Target Markets & Market Target Markets & Market SegmentationSegmentation

What is a Market?What is a Market?

A market is all customers who share common needs A market is all customers who share common needs and wants and who have the ability and and wants and who have the ability and willingness to buy the product.willingness to buy the product.

Market can also be a companies Market can also be a companies percentage of total sales in their industry. percentage of total sales in their industry. Ex: Nike sells 48% of all cross trainers Ex: Nike sells 48% of all cross trainers in the U.S. in the U.S.

How do we determine which customers share How do we determine which customers share common needs and have the ability to purchase?common needs and have the ability to purchase?

Target MarketingTarget Marketing

Is focusing all Is focusing all marketingmarketing decisionsdecisions on a very on a very specificspecific groupgroup of people you want your product of people you want your product to reach.to reach.

The more information you have on this group the The more information you have on this group the easier it is to make marketing decisions.easier it is to make marketing decisions.

Businesses will frequently create what they call a Businesses will frequently create what they call a CUSTOMER PROFILE,CUSTOMER PROFILE, which is a breakdown of which is a breakdown of the characteristics of the target market: the characteristics of the target market: ageage, , incomeincome, , ethnicethnic backgroundbackground, , geographygeography..

Market Segmentation

A way of analyzing a market by specific A way of analyzing a market by specific characteristics in order to create a target market.characteristics in order to create a target market.

Think about a “Widget” Company. Once the owners decide Think about a “Widget” Company. Once the owners decide what, where, and how to make and distribute the widgets, what, where, and how to make and distribute the widgets, they need to know who has a need for them. they need to know who has a need for them.

By using By using MARKET SEGMENTATIONMARKET SEGMENTATION to to define our define our TARGET MARKETTARGET MARKET we can we can focus all our marketing activities focus all our marketing activities.

How do we Segment a Market?How do we Segment a Market?

There are 4 ways to categorize potential There are 4 ways to categorize potential customerscustomers

DemographicsDemographics

PsychographicsPsychographics

GeographicsGeographics

Product BenefitsProduct Benefits

DemographicsDemographics

Refers to statistics that describe a population in Refers to statistics that describe a population in terms of personal characteristics. These include: terms of personal characteristics. These include: age, gender, income, ethnicity, education and age, gender, income, ethnicity, education and occupation.occupation.

It is important to understand the It is important to understand the attributesattributes of your of your target market, so you can focus your target market, so you can focus your promotional promotional dollarsdollars to the right group of people. to the right group of people.

Ex: You wouldn’t advertise BMW’s to low income teenagers.Ex: You wouldn’t advertise BMW’s to low income teenagers.Ex: You wouldn’t advertise Barbie dolls to everyoneEx: You wouldn’t advertise Barbie dolls to everyone

Demographics may also include fitness level, Demographics may also include fitness level, language spoken, or religious affiliations.language spoken, or religious affiliations.

Demographics

Age, Age, Gender,Gender,IncomeIncomeEthnicity, Ethnicity, Education Education OccupationOccupation%'s will %'s will differdiffer

AgeAge

Age is a key characteristic to consider. Many Age is a key characteristic to consider. Many products are age sensitive. products are age sensitive. – Ex: Health products to older adultsEx: Health products to older adults

Age is often broken down by generations.Age is often broken down by generations. People from the same generation People from the same generation were born between a certain were born between a certain set of years, and commonly set of years, and commonly share similar values, lifestyles, share similar values, lifestyles, cultural knowledge and cultural knowledge and experiencesexperiences..

Generations

Baby Boom GenerationBaby Boom Generation• 76 million Americans were born between 1946-76 million Americans were born between 1946-

19641964• Most baby boomers are in their 50’s and 60’s Most baby boomers are in their 50’s and 60’s • They are at the peak of their earning incomeThey are at the peak of their earning income• They are great targets for luxurious and They are great targets for luxurious and

recreational productsrecreational products• Looking toward retirement:Looking toward retirement: investments, savings,investments, savings,financial plansfinancial plans

Generations

Generation XGeneration X• 40 million Americans were born between 1965-40 million Americans were born between 1965-

19761976• Grew up during a time of widespread mediaGrew up during a time of widespread media• They are considered savvy and skeptical They are considered savvy and skeptical

consumersconsumers• Reaching this group is achieved by using sharp Reaching this group is achieved by using sharp

images, music, humor, and a little irreverence.images, music, humor, and a little irreverence.

Generations

Generation YGeneration Y• 77 million Americans were born between 1977-199777 million Americans were born between 1977-1997• Fewer number of children per familyFewer number of children per family• Grew up in a computer worldGrew up in a computer world• Extremely savvy with technology and used to doing Extremely savvy with technology and used to doing

multiple things at a timemultiple things at a time• Young people have a huge amount of influence over Young people have a huge amount of influence over

parents purchasing decisionsparents purchasing decisions• Marketers want to get kids hooked Marketers want to get kids hooked • early and influence buying decisionsearly and influence buying decisions

All of you!All of you!

