SHS

Principles of Marketing
Module 8

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ABM/GAS • Principles of Marketing
Grade 11/12: Module 8
First Edition, 2021

Copyright © 2021
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Mary Grace G. Bambao, T-II

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

Atty. Donato D. Balderas, Jr.

Schools Division Superintendent

Vivian Luz S. Pagatpatan, Ph.D

Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief

Virgilio C. Boado, Ph.D, EPS in Charge of LRMS

Lorna O. Gaspar, EPS in Charge of ABM
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II
 Target

This module deals with the conceptual information about market

segmentation. It covers the different types of market segmentation. This will help
learners to deepen their knowledge on how marketers personalized their marketing
campaigns.
After going through this module, you are expected to attain the following objectives:

Learning Competency
- Identify and segment market for a product or service (ABM_PM11lei-14)
Subtask:
1. Define what is a segment market
2. Determine the different types of market segmentation
3. Identify benefits of market segmentation

Before going on, check how much you know about this topic. Answer
the pretest in a separate sheet of paper.

Activity 1: Read Me! Analyze Me! Example of Market Segmentation

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Directions: Presented below is a template for market segmentation. Put a check
mark () on the right side of the column where the elements fall.
Elements Behavioral Demographic Geographic Psychographic
1. Region I
2. Age
3. Personal
Characteristics
4. Consumer’s
knowledge
5. Entrepreneur
6. Interest
7. Luzon
8. Social class
9. La union
10. Roman Catholic
11. Lifestyle
12. Filipino citizen
13. Buying habits
14. Educational
attainment
15. Brand preference

Activity 2: Word Hunt

Direction: Find and circle the 10 market segmentation terms below. Words appear
straight across, back-word straight across, up and down, down and up and diagonal.

M A R K E T I N G X E X A B C
E C I H P A R G O H C Y S P U
G E O G R A P H I C U R C H S
R E S I A R C H O N E U I I T
C A T T T W O M A D T N E L O
U T O G R A C E N U O E N I M
S M A R K E B E E Q M V C P R
T I M E L E G N V W E E E P G
O U T N U M N B E H A V I O R
M C U L T U R E A M E R S I A
E A N I A N A B E A G E A N P
R C C I H P A R G O M E D E H
L I F E S T Y L E L I F S S E

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 Lesson
Market Segmentation
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Market segmentation is a marketing term that refers to aggregating
prospective buyers into groups or segments with common needs and who respond
similarly to a marketing action. Market segmentation enables companies to target
different categories of consumers who perceive the full value of certain products and
services differently from one another.

Demographic Segmentation
Demographic segmentation sorts a
market by demographic elements such as
age, education, income, family size, race,
gender, occupation, nationality, and more. It
is one of the simplest and most commonly
used forms of segmentation because the
products and services we buy, how we use
those products, and how much we are willing
to spend on them is most often based on
demographic factors.

Psychographic Segmentation
Psychographic segmentation takes into account the psychological aspects of
consumer behavior by dividing markets according to lifestyle, personality traits,
values, opinions, and interests of consumers.

Geographic Segmentation
While typically a subset of demographics, geographic segmentation is typically
the easiest. It creates different target customer groups based on geographical
boundaries. Because potential customers have needs, preferences, and interests that
differ according to their geographies, understanding the climates and geographic
regions of customer groups can help determine where to sell and advertise, as well
as where to expand business.

Behavioral Segmentation
Behavioral segmentation divides markets by behaviors and decision-making
patterns such as purchase, consumption, and usage. For instance, younger buyers
may tend to purchase body wash, while older consumer groups may lean towards
soap bars. Segmenting markets based on purchase behaviors enables marketers to
develop a more targeted approach.

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 Jumpstart

Directions: Using the diagram below, categorize different terms provided inside the
word of pool into four types of market segmentation.

Town Social class Region

Religion Lifestyle Usage rate
Benefits sought Interest of consumer Ethnicity
Loyalty status Occupation Philippines

Behavioral Demographic Geographic Psychographic

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 Discover

Market segmentation is an increasingly important part of a strong marketing

strategy and can make all the
difference for companies in
competitive market landscapes,
such as e-commerce.
When up against a range of
online competitors, effective
communication is the best way
to differentiate your business.
Market segmentation offers an
opportunity to pinpoint exactly
what messaging will drive your
customers to make a purchase.
The purpose of market
segmentation is to identify
different groups within your
target audience so that you can
deliver more targeted and
Source: blog.alexa.com
valuable messaging for them.

There are four main customer segmentation models that should form the
focus of any marketing plan.
The four types of segmentation are Demographic, Psychographic Geographic, and
Behavioral. These are common examples of how businesses can segment their
market.

