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Chapter 8

Marketing Chapter 8.docx

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McMaster University
Ambika Badh

Marketing Chapter 8 Market • Group of people with sufficient purchasing power, authority, and willingness to buy Target market • Group of people to whom a firm decides to direct its marketing efforts and ultimately its goods and services Consumer products • Products bought by ultimate consumers for personal use Business products • Goods and services purchased for use either directly or indirectly in the production of other goods and services for resale Market segmentation • Division of the total market into smaller, relatively homogenous groups Criteria for Effective Segmentation 1. The market segment must present measurable purchasing power and size 2. Marketers must find a way to promote effectively and to serve the market segment 3. Marketers must then identify segments that are sufficiently large to give them good profit potential. 4. The firm must aim for segments that match its marketing capabilities Segmenting Consumer Markets • Geographic segmentation o Division of an overall market into homogenous groups based on their locations o Census metropolitan area Marketing 2MA3: Chapter 8 1  Geographic area surrounding an urban core with a population of at least 100,000 o Census agglomeration  Geographic area with a population over 10,000 o Core region  Region from which most major brands get 40% to 80% of their sales • Demographic segmentation o 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 o Cohort effect  Tendency of members of a generation to be influenced and bound together by events occurring during their key formative years (17-22) • Seniors – WWII & The Great Depression • Baby Boomers – Vietnam War & women’s right movement o According to Ernst Engel, as household income increases, the following will take place:  A smaller percentage of expenditures go for food  The percentage spent on housing, household operations, and clothing remains constant  The percentage spent on other items increase • Psychographic segmentation o Division of a population into groups that have similar psychological characteristics, attitudes, values, and lifestyles o AIO statements  Items on lifestyle surveys that describe various activities, interests, and opinions of respondents o VALS
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