Gender

Surprisingly few products today are marketed to solely Surprisingly few products today are marketed to solely women or men. women or men.

Ex: Women buy men’s cologne and clothing all the time. Frequently,Ex: Women buy men’s cologne and clothing all the time. Frequently,advertisements for these products are targeted at a female advertisements for these products are targeted at a female demographic.demographic.

Ex: Men buy flowers or jewelry for women Ex: Men buy flowers or jewelry for women as romantic gifts. as romantic gifts.

Ex: schick razors with women stealing razors Ex: schick razors with women stealing razors from men or vice versa. from men or vice versa.

It’s important to remember the distinction between the It’s important to remember the distinction between the customercustomer (purchaser) and the (purchaser) and the consumerconsumer (user). (user).

Income LevelIncome Level

Marketers look at two types of incomeMarketers look at two types of income

Disposable incomeDisposable income: is the money left : is the money left afterafter taking out taxes. taking out taxes. The money used to pay for bills, basic The money used to pay for bills, basic living necessities – food, shelter, clothing. living necessities – food, shelter, clothing.

Discretionary incomeDiscretionary income: is the money : is the money left afterleft after payingpaying for basic living necessities such as for basic living necessities such as food, shelter, and clothing. Cell Phones?food, shelter, and clothing. Cell Phones?

Money given to teenagers is often times Money given to teenagers is often times discretionary money from parent/s/guardians.discretionary money from parent/s/guardians.

Ethnic BackgroundEthnic Background

The U.S. is the Great Melting Pot. The U.S. is the Great Melting Pot.

African, Hispanic, and Asian Americans make up 28% of African, Hispanic, and Asian Americans make up 28% of the population.the population.

Marketers reach them using targeted ads on places like Marketers reach them using targeted ads on places like Spanish TV, BET or magazines like Ebony and Black Spanish TV, BET or magazines like Ebony and Black Enterprise.Enterprise.

Ethnicity and culture has a huge impact on purchasing Ethnicity and culture has a huge impact on purchasing decisions. Marketers have to understand all of the decisions. Marketers have to understand all of the cultures in the U.S. in order to be successful.cultures in the U.S. in order to be successful.

Ethnic BackgroundEthnic Background

http://www.usatoday.com/news/nation/census/2003-06-18-Census_x.htm

PsychographicsPsychographics

Categorizing people based on Categorizing people based on socialsocial and and psychologicalpsychological characteristics.characteristics.

Consumers’ attitudes, value system, and lifestyle. Consumers’ attitudes, value system, and lifestyle.

Trends are also important to look at. People Trends are also important to look at. People start placing value on new things like eating start placing value on new things like eating healthy, being independent, or being more healthy, being independent, or being more casual in the workplace.casual in the workplace.

Are people’s desires in line with their means?Are people’s desires in line with their means?Ex: People want luxury even if they can’t truly afford it.Ex: People want luxury even if they can’t truly afford it.

GeographicsGeographicsSegmenting the market based on Segmenting the market based on wherewhere peoplepeople livelive..

Ex: local, regional, national, or global markets.Ex: local, regional, national, or global markets.Ex: Small town restaurant – localEx: Small town restaurant – localEx: Coca Cola – InternationalEx: Coca Cola – International

Using ethnicity you can look at location by the concentration of a Using ethnicity you can look at location by the concentration of a particular ethnic group.particular ethnic group.

The trend in the U.S. has been for people to move South, West, or The trend in the U.S. has been for people to move South, West, or Southwest. There is huge growth in places like Nevada, Arizona, Southwest. There is huge growth in places like Nevada, Arizona, Colorado, Georgia, and Idaho.Colorado, Georgia, and Idaho.

Marketers also have to consider people in a specific regions likelihood to Marketers also have to consider people in a specific regions likelihood to use certain products.use certain products.

Washington – UmbrellasWashington – UmbrellasCalifornia/Florida – SurfboardsCalifornia/Florida – Surfboards

Product BenefitsProduct Benefits

Often potential customers are separated by the Often potential customers are separated by the features they are looking for. features they are looking for.

Ex: Shampoo comes in multiple styles; w/ conditioner, Ex: Shampoo comes in multiple styles; w/ conditioner, scented, dry scalp, oily hair, thick hair, etc..scented, dry scalp, oily hair, thick hair, etc..

Often products have several appealing features and Often products have several appealing features and need to be marketed in different ways. need to be marketed in different ways.

Ex: To one person an Audi might be fast and luxurious, Ex: To one person an Audi might be fast and luxurious, while to another the safety of passengers is paramount.while to another the safety of passengers is paramount.