Identifying Market

Segments and
Targets
ESTEBAN | FERIA | LUCOT
 ◦ What are the different levels of
market segmentation?
◦ In what ways can a company
divide a market into segments?
◦ What are the requirements for
OBJECTIVES effective segmentation?
◦ How can a business markets be
segmented?
◦ How should a company choose
the most attractive target
markets?
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 “
Market Segmentation is a
natural result of the vast
differences among people.

-Donald Norman

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 TARGET MARKETING
Many companies are now embracing this.
They focus on those consumers they have the
greatest chance of satisfying instead of
scattering their marketing efforts.

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 target
marketing
requires three
steps
 Identify and profile
distinct group of buyers
step who differ in their needs
1
and preferences (market
segmentation).

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 Select one or more
step market segments to
2
enter (market targeting).

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 Establish and
communicate the
products’ key distinctive
step benefit(s) of the
3
company’s market
offering (market
positioning).

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Levels and Patterns of Market
Segmentation
Market segmentation is an effort to increase a
company’s precision marketing.

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 Segment Marketing

A market segment consists of a

large identifiable group within a
market with similar wants,
purchasing power, geographical
location, buying attitudes or
buying habits. For example, for an
auto company might have four
broad segments: customers
seeking basic transportation or
high performance or luxury or
safety.
BASES FOR SEGMENTING
CONSUMER MARKETS

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 Geographic
Segmentation

basis calls for dividing the market

1 into different geographical
units

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Grassroots Marketing

-concentrates on getting close &

personally relevant to individual
customers as possible

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Customer Cloning

- Assuming that the best prospects

live where most of his customers
come from

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Geoclustering
- combine geographic data with
demographic data
- captures increasing diversity of the
population

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 Demographic
Segmentation
-the market is divided into
basis groups in the basis of
2 variables such as age, family
size, family life cycle, gender,
income, etc.

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two reasons 1. Affiliation with
for the
popularity of demographic
demographic variables
variables 2. Easier to measure

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Demographic
segmentation

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 Psychographic
Segmentation
-is the science of using
basis psychology and demographics
3 to understand consumers.
❏ psychological/personality
traits
❏ Lifestyle or values

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VALS (formerly known as “Values and
Lifestyles”) which originally developed on 1970s.

-is based on psychological traits for people and

classifies consumers into 8 groups based on
responses to a questionnaire containing 4
demographic and 35 attitudinal questions

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 ◦ Innovators- successful,
sophisticated and have high self
four esteem
segments ◦ Thinkers- motivated by ideals
with more ◦ Achievers- looking for
resources
consensus and stability
◦ Experiencers- young,
enthusiastic and impulsive
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 ◦ Believers-conservative,
conventional and traditional

four ◦ Strivers- trendy and fun-loving

segments ◦ Makers- favor functional
with fewer products
resources
◦ Strugglers- loyal to their
favorite brands

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 ◦ Integrators- innovative; exposed
to wide range of media
◦ Self Innovators & Self
Psychographic
Segmentation Adaptors- these consumers desire
Schemes- often personal experience and
customized by
◦ Ryoshiki Innovators &
culture
Ryoshiki Adaptors- Ryoshiki
means “good values”, consumers
focused on their occupation.
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 ◦ Traditional Innovators &
Traditional Adaptors- follow
traditional religions and customs
Psychographic ◦ High Progmatics & Low
Segmentation
Schemes- often Progmatics- few interest and
customized by uncommitted in their lifestyle
culture choices
◦ Sustainers- they dislike
innovation and tend to focus on
sustaining the past
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 Behavioral
Segmentation
Basis Buyers are divided into
4 groups in the basis of their
knowledge of, attitude
toward, use of, or a response
to a product

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Behavioral
Segmentation

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Behavioral
Segmentation

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 ◦ Occasions- buyers can be
distinguished according to the occasions
when they develop a need , purchase a
product or use a product.

User & Usage

◦ User Status- markets can be
segmented into non-users, ex-users,
potential users, first time users, regular
users of a product. The key to attract
potential users or even possibly non-
users is understanding as to why they
are not using.
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 ◦ Usage Rate- markets can be
segmented into light, medium and
heavy product users.

User & Usage

◦ Buyer-Readiness Stage-
Some people are unaware of the
product, some are aware, some are
informed, some are interested, some
desire the product and some intent
to buy.

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 Sample Marketing Funnel

User & Usage

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 ◦ Loyalty Status
➢ Hard-core Loyals- one brand all the
time
➢ Split Loyals- loyal to two or three
brands
User & Usage ➢ Shifting Loyals- shift loyalty from
one brand to another
➢ Switchers- no loyalty to any brand
◦ Attitude- Five attitude groups can be
found in a market: enthusiastic, positive,
indifferent, negative and hostile.

