon

How Marketers Meet Customer Needs

Group customers

by their similarities

Pinpoint the particular group of

customers to attract (a.k.a., the target market)

What IsWhat IsTarget Marketing? Target Marketing?

The identification and The identification and selection of markets for a selection of markets for a business or for a product business or for a product

Mass Marketing Mass Marketing • Involves:

Designing products that will appeal to most buyers

Directing marketing activities to the whole market

• Is sometimes called undifferentiated marketing

• Focuses on appealing to many types of customers through one marketing plan

Advantages of Mass Marketing Advantages of Mass Marketing

• Communicates a broad message to a Communicates a broad message to a large audiencelarge audience

• Allows a business to produce one Allows a business to produce one product for everyoneproduct for everyone

• Provides the most possibilities for Provides the most possibilities for success at the least costsuccess at the least cost

Disadvantages of Mass Marketing Disadvantages of Mass Marketing

• Diverse mass marketing audienceDiverse mass marketing audience

• Small percentage of audience likely to Small percentage of audience likely to purchase the product purchase the product

Segment Marketing Segment Marketing Involves planning activities for specific, well-defined groups of customers (a.k.a., market segments)

Advantages of Segment Marketing

• Aligns with the marketing conceptAligns with the marketing concept

• Is more precise than mass marketing in determining Is more precise than mass marketing in determining customers’ needscustomers’ needs

• Allows for:Allows for:

A finely-tuned productA finely-tuned product

An appropriate priceAn appropriate price

Ease of distributionEase of distribution

Advantages of Segment Marketing

• Encourages effective communicationEncourages effective communication

• Helps businesses to make more efficient use of their Helps businesses to make more efficient use of their resourcesresources

• Allows small firms to be competitive Allows small firms to be competitive

Disadvantages of Segment Marketing

• Requires more resourcesRequires more resources

• Makes producing the product more difficult Makes producing the product more difficult

Why Is the Use of Segments Increasing?

• Today’s customers are:Today’s customers are:

Better educatedBetter educated

More discerning in the purchases that they makeMore discerning in the purchases that they make

• These customers want to know, “How will the good These customers want to know, “How will the good or service benefit us directly?” or service benefit us directly?”

Discuss ways that a marketDiscuss ways that a marketcan be segmented.can be segmented.

ObjectiveObjective

Segmenting Markets Segmenting Markets

Ways to learn about markets and divide markets into smaller groups:

• Demographic segmentation

• Geographic segmentation

• Psychographic segmentation

• Behavioral segmentation

Demographic Segmentation Demographic Segmentation

• Divides a market on the basis of its physical and social characteristics, such as:

Gender

Origin or heritage

Religion

Socioeconomic status

Life stage

Geographic Segmentation Geographic Segmentation

• Customers are grouped on the basis of geographic divisions, such as:

Regions

States

Cities

Neighborhoods

Psychographic Segmentation Psychographic Segmentation

• LifestyleLifestyle• The way in which people The way in which people

lead their daily lives as lead their daily lives as determined by their income, determined by their income, interests, and activitiesinterests, and activities

• PersonalityPersonality• Is defined by a person’s Is defined by a person’s

individual qualities or traits individual qualities or traits and behaviorand behavior

• Affects the person’s buying Affects the person’s buying behavior behavior

Behavioral Segmentation Behavioral Segmentation

• Divides customers into Divides customers into groups according to:groups according to:

Their response to a Their response to a productproduct

What they are looking What they are looking for in a productfor in a product

Why they buy the Why they buy the productproduct

Behavioral Segmentation Behavioral Segmentation

• Includes:Includes: Rate of useRate of use Benefits derivedBenefits derived Loyalty responseLoyalty response Occasion response Occasion response

• If marketers were grouping you:

What categories would they use?

Where would you fit?

• What would marketers do to target you?

• Color-coded toy aisles• Is the toy manufacturers’

approach to selling toys appropriate and ethical?

• Are they shrewd business professionals?

• Are they perpetuating gender stereotypes?

• What do you think?

MBAResearchAcknowledgments

Original DevelopersChristopher C. Burke,

April J. Miller, MBAResearch

Version 2.0

Copyright © 2012MBA Research and Curriculum Center®

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