Chapter Eight Notes
Each of us is unique, coming from different backgrounds, living in different households and have
different interests and goals. Marketers look at current customers and potential customers to figure out
what their characteristics are, whether they can identify certain subgroups, and how they can best offer
products to meet their requirements.
Market is composed of people with sufficient purchasing power, authority and willingness to buy.
Target market is a group of people whom a firm decides to direct its marketing efforts and ultimately its
goods and services.
Types of markets
Consumer products are products bought by ultimate consumers for personal use.
Business products are goods and services purchased for use either directly or indirectly in the
production of other goods and services for resale.
Market segmentation is the division of the total market into smaller, relatively homogeneous groups.
Criteria for effective segmentation include the following requirements:
1. The segment must have measurable size and purchasing power.
2. Marketers must find a way to effectively promote and serve the market segment.
3. Segment must be sufficiently large to offer good profit potential.
4. Firm must aim for segments that match its marketing capabilities.
Segmenting consumer markets
Four common bases for segmenting consumer markets:
1. Geographic segmentation
2. Demographic segmentation
3. Psychographic segmentation
4. Product-related segmentation
Geographic segmentation is the division of an overall market into homogenous groups based on their
locations. Census metropolitan area (CMA) is a geographic area surrounding an urban core with a population of at
Census agglomeration (CA) is a geographic area with a population over 10,000.
Core region is a region from which most major brands get 40 to 80 percent of their sales.
Demographic segmentation is the division of an overall market into homogenous groups based on
variables such as gender, age, income, occupation, education, sexual orientation, household size and
stage in the family life cycle; also called socioeconomic segmentation.
Generation X is the group born between 1966 and 1981 that are now between ages of 25 and 40.
Baby boomers are the group born between 1947 and 1965 that are now between ages of 48 and 66.
Cohort effect is the tendency of members of a generation to be influenced and bound together by
events occurring during their key formative years, roughly from 17 to 22 years of age.
Video game generation is a group called by several