MARKET
SEGMENTATIO
N
- Is defined as the
process of subdividing a
large group of customer
into smaller groups
possessing common
needs, wants,
expectation, and
demand.
A. By needs and wants
B. By demographic
Basis for Market C. By Psychographics
segmentation D. By Behavior
E. Others Bases for
segmentation
A. By
needs and
wants
Segmenting the
market is done
through identifying
the needs and wants
of the consumer and
creating products or
services that
responds specifically
to each one.
Example: Reebok- A famous shoe brand that caters to
different segments.
Needs and Wants of consumer Product (Franchise Concepts)
For running and helps
absorb shock on the heels.
For workout to lessen stress
on feet and legs.
Rubber shoes that are comfy
and fashionable.
B. By
demographics It may be the most obvious
basis of many brands as
their segmentation. It is
here that the market is
segmented according to
their basic identify such
as:
• Age
• Gender
• Religion
• Civil status
• Income level
Example Brand Demographics Products
Bear brand Age (for children and
Adult)
NIVEA Gender(for men and
women)
McDonalds Religion (for Muslims -
pork free, halal certified
food)
FORD Income Level (low,
middle, high)
C. By
Psychographic Psychographics
s segmentation
entails
subdividing the
market according
to the customers
lifestyles and
personalities.
D. By Behavior
The market may be
segmented based on their
buying behavior. This may
be reflected by:
[Link] Loyalty
[Link] usage
[Link]
frequency
[Link]
behavior
1. Brand Loyalty
Reflects the customer’s level of attachment to a particular
brand primarily because of past experiences and values.
[Link]- Customers who refuse to replace a
certain brand of product and are not sensitive to
the competitor’s price changes.
[Link]- Customers who prefer a brand but
with enough convincing, may switch to another.
c. Switcher- they don’t mind buying different
brands of a product mainly because they do not
see a significant differences between them.
2. Product Usage
Answer the question; “How much of the product do they
use?”
• Heavy-user
• Medium-user
• Light-user
• Ex-user
3. Purchase
Answer the question; “How often do they avail of the
product?”
frequency
• Regular customer- those who buy in a regular basis (daily,
weekly, monthly)
• Occasional customer- Those who purchase only during certain
events, season.
4. Purchase
Relate to the behavior
time the customer purchases the product
relatives to its launch in the market.
a. Innovators- Commonly the first ones buy, they have
tolerance of risk or problem that a new product may
come with.
b. Early Adopters- Just like Innovator, they have higher
tolerance on risk but they are different from innovator
since their motivation is not only love of innovation,
instead it is more of the desire for improvement.
c. Early majority- More practical in their purchases. They
try to reduce the risk in purchasing hence they wait
before a product is proven effective and reliable.
d. Late majority- responds to new products just to stay
even with the rest of the crowd. They are naturally risk
averse and price sensitive which makes new products
quite unappealing for them.
e. Laggard- are not fans of changes when it comes to
E. Other bases
for
segmentation.
1. Internet
Segmentation
2. Price
segmentation
Internet segmentation- Dividing the market
based on their online behavior. We can classify
them according to how active they are in social
media and what their common activities are.
Price segmentation- Dividing the market based
on how sensitive there are to price changes or
their over-all purchasing power.
Factors to
consider in
Choosing your
target
segment
1. Size- the segment must be substantial or large enough to
generate the targeted level of sales.
2. Potential growth- it is advisable to choose a segment that
has a potential to expand in the future.
3. Competition- the segment might be large as of the moment
but the market might also be saturated by potential
competitors.
4. Cost- Reaching a particular segment entail costs.
5. Firm’s VMO’s- Vision, mission, and objectives. It is vital that
serving the chosen target market leads to the fulfillment of the
firms VMO.
6. Firm’s resources- In order to identify whether the firm has
the ability to satisfy a particular segment, they have to look
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