Marketing 1 (Chapter 5: Market Segmentation, Targeting and Positioning)
(Market Segmentation, Targeting, and Positioning)
Leader: De Roxas, Angelie S.
Members: Ramilo, John Gil O.
De Roxas, Angelie S.
BSBA F&MA IV-B
Group of people with sufficient purchasing
power, authority and willingness to buy.
Specific group of people a firm believes is
most likely to buy its goods and services.
Types of Products
• Consumer Products
Products bought by ultimate
consumers for personal use.
• Business Products
purchased for use either directly
or indirectly in the production of
other goods and services for
Division of the total market into smaller,
relatively homogenous groups.
Criteria for effective segmentation
Segment must have measurable purchasing power
Marketers must find a way to promote and serve the
Marketers must identify segments large enough for
Firm must target a number of segments that match its
Segmenting Consumer Markets
Geographic, Demographic, Psychographic,
and Product-related segmentation
Divides the over-all market into homogenous
groups according to population locations.
• Core Based Statistical Area (CBSA)
Collective term for metropolitan and micropolitan statistical
• Metropolitan Statistical Area (MSA)
Free standing urban area with a population in the urban center of
at least 50,000 and a total MSA population of 100,000 or more.
• Micropolitan Statistical Area
Area with at least one town of 10,000 to 49,999 with
proportionally few of its residents commuting to outside the
• Consolidated Metropolitan Statistical Area (CMSA)
Urban area that includes two or more PMSAs.
• Primary Metropolitan Statistical Area (PMSA)
Urbanized county or set or counties with social and economic ties
Ten Most Populous Cities in the Philippines
The capital of the Philippines from 1948 to 1976. Has close to three million people
The current capital of the Philippines. Very densely populated with close to two million
Located north of Manila. Has close to 1.5 million people
Located on the island of Mindanao. Has close to 1.4 million people.
The first capital of the country. Located on a large island in the Visayas
"The Queen City of the South“. Has close to a million people
Located on the island of Mindanao. Has close to 800,000 people
Located on the hills east of Manila . Has close to 700,00 people
Now part of Metropolitan Manila area. Has close to 650,000 people
On the western shores of Laguna de Bay. Has close to 620,000 people
Has close to 580,000 people. Northern part of Metropolitan Manila area
• Geographic Information Systems (GISs)
Software packages that assemble, store,
manipulate and display data by their location.
Division of an over-all market into
homogenous groups based on variables
such as gender, age, income, occupation,
education, sexual orientation household
size, and stage in the family life cycle;
also called socioeconomic segmentation.
COHORT EFFECT: VIDEO GAME GENERATION
Cohort effect is the tendency of members of a generation to be
influenced and bound together events occurring during their key
formative years. These events help define the core values of the age
group and eventually shape consumer preferences and behavior.
For seniors, the events would be the great depression, World
War II, and Korea because many were in this age bracket at that time.
Later groups were influenced by the Cold War, Vietnam mar and other
The current cohort may be the most integrated to date.
Marketers have called this group Generation Y, Generation Next, and
Echo Boomers. Some called it the 9-11 Generation.
Years passed and there came the development of Video Games.
And they called it Video Game Generation.
Members of this cohort are highly visual and are generally
comfortable with all forms of technology. They gravitate to activities that
provide constant entertainment and immediate gratification.
The significance of cohort effect for marketers lies in
understanding the general characteristics of the Video Game Generation
as it corresponds to its life-defining events. The social and economic
influences this generation experiences help form members long term
beliefs and goals in life.
Segmenting by Ethnic Groups
Three largest ethnic group in U.S:
Hispanics (Latin Americans)
Currently the largest
group in the United
States. They have a rising
rate of buying power
which is estimated to
Like Hispanics, they are
also one of the largest
ethnic group in U.S.
This group now has an
estimated $1.08 trillion
in buying power.
They make up
smaller segment than
either African Americans
or Hispanics. They serve
as an attractive target
for marketers because
they have the fastestgrowing income.
Three largest ethnic group in the Philippines
Another important minority group is native Americans,
whose current population numbers over 5 million or 1.7% of the
total U.S population. Aside from their growing population growth,
Native American Business are growing. In the recent year almost
237,000 non- farm Native American firms are operated in U.S , with
$34.4 billion in receipts.
People of Mixed Race
U.S residents completing census forms now have the option of
identifying themselves as belonging to more than one racial category.
According to their census. About 9million U.S residents classify themselves
this way and marketers need to be aware of this change.
Forward –thinking marketers should keep tabs on this group,
identifying their needs and preferences.
Segmenting by Family Lifecycle Stages
Family Lifecycle is the process of family formation and dissolution.
