Lectures 1 and 2
mrsaiz
MiniLecture1.docxImportant Definitions:
Marketing – process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate satisfying exchange relationships with customers, and to develop and maintain favorable relationships with stakeholders, in a dynamic environment.
Target Market – A specific group of customers on whom an organization focuses its marketing efforts.
Marketing Mix – Four marketing activities, including product, distribution, promotion and pricing, that a firm can control to meet the needs of customers within its target market.
Introduction to Marketing Summary:
The critical factor to remember from Chapter 1 is that organizations must focus on identifying the customers who not only will buy the products being offered by the organization, but also focus on maintaining these customer relationships so that customers continue to buy from the organization. Marketing is not a complicated process. Continuing to maintain a critical focus on the core marketing mix variables (product, distribution, promotion and price) allows organizations to both create and advance their marketing-related competitive advantages.
Chapter 6 – Target Markets: Segmentation and Evaluation
Important Definitions:
Consumer Market – Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits.
Market Segment – Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs.
Segmentation Variables – Characteristics of individuals, groups, or organizations used to divide a market into segments.
Target Marketing Selection Summary:
For students who have chosen to purchase either of the textbooks, but especially for those who are using the Pride and Ferrell textbook as a reference, you should immediately notice an important component of this class: The topics covered in these mini-lectures and postings often will be very small components of the overall textbook chapters. This will occur in many of the topics that we cover, and is especially true for the present chapter. Although the textbook spends a significant amount of time introducing the overall concept of target market selection, the focus of this mini-lecture is on specific market segments that are profitable options for organizations today.
Depending on the product being sold, organizations might have consumer market segments, business market segments, or both. The focus of the present class will primarily be placed on organizations that are targeting consumers who are the actual end-users of the products they purchase. As such, it is important to understand that organizations today have a variety of options in terms of the market segments they identify and target as primary product-purchasing segments.
Consumers Defined by Generation
A significant emphasis for many organizations today is the ability to identify consumption groups based on their purchasing habits and spending characteristics. Three broad consumption cohorts identified in the United States today are the groups of consumers who fall into the categories of the Millennials (formerly known as Generation Y), Generation X, and the Baby Boomers. Although definitions of these social cohort groups differ, most industry experts accept the following descriptions of each group (sections of these descriptions are taken from The Atlantic – Bump, 2014)
Millennials – Although the birth years of this group often vary depending on the source of the information, the most common accepted birth years for this group identify them as consumers born from the early 1980’s to the mid 2000’s.
Generation X – Generally, this generation is defined as consumers born after the post–World War II baby boom, ranging from the mid-1960’s to the mid-1980’s.
Baby Boomers - This generation is defined as consumers born during the post–World War II baby boom, ranging from the mid-1940’s to the early-1960’s.
The Millennials
Organizations have a variety of reasons explaining the emphasis they are placing on these groups of consumers. However, the reasons most often identified for the increased emphasis on selling products to the Millennial consumers fall into three categories: 1) the increased freedom of product selection that younger consumers possess today as compared to their counterparts of years past; 2) the vast differences in consumption habits as compared to previous generations; and 3) the increased spending power that younger consumers possess. The Millennial spending power is astonishing. Experts predict that in 2017, Millennials will have spent approximately $200 billion in the United States alone (Solomon, 2015). The Millennials are also expected to possess the greatest amount of spending power by the 2018. In addition to this vast spending, the Millennials rely heavily on social media for both consumer education and consumption recommendations. Research indicates that this shift in promotional power will vastly re-shape the business-to-consumer retail market in the United States (Schroeder, 2017).
Generation X
According to a Forbes study of generational cohorts (Howe, 2014), Generation X consumers belong to the most independent cohort group ever, were the first consumers to experience widespread divorce of their parents, and are much more likely than their predecessors, the baby boomers, to change jobs or careers multiple times. Additionally, the average Generation X consumer has accepted lower wages that accompany lower expectations, traditionally has performed poorly when investing income, and will likely work in full-time employment positions longer than the average baby boomer. Finally, according to a study conducted by the University of Michigan ( http://lsay.org/ ), Generation X consumers are focused on value over prestige and have a stronger sense of being involved with their families, but are pessimistic about their financial future, including retirement options.
Baby Boomers
These consumers have often been the measuring stick for organizations seeking to establish and/or improve their marketing efforts. An article from CNN suggests that the viability of this group as a profitable target segment might not be as sound as once thought.
“So, how did the "Me" generation do for itself? Have the boomers prospered as much as they could have, or did they miss key opportunities to better their nation and their lives? It depends on whom you ask. Some experts say the boomers did not plan well for their future, especially their financial futures, relying instead on the whimsy of a historically rosy economic era to carry them along. Others contend the boomers may have had sound, long-term plans, but were sandbagged by economic and political shifts so dynamic that the boomer generation became preoccupied with adapting to their new world and rewriting the social contracts that bind our nation together, instead of fulfilling long-term financial and personal goals. ‘I think they've been baby bummers,’ says Suze Orman, a personal finance expert and host of her own financial advice television and radio show. ‘We are a fascinating generation,’ she says, admitting that she's a boomer herself. ‘We're really independent and free-thinking,’ but from a financial perspective, ‘we did not save money, and we loved to spend money. Many of (the boomers) were saved by the real estate markets, and their wealth was created for them; they did not create it themselves.’” (Trickey, 2006)
Bump, Philip (2014), “Here Is When Each Generation Begins and Ends, According to Facts,” the Atlantic, March 25, 2014.
Howe, Neil (2014), “Generation X: Once Xtreme, Now Exhausted,” Forbes, August 27, 2014.
Schroeder, Jules (2017), “How To Tap Into The Millennial $200 Billion Buying Power With Social Media,” Forbes, October 31, 2017.
Solomon, Micah (2015), “The Millennial Customer Has $200 Billion To Spend (But Wants A New Style Of Customer Service),” Forbes, January 21, 2015. https://www.forbes.com/sites/micahsolomon/2015/01/21/the-millennial-customer-has-arrived-has-200-billion-to-spend-and-wants-a-new-style-of-customer-service/#76f1e5ab3e29
Trickey, Helyn (2006), “Looking to the '60s generation for lessons on how to plan,” CNN, February 20, 2006.
http://www.cnn.com/2006/US/02/15/babyboomers.planning/index.html
[Finally, please do not expect (or dread) a 4 page mini-lecture post every time. This topic is extremely popular in the media and finding information to bolster the discussion presented in the mini-lecture is rather easy to find. It also tends to be a good topic with which to start the class, as students often find it easy to get involved in this discussion.]
Questions and Discussion Points for the Discussion Board on Blackboard:
1) Identify the organizations that have been particularly successful in reaching one or more of the cohort groups identified in this topic.
2) Identify the factors that are important in reaching these cohort groups. In other words, what characteristics of these groups separate them from other groups and make them viable options as target segments?
3) What does the future hold for organizations specializing in sales to younger consumers? Some organizations are already trying to prepare for the next group of younger consumers who will emerge in the coming years. What can organizations expect from this new group of young consumers? How will they differ from the Generation X and Millennial consumers of today?
4) Do any of the marketing mix variables require special attention in terms of their utilization in reaching any of the cohort groups identified in this topic? Additionally, would any of the marketing mix variables be more important in terms of their utilization in reaching any of the cohort groups? (Just as a hint, I probably would not be presenting these questions to you if I did not believe that the answers are both yes. Therefore, your ability to identify the appropriate marketing mix variables and support your positive response to the question will be important in responding to this question.)