The who

1. Demographic segmentation
- Most straightforward way of defining customer groups, but it remains powerful.
- Demographic segmentation looks at identifiable non-character traits such as:

• Age
• Gender
• Ethnicity
• Income
• Level of education
• Religion
• Profession/role in a company
For example, demographic segmentation might target potential customers based
on their income, so your marketing budget isn’t wasted directing your messaging at
people who likely can’t afford your product.
Segmentation isn’t just about your business reaching customers more effectively –
it’s also about those customers seeing messaging that is more relevant to them!

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 The why

2. Psychographic segmentation
- Compared to demographic segmentation this can be a harder set to identify. It
focuses on customers’ personalities and interests. Here we might look at customers
and define them by their:
• Personality traits
• Hobbies
• Life goals
• Values
• Beliefs
• Lifestyles The where

3. Geographic segmentation
- By comparison, geographic segmentation is often one of the easiest to identify,
grouping customers with regards to their physical location. This can be defined in
any number of ways:
• Country
• Region
• City
• Postal code
For example, it’s possible to group customers within a set radius of a certain
location – an excellent option for marketers of live events looking to reach local
audiences. Being aware of your customers’ location allows for all sorts of
considerations when advertising to consumers.
In some nations like, customers could be presented with options that match with
local weather patterns. Geographical identification is an important part of seasonal
segmentation, which allows businesses to market season-appropriate products to
customers.
Some recent examples of proper geographic segmentation came from the
response by e-commerce businesses to the coronavirus pandemic. During lockdown
stages, many businesses shifted their focus to local communities to highlight how
their services could still be accessed online.
Conversely, as public spaces began to open up again purely e-commerce brands had
to shift their marketing plans to maintain the levels of business, they had seen over
the lockdown period

The how

4. Behavioral segmentation
- Possibly the most useful of all e-commerce businesses. As with psychographic
segmentation, it requires a little data to be truly effective but much of this can be
gathered via website itself. In this segmentation, customers are grouped with regards
to their:

• Spending habits
• Browsing habits
• Interactions with the brand
• Loyalty to brand
• Previous product ratings

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 All of these are datasets that can be harvested from a customer’s usage of website.
Business enterprise utilizes behavioral segmentation to deliver highly relevant
and targeted campaigns based on a number of behavioral patterns:
• Number of sessions to your website
• Number of pages visited
• Time spent on site
• URLs visited
• Page types visited
• Shopping cart value
• Campaign history
• Referral source
• Exit intent
• Inactivity, and more.

For example, distinguishing between a first-time visitor and someone who’s

already been on a site multiple times but haven’t purchased. Based on this
behavioral data, a business enterprise can tailor such messaging accordingly:
First time visitor: Hey, learn about our latest collection!
Returning visitor: Join our loyalty program and start saving!
One of the best examples of this type of segmentation is showing new visitors
an incentive in exchange for joining the community. Returning visitors who had
already subscribed but have not redeemed their coupon yet were reminded on their
first order incentive.

Benefits of Market Segmentation

➢ More effective marketing - This is the biggest and most obvious benefit to well-
implemented market segmentation. By better recognizing the needs of your
customers, you can identify more effective tactics for reaching them and
improving their interactions and experience with your business.

➢ More efficient spending - After all, your targeted marketing is going to allow for
better returns on investment, and you’ll waste less money on marketing that
reaches the wrong audience.

➢ Higher quality leads - You’ll also notice that the more targeted more marketing
is, the better your leads become. You’re reaching the right people, and they’re
starting to notice you!

➢ Identifying niche markets - Similarly, your research into segmentation may

help you recognize areas of the market you’d not considered before. This might
even lead to the development of new products that are aimed specifically
towards these markets.

➢ Improved customer retention - By identifying your customers by their needs,

you can put out marketing that offers irresistible reasons for a return visit.
This is proven to increase customer retention and lifetime value.

➢ Differentiating your brand - The purpose of market segmentation is not only to

help you reach your audience but also to allow your customers to see the true
value of your brand via marketing that speaks to them – and in doing so puts
you head and shoulders above your competitors.

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 ➢ More focus - Ultimately, thoughtful customer segmentation will allow your
business to focus every element of its activity to better reach those that it
serves. Your marketing becomes focused on your customers’ needs, your
research and development may focus on meeting those needs, your spending
will be focused on achieving these, and not wasted on mistargeted marketing
and planning.

Your customers’ every decision is judged on whether the result is what they want,
or whether it is what they need. Market segmentation allows you to recognize these
needs and market directly to them, without any wasted messaging.