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Behavioral
Segmentation
Breakdown

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BASES FOR SEGMENTING
BUSINESS MARKETS

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 Demographic Characteristics

MAJOR 1. Industry- Which industries

SEGMENTATION
should we serve?
VARIABLES
2. Company Size- What size
FOR BUSINESS
MARKETS companies should we serve?
3. Location- What geographical
areas should we serve?

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 Operating Variables
1. Technology- What customer
MAJOR technologies should we focus
SEGMENTATION on?
VARIABLES 2. User or non-user status- heavy
FOR BUSINESS users, medium, light or non-
MARKETS
users?
3. Customer Capabilities-
customers needing many or few
customers?
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 Purchasing Approaches
1. Purchasing-function
MAJOR Organization- companies with
SEGMENTATION
highly centralized or decentralized
VARIABLES
purchasing organizations?
FOR BUSINESS
MARKETS 2. Power Structure- companies that
are engineering dominated,
financially and so on?

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 Purchasing Approaches
3. Nature of Existing Relationships-
MAJOR serve companies which have strong
SEGMENTATION
relationships or simply go after the
VARIABLES
FOR BUSINESS most desirable companies?
MARKETS 4. General Purchase Policies-
companies that prefer leasing?
Service contracts? system purchases?
Sealed bidding?
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 Purchasing Approaches

MAJOR
SEGMENTATION 5. Purchasing Criteria- should we
VARIABLES serve companies that are seeking
FOR BUSINESS quality, service or price?
MARKETS

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 Situational Factors
1. Urgency- Companies that need
quick and sudden delivery or
MAJOR
service?
SEGMENTATION
VARIABLES 2. Specific Application- focus on
FOR BUSINESS certain applications of our
MARKETS products rather than all
applications?
3. Size of Order- focus on large or
small orders?
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 Personal Characteristics

1. Buyer-Seller Similarity- serve

MAJOR
SEGMENTATION companies whose people and
VARIABLES values are similar to ours?
FOR BUSINESS 2. Attitudes toward risk- Risk-
MARKETS taking or risk-avoiding customers?
3. Loyalty- Should we serve
companies that show high loyalty
to their suppliers?
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 MARKET TARGETING
The process of evaluating market
segments and deciding which among
them shows the most promise for
development

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Segmentation
process steps
by Roger Best

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Segmentation
process steps

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• Skillshare- “Tomorrow is for the
taking. Thousands of classes to help
you do your best work”
• Netflix- "Watch Anywhere. Cancel
Anytime"
• Spotify- music for everyone

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Effective Segmentation
Criteria

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 5 KEY CRITERIA

EFFECTIVE
1. Measurable
SEGMENTATION 2. Substantial
CRITERIA 3. Accessible
4. Differentiable
5. Actionable

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 5 KEY CRITERIA
1. Measurable
EFFECTIVE - The size, purchasing
SEGMENTATION
CRITERIA power and
characteristics of the
segments can be
measured
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 5 KEY CRITERIA
2. Substantial
EFFECTIVE
SEGMENTATION - Segments are large and
CRITERIA
profitable enough to
serve

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 5 KEY CRITERIA

EFFECTIVE
3. Accessible
SEGMENTATION
CRITERIA - Segments can be
effectively reached and
served.

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 5 KEY CRITERIA

EFFECTIVE
SEGMENTATION
4. Differentiable
CRITERIA - Segments are conceptually
distinguishable and respond
differently to different
marketing-mix elements and
programs
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 5 KEY CRITERIA

EFFECTIVE
SEGMENTATION
5. Actionable
CRITERIA - Effective programs can
be formulated for
attracting and serving
the segments
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 5 FORCES BY
5 Forces that MICHAEL PORTER
Determine the
Intrinsic Long- 1. Industry Competitors
Run 2. Potential Entrants
Attractiveness
of a Market 3. Substitutes
Segment 4. Buyers
5. Suppliers
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 5 FORCES THREATS
Industry Competitors Threat of Intense Segment
Rivalry
Potential Entrants Threat of New Entrants
Substitutes Threat of Substitute
Products
Buyers Threat of Buyers’ Growing
Bargaining Power
Suppliers Threat of Suppliers/ Growing
Bargaining Power
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Evaluating and Selecting the
Market Segments

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Evaluating &
Selecting the
Market
Segments

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Possible Levels of Segmentation

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 - A firm attempts to serve
Evaluating & all customer groups with
Selecting the all the products they
Market might need. Most
Segments applicable to large firms.

