CHAPTER 4: MARKET SEGMENTATION

Marketing Management
Instructor: Mrs. Adeline A. Suba

What are market segments?

A MARKET SEGMENT is a group of customers that shares similar inclinations

towards your brand. Process of dividing a market into groups of similar consumers and
selecting the most appropriate groups for the firm to serve. Target market: Group or
segment a company selects to serve.

How do marketers segment the market?

Marketers identify segments best when iterating between two approaches: a

managerial, top down ideation and a customer based, bottom up needs assessment.
Marketers begin with some knowledge of the market place- the customers, the competitors,
and the company’s own strengths- and they gather information to understand the
customer’s perspective.

 TOP DOWN APPROACH- The most common management style. It is the process of
upper management reaching independent conclusions that change or improve the
workplace or business systems.
 CUSTOMER BASED, BOTTOM UP ASSESSMENT-A process where team members
are invited to participate in every step of the management process.

Advantages:

 Allow the full talents of employees to be used.

 A lower level employee may have unique insights on how to solve a
common problem.

Disadvantages:

 Too much input, managers may have a harder time finding an

effective plan for reaching goals.
 CHAPTER 4: MARKET SEGMENTATION
Marketing Management
Instructor: Mrs. Adeline A. Suba

Determine the customer needs and wants?

Providing superior customer service means meeting customers’ needs by providing

them with the products and services they want or by providing effective solutions to their
problems. In order to do that, customer service, customer care, and call center
representatives must be able to accurately and completely identify customers’ needs. The
objective of this online customer service training course is to help trainees identify and
meet customer needs, an important step in creating loyal customers. At the end of this
training course, trainees will be able to recognize the importance of correctly identifying
customers’ needs; ask the right questions to accurately identify needs; identify and take
advantage of cross-selling opportunities; and present products, services, and solutions that
meet customers’ needs.

Divide market on relevant dimensions?

GEOGRAPHIC SEGMENTATION

It is the practice of segmenting a campaign’s target audience based on where they

are located. Segments can be as broad as a country or a region, or as narrow as one street of
homes in a town.

DEMOGRAPHIC SEGMENTATION

It is segmenting the market based on certain characteristics of the audience.

Characteristics often include, but are certainly not limited to: race, ethnicity, age, gender,
religious, education, income, marital status, and occupation.
 CHAPTER 4: MARKET SEGMENTATION
Marketing Management
Instructor: Mrs. Adeline A. Suba

PSYCHOGRAPHIC SEGMENTATION

It is far less concrete than both geographic and demographic customer

segmentation, as the characteristics used to segment are less “tangible” than the latter two.
Psychographic segmentation divides the market on principles such as lifestyle, values,
social class, and personality.

BEHAVIORAL SEGMENTATION

It is similar to psychographic segmentation on the basis that it is less concrete than

demographic or geographic segmentation. Behavioral segmentation is the practice of
dividing consumers into groups according to any of the following attributes: usage,
loyalties, awareness, occasions, knowledge, liking, and purchase patterns.

Develop Product Positioning

1. Understand your target market

 Which product features (i.e. size, speed…), if any, do they emphasize?
 Which product benefits ( i.e. safety, comfort…), if any, do they emphasize?

2. Understand your competitors

 Conduct primary and secondary research to determine how your
competitors are positioning themselves, the strategies they using, and how
successful they’ve been.

3. Map buying criteria against competitive positioning

 Add a column to the right of your list of buying criteria to note each
competitor that positions its product against the criterion.
 CHAPTER 4: MARKET SEGMENTATION
Marketing Management
Instructor: Mrs. Adeline A. Suba

Target market buying criteria Competitive positioning

40%- Color selection Company C
30%- Length warranty Company B
20%- Service reputation
10%- Makes me happy/feel good Company A
5%- High tech gadgetry Company B and D

4. Assess your product’s strengths against the buying criteria

 Now add a column to the left of your buying criteria list to write your
product’s relative strengths. Ask your customershow they rank your various
strengths. Otherwise, just use your best judgment.

Your product Target market buying criteria Competitive positioning

strengths
40%- Color selection Company C

#2 30%- Length warranty Company B

#1 20%- Service reputation

#3 10%- Makes me happy/feel good Company A

5%- High tech gadgetry Company B and D

5. Analyze the gaps

 Is thereone your product satisfies effectively? Would successfully positioning

yourself there yield the returns you seek?If there are no unfilled positions (or
there are but you’re not interested in any of them), then you will have to
decide whichcompetitor to battle and which position you can most effectively
win.
 CHAPTER 4: MARKET SEGMENTATION
Marketing Management
Instructor: Mrs. Adeline A. Suba

Decide Segmentation Strategy

There are various market segmentation strategies which an entrepreneur can use
for their products. In fact, the whole concept of entrepreneurship is many times based on
the segment you are going to target. Defining the segmentation strategy is important
because it then encourages you to learn more about your customers, and hence achieve a
higher turnover.

Design Marketing Mix

The marketing mix is the set of controllable, tactical marketing tools that a
company uses to produce a desired response from its target market. It consists of
everything that a company can do to influence demand for its product. It is also a tool to
help marketing planning and execution.

The marketing mix can be divided into four groups of variables commonly known as the
four Ps:

Product: The goods and/or services offered by a company to its

customers.Price: The amount of money paid by customers to purchase the
product.
Place (or distribution): The activities that make the product available to
consumers.
Promotion: The activities that communicate the product’s features and
benefits and persuade customers to purchase the product.
 CHAPTER 4: MARKET SEGMENTATION
Marketing Management
Instructor: Mrs. Adeline A. Suba

Packaging: Also refers to the process of designing, evaluating, and producing

packages. Packaging can be described as a coordinated system of preparing goods
for transport, warehousing, logistics, sale, and end use.
Position: Put or arrange (someone or something) in a particular place or way.
People: Are the most important element of any service or experience. Services
tend to be produced and consumed at the same moment, and aspects of the
customer experience are altered to meet the individual needs of the person
consuming it.