MARKETS

1
CHAPTER 2

• MARKETS

2
MARKETS

• Definition of Markets

• Buyers
• Ability to Buy
• Willingness to Buy

Consumer Market Segments

• Geographic
• Demographic
• Psychographic
• Cultural/Racial

3
BUYERS

• Consumer Markets
• Families
• Individuals
• Business Markets
• Business
• Government

4
CHARACTERISTICS OF MARKETS

• Consumer Business
• Many buyers Few buyers
• Small purchases Large purchases
• Direct demand Derived demand

5
DERIVED DEMAND

• U.S. Steel Ford
  Buyer
• The amount of steel sold by U.S. Steel to Ford is
• derived (influenced) by how many cars Ford sells.
• Intel Dell
  Buyer
• The number of computer chips sold by Intel to
  Dell is
• derived by how many PC s Dell sells.

6
ABILITY TO BUY

• Income
• Credit
• Bartering

7
CONSUMER INCOME

• Gross Income Total income (paycheck) before any
  deductions
• Disposable Income Total income minus taxes
• Discretionary Income Total income minus taxes
  and basic needs

8
U.S. RETAIL SALES BY PAYMENT

• Store Payment 1995 2003
• Cash 60
  32
• Checks 30 15
• Credit/Debit Cards 10 53
• 100
  100

9
BARTERING

• The negotiated exchange of goods for other goods
• instead of cash or credit.
• Examples

• Tutor a student in exchange for mowing your lawn
• Trading radio time for Astro Tickets

10
WILLINGNESS TO BUY

• Consumer Spending
• U.S. Beverage Market
• Favorite Sports

11
CONSUMER SPENDING

• Category Examples
• Durable Goods Furniture, TV
• Nondurable Goods Food, Beer
• Services Travel, Education

12
U.S. Consumer Expenditures(Percent)

• Category 1970 2000
• Durable Goods 13.1 12.1
• Nondurable Goods 41.9 29.8
• Services 45.0 58.1

13
U.S. CONSUMER SPENDING

• Category 1960 1990
• Food and Alcohol 26 19
• Shelter 14 20
• Apparel 10 6
• Vehicles 13 23
• Other 37
  32
• 100
  100

14
U.S. BEVERAGE MARKET SHARE

• Beverage 1960 1990
• Milk 34 13
• Coffee 32 12
• Beer 14 20
• Soft Drinks 11 36

15
U.S. FAVORITE SPORT

• Time Pro Football Pro Baseball
• 1985 24 23
• 1997 28 17
• 2004 30 15

16
CHANGES IN FAMILY DINNERS

• Take-outs
• Fast Foods
• Plan-overs

17
CONSUMER MARKET SEGMENTS

• Geographic
• Demographic
• Psychographic
• Cultural/Racial

18
GEOGRAPHIC MARKET SEGMENTS

• Rural Areas
• Suburbs
• Cities
• Global

19
DEMOGRAPHIC MARKET SEGMENTS

• Age
• Income
• Sex
• Education

20
HIGH INCOME MARKET SEGMENTS

• Tiffany
• Rolex
• Porshe

21
PSYCHOGRAPHIC MARKET SEGMENTS

• Lifestyles Business Examples
• Jill Best Buy
• Free Spirit Harley-Davidson
• Organic Eater Whole Foods

22
LIFESTYLE TARGET MARKETS FOR BEST BUY

• Markets
  Description
• Jill Busy
  suburban mom
• Ray Family man who wants
  his
• technology
  practical
• Barry Affluent
  professional male

23
CULTURAL/RACIAL MARKET SEGMENTS

• Cultural/Racial Business Example
• Black Angel Books
• Hispanic Bank of America
• Vietnamese Kim Son

24
BANK OF AMERICA MARKET STRATEGY

• Hispanic Market Major Banking
• Segments Services
• New Arrivals Basic bank
  services
• Transitionals Mortgages, IRAs
• Established Brokerage services

25
HISPANIC RICE USERS

• Cuban Puerto Rican Mexican
• White rice White rice Mexican
  rice
• Black beans Pink beans Pinto beans
• Crackers None
  Tortillas