THE PREMISE

BEHIND MARKET
SEGMENTATION
Prepared by:
Barbosa, Florie Jane
Bathan, Marissa
Urbino, Charlene
Market segmentation is the
process of dividing a market of
potential customers into
groups, or segments, based
on different characteristics.
The segments created are
composed of consumers who
will respond similarly to
marketing strategies and who
share traits such as similar
interests, needs, or locations.
 Why is market segmentation important
for marketers?

 Market segmentation makes it easier for marketers to

personalize their marketing campaigns.
 By arranging their company’s target market into
segmented groups, rather than targeting each potential
customer individually, marketers can be more efficient
with their time, money, and other resources than if they
were targeting consumers on an individual level.
Grouping similar consumers together allows marketers
to target specific audiences in a cost effective manner.
Market segmentation also reduces
the risk of an unsuccessful or
ineffective marketing campaign.
When marketers divide a market
based on key characteristics and
personalize their strategies based on
that information, there is a much
higher chance of success than if
they were to create a generic
campaign and try to implement it
across all segments.
Many optimistic
entrepreneurs assume
that if they make their
product good enough, it
can attract anybody and
everybody regardless of
age, gender, income, and
a whole lot of other
factors.
For example:
The phenomenal
success of Coca-Cola
which manages to have
a very broad appeal,
becoming the favorite
beverages of young or
old, rich or pool alike.
The typical new product launches
into a market that is already
saturated with competition and
with each business fighting to get
a share of the available market.
If you are planning to launch a
product into an already
competitive industry, then
focusing on specific market
segment may prove to be more
effective than simply appealing to
all tastes and preferences.
 Examples:
In the US market, Pepsi had been struggling to
compete with Coke since the 1930s but barely
gained any transaction. For the longest time, it
tried to wrestle market share from the leading
beverage by being much cheaper at one point
even promising to be twice the size of a bottle
of Coke for half the price! It was not until the
1960s when Pepsi finally decided to just focus
on the youth with a campaign that called them
“The Pepsi Generation”. Sales finally took off
then.
Apple succeeded phenomenally by
focusing on satisfying the needs of
more upscale buyers who had
enough disposable income to spare
for well-engineered and well-
designed products. The company
does not sell low-priced devices and
it does not seek to appeal to a
broad market. In doing so, it is able
to command high profit margins
while still affording to build
products at premium quality.
 Market were segmented according
to the following variables:
1.Demographic. This refers to
quantifiable and factual statistics of the
population, such as age, sex, income,
occupation, and basically any piece of
information that is gathered by the
National Statistical Office.
Firms that seek to use demographic
segmentation would typically look up
statistics about their selected demographic
criteria to get an idea about how big this
segment might be.
2. Psychographic. This refers to how
consumers see and feel about themselves-
hence psycho or “of the mind”. It includes
elements such as social class, lifestyle, and
personality. If you are segmenting the market
by whether or not they are adventurous,
idealistic, how they feel about a particular
issue, or who they aspire to be, then this are
all factors that beside primarily in the
people’s minds.
For example Nike has used psychographics in
designing its communications, appealing
primarily to people with competitive self-
identities.
Psychographic data is not
captured by the National Statistics
Office, so the way to determine
how many people fit into a
particular
.
psychographic profile is
generally through primary
research methods such as
surveys.
3. Behavioral. Refers to how we behave when buying
when buying a product, whether these actions may be
conscious or unconscious in nature.

This includes issues such as when do we typically buy a

product, what we look for when buying a product, how
loyal we tend to be a brand, how often and how much do
we buy, what price point we are comfortable with, how
ready we are to buy the product in the first place, and to
whom we typically buy the product for.
Example:
Jollibee originally differentiated its burgers by proclaiming
them to be "langhap-sarap" appealing to a typically
Filipino behavior of smelling food to fully appreciate it
before eating it.
4. Geographic. The physical location of a
market, including the general
characteristics of the location.
This includes factors such as:
• climate
• traffic conditions
• cultural characteristics that are inherent
in a geographic area
• livelihood opportunities
• population density
SYSTEMATIC SEGMENTATION

Ways of identifying distinctive segments

among a large population. This is where a
statistically based method of segmenting the
market can be utilized, something that large
organizations use.
Step 1. Conduct a wide survey. Using a
survey methodology have a large group of
respondents identify the different product
attributes and their importance ratings.
Step 2. Process the data. Using the
statistical tool of cluster analysis, where
respondents are grouped together based on
similarities of their answers, the respondents
are grouped into a given number of cluster.
Step 3. Profiling. This is the hard part. While
the software can classify and categorize
respondents into cluster, it generally cannot
describe what each cluster is composed of or
why respondents were clustered together the
way they were.
Targeting
The next step is to select the
segment that can be most
sensibly targeted.
There is no hard and fast
science to the selection process.
In the end, it is primarily the
result of informed assessment
and analysis. Some tips that
come into play are:
 Always consider a firms size and growth
objectives when selecting a market for it to
target.
• Assess the structural attractiveness of
the potential market.
• Identify the firms objectiveness and
resources.
• When planning for a long-time growth,
immediately assess the segment’s
potential for economics of scope.
• By the same token, there is also the
issue of segment-by-segment invasion.
 By keeping that pointers
in mind, strategic business
plans can be developed
around the spotting of
opportunities in
undeserved and under-
marketed segments in the
industry.
 THANK YOU
AND GOD BLESS!