Chapter Overview This chapter covers: –Functions of Marketing –Customers v. Consumers –Marketing Mix –Market Segmentation Demographics Psychographics Geographics

Chapter OverviewChapter Overview

• This chapter covers:– Functions of Marketing– Customers v. Consumers– Marketing Mix– Market Segmentation

• Demographics• Psychographics• Geographics• Product Benefits

MarketingMarketing

• On-going process of planning, pricing, promoting, selling ideas, goods, and services

• Ideas

• Goods

• Services

• The Exchange

Functions of MarketingFunctions of Marketing

• Distribution

• Financing

• Marketing Information Management

• Pricing

• Product/Service Management

• Promotion

• Selling

Marketing ConceptMarketing Concept

• In order to succeed, a business must satisfy customers needs and wants– Must satisfy all aspect of utility

• Right time• Right place• Right product• Right price• Inform customers of its existence

Customers v. ConsumersCustomers v. Consumers

• Customers buy products

• Consumers use products– To a certain extent, they are

interchangeable• Manufacturers point of view

– Retail stores are customers, shoppers are consumers

• Retail point of view– Customers and consumers are the same

Definition of MarketDefinition of Market

• Market– A collection of customers who share

common needs & wants, AND who have the ability & willingness to purchase

• I want, need and am willing to buy a Bentley, but I have not the ability.

OR…

Definition of MarketDefinition of Market

• The total sales in a given category by competing companies– Cereal market– Soft drink market– Athletic wear market

Target MarketTarget Market

• A specific group of current and potential customers that a company will focus on for all decisions affecting products and sales

Customer ProfileCustomer Profile

• A detailed description of the typical customer• Helps to identify target market• Some attributes are:

Age Income level

Ethnic background Occupation

Lifestyle Attitudes

Location Etc.

Marketing MixMarketing Mix

• Product, Place, Price and Promotion

• Must first define target market, then fine tune the mix to effectively reach market

• Interconnected and dependent on each other


• Product– What to make and how– Brand name– Image– Packaging

• Place– Where to sell– How to get it there


• Price– What is the target market willing and able

to pay– Can I lower my price and still make a

reasonable profit?

• Promotion– Message– Media

Market SegmentationMarket Segmentation

• Analyzing a market by specific characteristics– Differing Levels

• Mass Marketing – no identifiable collective trait• Segmentation

– One simple level, i.e. sex or age or ethnicity– Several level combined, i.e. 18 -24 yr old white male– Very specific target, i.e. 25-27 yr old white male,

outdoors, sporting type, drives an SUV, rents a home in the city, single, who likes sushi and Indian food….

Market SegmentationMarket Segmentation

• 4 methods to segment a market– Demographics– Psychographics– Geographics– Product Benefits

DemographicsDemographics

• Statistics that describe a population by personal characteristics– Age– Gender– Income level– Ethnic background – Etc.


• Age– Most typical method of segmentation– Based on generations, which are

determined by collective experiences and buying patterns

• Baby Boomers• Generation X• Generation Y


• Baby Boomers– Between 1946 – 1964– 76 million people– $ 2.6 trillion in spending power – 51% of

wealth– Prime of luxuries– Aged baby boomer will cause a dramatic

rise in the average age of the population


• Generation X– Between 1965 – 1981– 50 million, smallest generation– Parents typically either dual career or

divorced– Exposed to media from young age– Financially conservative, skeptic consumers– Marketers use sharp images, music and

irreverent humor to reach this group


• Generation Y– Between 1982 – 1998– 82 million, largest generation– Exposed to computers from young age,

adopt new technology quickly– $300+ billion in spending power, influence

over significantly more• Sometimes referred to as iGen, Millennials

– Marketers seek to solidify brand loyalty


• Gender– Certain products can be gender neutral

• Cars, beer, toothpaste, computers

– Companies market different product lines to different genders

• Jockey, Speed Stick, Calvin Klein

• Income• Disposable – money after taxes, used for

necessities • Discretionary – money after necessities


• Ethnicity (as est. based on 2000 Census)– White America accounted for 87% of national

spending in 1990, 80% 10 years later • National spending is ~ $14 trillion dollars• Median household income is $43k

– U.S. is becoming more diverse• African, Asian, and Hispanic American

communities currently account for 33% of population, by 2040 ~ 54%


• Hispanic Americans– 45 million or 15% of population– $735+ billion in spending power– Median household income is $34k– Incredibly diverse, over 21 nationalities– Larger families, 3.4 compared to 2.6 for

America as a whole– Best reached through Spanish speaking

television and other Spanish ads


• African Americans– 37 million, or 13% of population– $760+ billion in spending power, or 12th

largest national amount in the world– Median income $30k– On average, 10 years younger than the rest

of America– Market has a strong desire to see companies

active in the local community


• Asian Americans– 13 million, 4.3% of population– $400 billion in spending power– Median income $57k – Fastest growing and most affluent– More college graduates per capita than any

other group in U.S.– Very diverse, 16 nationalities– Very different cultural values

PsychographicsPsychographics

• Study based on social and psychological characteristics– Lifestyles – how people spend time and

money• Similar activities and interests lead to or are

fostered by similar attitudes– Think of all the ads in specific magazines and who

they are aimed toward, i.e. you won’t find pantyhose ads in Maxim, or chewing tobacco ads in Vogue


• Trends– Trends are studied through

psychographics– People who desire low carb diets will

purchase a wide variety or low carb items, i.e. low carb bread!!

– More casual workplaces, this trend leads to different kinds of clothing trends


• Time has become a commodity, meaning it can now be brought and traded– This in the sense of leisure time as

weighed against time spent working– More money than ever is spent on leisure

time and relaxing away from work– Why?


• New technologies that were supposed to have Americans working less have actually increased time spent on work related activities

• In 1975, 3% of Americans thought money was important to happiness, recent poll indicates more than 64% now think so

GeographicsGeographics

• Segmentation based on where you live– Locally

• small neighborhood newspaper• City wide newspaper• T.V., radio

– Nationally• Big retailers, Sears, Wal-Mart• T.V., national papers tailored toward audience,

ethnic concentrations

– Globally• Coke, McDonalds, largest corporations• Very different methods and commercialization


• Metropolitan Study Areas (MSA)– Used to study where people live in relation to

demographic studies– Used by government to determine medical

benefits and financial assistance– Used by marketers to target customers and

launch new product campaigns• Sales and Marketing Magazine reports on where

people are moving and how much spending power they have


• General trend in population shift is toward South, West, and Southwest– In 2007, Nevada was fastest growing

• Followed by Arizona, Idaho, Georgia and Texas• PA ranked mid 30’s

– Propensity to consume products in certain areas is used to launch new products

• Northwest states tend to be great for selling energy drinks

Product BenefitsProduct Benefits

• Marketers must first understand needs and wants of consumers (duh)

• Typically want to market benefits of product for consumers, not the characteristics of product– Different types of shoes, i.e. basketball,

running, etc– Different types of sodas, i.e. diet, low-carb,

caffeine free

Documents

Chapter Overview This chapter covers: –Functions of Marketing –Customers v. Consumers –Marketing Mix –Market Segmentation Demographics Psychographics Geographics