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 Undifferentiated Marketing-
the firm ignores segment
differences and goes after the
whole market with one offer
Evaluating &
Selecting the Differentiated Marketing -
Market operates in several market
Segments segments and designs
different products for each
segment

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 - Selective Specialization-
Evaluating &
Selecting the selects a subset of all the
Market possible segments, each
Segments attractive and appropriate

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 - Product Specialization- a
Evaluating &
Selecting the firm sells a certain product
Market to several different market
Segments segments

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 - Market Specialization-
Evaluating &
Selecting the concentrates on serving
Market many needs of a particular
Segments customer group.

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 - The firm markets to only one
particular segment
Evaluating &
Selecting the - Enjoys operating economies
Market through specializing its
Segments production, distribution and
promotion

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 - Also known as one-to-one
marketing
Evaluating & - Ultimate level of segmentation
Selecting the which leads to “segments of
Market one”, “ customized marketing”
Segments - This represents a target of one
individual for whom a unique
product offering is developed.

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 ◦ Identify your prospects and
one-to-one customers.
marketing ◦ Differentiate customers in
steps terms of their needs and their
value to your company.

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 ◦ Interact with customers to
improve your knowledge
one-to-one about their needs and build
marketing stronger relationships.
steps ◦ Customize products, services,
and messages to each
customer.

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The Zozosuit

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Legal & Ethical Public becomes concerned when
Issue with marketers take unfair advantage
of vulnerable groups (children) or
Market Targets
disadvantaged groups.

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Kretek Cigarettes in Fast-food Marketing Effort for
Indonesia Children

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POSITIONING

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 Creating, communicating, and
delivering the value offering to the
POSITIONING target markets so that consumers
understand its ability to fulfill their
needs and wants

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 - Show consumer perceptions
of their brands versus
competing products on
important buying dimensions
Perceptual
Maps - Perceptual maps can help
identify where (in the market)
an organization could position
a new brand

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 Three Steps in Positioning Task
1. Identifying a set of possible customer value
differences that provide competitive
advantages upon which to build a position.

2. Choosing the right competitive advantages,

and selecting an overall positioning strategy.

3. Effectively communicating and delivering

the chosen position in the market.
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Points of
Differentiation

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Sources of
Differentiation

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Sources of
Differentiation

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Selecting Overall Positioning
Strategy
Value Proposition – full positioning of a
brand and the full mix of benefits upon
which the brand is differentiated and
positioned

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Positioning
Strategies

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 More for More

- Involves providing the most

Positioning upscale product or service and
charging a higher price to
Strategies
cover the higher costs.

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 More for the Same

- Companies can attack a

Positioning competitor’s more-for-more
Strategies positioning by introducing a
brand offering comparable
quality but at a lower price.

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 The Same for Less

Positioning - The same quality of products

Strategies but at a lower price than most
of its competitors.

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 Less for Much Less

- Summed up with a definition of

"offering a brand, product, or
Positioning service of less quality, for a lower
price".
Strategies - This proposition offers the
customers less benefits in their
products, they are also incurring
less costs and can therefor charge
the customer lower prices
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 More for Less

Positioning - The ability to produce a

Strategies product that provides the
customer with more benefits
but at a lower price.

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Positioning
Errors

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 Underpositioning

- When consumers have only a

vague idea about the
Positioning company and its products,
Errors and do not perceive any real
differentiation.

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 Overpositioning

- When consumers have too

Positioning narrow an understanding of
the company, product, or
Errors
brand.

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 Confused Positioning

- When frequent changes and

Positioning contradictory messages
confuse consumers regarding
Errors
the positioning of the brand.

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 Doubtful Positioning

- When the claims made for the

Positioning product or brand are not
regarded as credible by
Errors
consumers.

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Communicating and Delivering The
Chosen Position

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References
● Kotler, P., Keller, K., Ang, S., Tan, C., & Leong, S. (2018).
Marketing Management An Asian Perspective (7th
ed., pp. 248-271).

● Kotler, P., Armstrong, G., Ang, S., Leong, S., Tan, C., &
Yau, O. (2009). Principles of Marketing A Global
Perspective (12th ed., pp. 164-182). Pearson Education,
Inc.

● Marshall, G., & Johnston, M. (2010). Marketing

Management (pp. 236-260). McGraw-Hill/Irwin.
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THANK YOU!

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 “
Market Segmentation is a
natural result of the vast
differences among people.

-Donald Norman

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