Chapter5 Marketing Segmentation

Republic of the Philippines
CAVITE STATE UNIVERSITY
Imus City Campus
Cavite Civic Center, Palico IV, Imus City Cavite
(046) 471-6607 / (046) 471-6770 / (046) 686-2349
www.cvsu.edu.ph
CHAPTER 5
MARKET SEGMENTATION
SUBMITTED BY:
BORROMEO, RICA MAE A.
HUSSAIN RAHIM
AMIEL MARVIN NAPEÑAS
STEPHEN DEREK NACIONALES
BSBM-MKTG3B
SUBMITTED TO:
MRS. RUBY DE GRANO
What is Market Segmentation?
Market Segmentation is one of the most important concepts of marketing. In fact, a primary
reason for studying consumer and organizational behavior is to provide bases for effective
segmentation, and a last portion of marketing research is concerned with segmentation.
Selection of appropriate target market is paramount to developing successful marketing
programs.
Market Segmentation – is a process of dividing a market into groups of similar consumers and
selecting the most appropriate group(s) for the firm to serve. The group or segment that a
company selects to market to is called target market
Market Segmentation
 Market segmentation is a marketing concept which divides the complete market set
up into smaller subsets comprising of consumers with a similar taste, demand and
preference.
 A market segment is a small unit within a large market comprising of likeminded
individuals.
 One market segment is totally distinct from the other segment.
 A market segment comprises of individuals who think on the same lines and have
similar interests.
 The individuals from the same segment respond in a similar way to the fluctuations in
the market.
Marketing Segmentation Process

1. Delineate firm's current situation - a firm must do a complete situational analysis when
embarking on a new or modified marketing program. At the marketing planning level, such an
analysis aids in determining objectives, opportunities, and constraints to be considered when
selecting target markets and developing marketing mixes. The inclusion of this first step in the
marketing segmentation process is intended to be a reminder of tasks to be performed in the
marketing planning.
2. Determine consumer needs and wants - successful marketig strategies depend on

discovering and satisfying consumer needs and wants. A firm in this situation may seek to
discover a broad variety of unsatisfied needs. For example, a firm in the communication
industry may seek more efficient methods for serving consumers' long-distance telephone
needs. At a strategic level, consumer needs and wants usually are translated into more
operational concepts. For instance, consumer attitudes, preferences, and benefits soughts,
which are determined through marketig research , are commonly used for segmentation
purposes.
3. Divide markets on relevant dimentions - this step is often considered to be the whole
market segmentation. Three important questions should be considered here:
1. Should the segmentation be a prori or post hoc?
2. How does one determine the relevant dimensions or bases to use for segmentation?
3. What are some bases for segmenting consumer and organizational buyer markets?
Priori Vs Post Hoc Segmentation
Real-world segmentation has followed one of two general patterns.
An a priori segmentation approach is one of which the marketing manager has decided on the
appropriate basis for segmentation in advance of doing any research on the market.
Post hoc segmentation is an approach in which people are grouped into segments on a basis
of research findings.
Both of these approach are valuable.
Bases for Segmentation
Benefit segmentation - approach that focuses on satisfying needs and wants by grouping
consumers on the basis of the benefits they are seeking in a product.
Psychographic segmentation - approach that focuses on consumer lifestyles as the basis

for segmentation. Consumers are asked a variety of questions about their lifestyles
( commonly, their activities, interests, and opinions ) and then grouped on the basis of the
similarity of their responses .
Geodemographic segmentation -appoach that identifies specific households in a market by

focusing on local neighborhood geography ( such as zip codes ) to create classifications of
actual, addressable, mappable neighborhoods where consumers live and shop.
The best-known psychographic segmentation is called VALS, which stands for " values and
lifestyles". Originally developed in the 1970s, ut has been redone several times to enhance its
ability to explain changing lifestyles and predict consumer behavior. VALS framework has
eight psychographic groups arranged in a rectangle based on two dimensions: Vertical
dimension segments people based on rhe degree to which they are innovative and have
resources such as income, education, self-confidence, intelligence, leadership skills, and
energy. The horizontal dimension represents primary motivations for buying.
VALS Framework and Segments
4. Develop product positioning - by this time, the firm should have a good idea of the basic
segments of the market that could potentially be satistified its product. The current step is
concerned with positioning the product favorably in the minds of the customers relative to
competetive products. Several different positioning strategies can be used. Products can be
positioned by focusing on their superiority to competetive products based on one or more
attributes. Second, products can be positioned by use or application. Third, products can be
positioned in terms of particular types of product users. Fourth, products can be positioned
relative to a product class. Finally, products can be positioned directly against particular
competitors. One way to investigate how to position a product is by using a positionig map,
which is a visual depiction of customer perceptions of competetive products, brands, or models.
Some experts argue that different positioning strategies should be used depending on
whether the firm is a market leader or a follower and that usually not attempt to position directly
against the industry leader.
5. Decide segmentation strategy - the firm is now ready to select its segmentation strategy.
There are four basic alternatives. First, the firm may decide not to enter the market. Second,
the firm may decide not to segment but to be a mass marketer. There are at least three
situations.
1. The market is so small that marketing to a portion of it is not profitable.
2. Heavy users make up such a large proportion of the sales volume that they are the
only relevant target.
3. The brand is the dominant brand in the market and targeting to a few segments would
not benefit sales and profits.
Third, the firm may decide to market one segment. And fourth, the firm may decide to market
more than one segment and design a separate marketig mix for each. In any case, the firm
must have some criteria on which to base its segmentation strategy decisions. Three important
criteria are (1) measuralbe (2) meaningful (3) marketable.
6. Design Marketing mix Strategy - the firm is now in a positio to complete its marketing
plan by finalizing the marketig mix or mixes to be used for each segment. Clearly, selection of
the target market and designing the marketing mix go hand in hand, and thus many marketing
mix decisions should have already been carefully considered. While we place marketing mix
design at the end of the model, many of these decisions are made in conjunction with target
market selection.

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Republic of the Philippines

CAVITE STATE UNIVERSITY

Imus City Campus

Cavite Civic Center, Palico IV, Imus City Cavite

(046) 471-6607 / (046) 471-6770 / (046) 686-2349

Marketing Segmentation Process

2. Determine consumer needs and wants - successful marketig strategies depend on

1. Should the segmentation be a prori or post hoc?

Priori Vs Post Hoc Segmentation

Real-world segmentation has followed one of two general patterns.

Both of these approach are valuable.

Bases for Segmentation

Psychographic segmentation - approach that focuses on consumer lifestyles as the basis

Geodemographic segmentation -appoach that identifies specific households in a market by

VALS Framework and Segments

1. The market is so small that marketing to a portion of it is not profitable.

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