As people move from one life stage to another, they become potential
consumers for different types of goods and services.
Families typically spend the most during the years their children are
growing- on everything including housing, clothing, braces, and college. They
often look to obtain value wherever they can.
Marketers can create
customer loyalty within
this group by giving them
the best possible value.
Once children are on their own
– or at least off to college – married
couples enter the “ empty nest” stage.
Empty nesters may have the disposable
incomes necessary to purchase premium
products once college tuitions and
mortgages are paid off. They may treat
themselves to luxurious things that they
cannot do or buy before because of
Segmenting by Household Type
Today, Households embody a wade range of diversity. They include:
- Households with married couple and their children
- Households blended through divorce or loss of spouse and
- Those headed by single parent
- Same-sex parents
- Couples without children
- Groups of friends
- Single-person households
Segmenting by Income and Expenditure Patterns
Over a century ago, Ernst Engel, a German Statistician, published
to what became known as Engel’s law. According to him, as household
A smaller percentage of expenditures goes for food
The percentage spent on housing, household operations, and
clothing remain constant
The percentage spent on their items (such as recreation and
Demographic Segmentation Abroad
Marketers often face a difficult task in obtaining the data necessary
for demographic segmentation abroad. Many countries do not schedule
census programs. Similarly, family lifecycle data are difficult to apply in global
demographic segmentation efforts.
Segmentation of Global
Psychographic segmentation is a
good supplement to segmentation by
demographic or geographic variables
Division of a population into homogeneous
groups based on their relationships to a product
Segmenting based on the benefits people seek
when they buy a product
Segmenting based on usage rates for a
Segmenting according to consumers brand
loyalty toward a product
This approach focuses on attributes
people seek and benefits they expect to
receive from a good or service
Segmented By Usage
Marketers may also
segment a total market by
grouping people according to
the amounts of a product they
buy and use.
Generally accepted rule that 80
percent of a product’s revenues
come from 20 percent of its
Segmented by Brand
A third product-related
segmentation methods groups
consumers according to the
strength of the brand loyalty they
feel toward a product.
BSBA F&MA IV-B
Management -driven methods
Segments are predefined by
managers based on their observation
of the behavioural and demographic
characteristics of likely users.
Segments are defined by asking
customers for the attributes important
1. Develop a relevant profile for
The process must identify the
characteristics that both explain the
similarities among customers within
each segment and account for
differences among each segment.
The task at this stage is to develop a
profile of the typical customer in
each segment such as:
1.information about lifestyle patterns
2.attitude toward product attributes and brands
3.product use habits
5.and demographic characteristics
2. Forecast market potential
• In the second stage market
segmentation and market opportunity
analysis combine to produce a
forecast of market potential within
each segment. Market potential sets
the upper limit on the demand
competing firms can expect from a
For example, In deciding whether to
market a new product to teens,
electronics firms need to determine
the demand for it and the disposable
income of that group.
This step should define a preliminary go or nogo decision from management because the
total sales potential I each segment must
justify resources devoted to further analysis.
3. Forecast probable market
• Competitor’s positions in targeted
segments must be analyzed, and a
specific marketing strategy must be
designed to reach these segments.
A firm determine the expected level of
resources it must commit, that is, to tap
the potential demand in each segment.
4. Select specific market
• At this point in the analysis, market
weighs more than monetary costs and
benefits; they also consider many
difficult-to-measure but critical
organizational and environmental
FOUR BASIC STRATEGIES FOR
1. Undifferentiated marketing
• Strategy that focuses on producing a
single product and marketing it to all
customers; also called mass marketing
• More common in the past than it is
2. Differentiated marketing
• Strategy that focuses on producing
several products and pricing, promoting,
and distributing them with different
marketing mixes designed to satisfy
• A company can produce more sales by
following a differentiated marketing than
a differentiated marketing would
Differentiated marketing also
• Production costs usually rise because
additional product and variations require
shorter production runs and increased set
• Inventory costs rise because more
products require added storage space
and increased efforts for record keeping.
• Promotional costs also rise because each
segment demands a unique promotional
3. Concentrated marketing
• Focusing marketing efforts on
satisfying a single market segment.
• This approach can appeal to a small
firm lacking the financial resources of
its competitors and to a company
offering a highly specialized goods
• Targeting potential customers at very narrow, basic
levels, such as by zip code, specific occupation or
lifestyle—possibly even individuals themselves.
• But micromarketing like niche marketing, can
become too much of a good thing if companies
spend too much time, efforts and marketing dollars
to unearth a market too small and specialized to be
profitable. In addition micromarketing may cause a
company to lose sight of other , larger markets.