Whether it’s telling new drivers about the best car insurance for them, or sharing
offers on barbeques and sun-chairs to those living in the middle of a heatwave,
market segmentation offers you thousands of ways to ensure your customers see you
as exactly what they want, and exactly what they need.

Explore

Here are some enrichment activities for you to work on to master and
strengthen the basic concepts you have learned from this lesson.

Assessment 1: Matching Type

Direction: Match the given conceptual information about marketing segmentation in
column A to the given answers in column B.

Column A Column B
_____ 1. It offers an opportunity to pinpoint exactly A. Behavioral
what messaging will drive your customers to make a
purchase.
_____ 2. It divides markets by decision-making B. Demographic
patterns such as purchase, consumption and usage.
_____ 3. It divides markets according to lifestyle, C. Geographic
personality traits, values and interest of consumers.
_____ 4. It creates different target customer groups D. Market
by including factors such as climate
_____ 5. It sorts market by age, gender, education, E.Market Segmentation
income, family size, race, gender and occupation
_____ 6. It consists of various segments. F. Psychographic

Assessment 2: Fill in the blanks

Direction: Fill in the appropriate word/s in each blank to complete the basic
information you have learned about market segmentation.
1) ________________________ is a marketing term that refers to aggregating prospective
buyers into groups or segments with common needs and who respond similarly to a
marketing action. 2) The _______________________of market segmentation is to
identify different groups within your target audience so that you can deliver more
targeted and valuable messaging for them. Market segmentation 3)

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_______________________ companies to target different categories of consumers who
perceive the full value of certain products and services differently from one another.
4) _________________________ is one of the simplest and most commonly used forms
of segmentation and it sorts a market by 5) ________________________ elements such
as age, education, income, family size, race, gender, occupation, nationality and
more. 6) __________________________ is often one of the easiest to identify, grouping
customers with regards to their physical location. This can be defined in any number
of ways like country, region, city and even postal code. 7) _________________________
takes into account the psychological aspects of 8) _________________________ behavior
by dividing markets according to lifestyle, personality traits, values, opinions, and
interests of consumers. 9) ___________________________ divides markets by behaviors
and 10) ___________________________ making patterns such as purchase,
consumption, and usage. Segmenting markets based on purchase behaviors enables
marketers to develop a more targeted approach.

Assessment 3:
Directions: Identify word/s associated to the given key words in the diagram
presented below.

Demographic Psychographic

1. 2. 1. 2.

3. 3.

Geographic Behavioral

1. 2. 1. 2.

3. 3.

Great job! You have understood the lesson. Are you now ready to
summarize?

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 Deepen

At this point, you are now ready to deepen your understanding about
segmenting the market.

Direction: Based on the car examples, how do car manufacturers use the following
segments when marketing products? Use a separate sheet of paper for your answer
and be guided with the rubrics given in constructing your idea.
* Behavioral * Demographic * Geographic * Psychographic

Source:http://web.itu.edu.tr/~elmadaga/MKT/MKT_PPT/CH07

Rubric:
Performance
4 points
Areas
Essay has a very specific
central idea. Very much
appropriate, concrete
Content
details support the central
idea and shows direct
focus.
Essay is logically organized Essay is slight logically
and well structured.
Organization
Critical thinking skills is
very evident.
Writing is coherent and
very much consistent with coherent and consistent
Style central idea. Sentences are with central idea.
very strong and very
expressive.
Written work has no error
in word selection and use
Mechanics
spelling, punctuations and
capitalizations very well.
3 points 2 points 1 point
Essay has somewhat
Central idea is
specific central idea. Unable to find specific
vague; somewhat
Appropriate, concrete supporting details;
sketchy and non-
details support the more than 4 errors in
supportive to the
central idea and shows information.
topic; lacks focus
focus.
Essay somewhat Central point and flow
organized and structured. disorganized; ideas of essay is lost; lacks
Critical thinking skills is do not logically organization and
slightly evident. follow each other. continuity.
Writing is slightly
Sentences are Lacks creativity and
varied and focus. Unrelated word
inconsistent with choice too central
Sentences are slightly
central idea. idea.
strong and expressive.
Written work has Written work has
Written work has lesser
several errors in serious and persistent
errors in word selection
word selection and error in word selection
and use spelling,
use spelling and use spelling
punctuations and
punctuations and punctuations and
capitalizations.
capitalizations. capitalizations.

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 Gauge
Directions: Read carefully each item. Use a separate sheet of paper for your answers.
Write only the letter of the best answer for each test item.
1. Which of the following sorts a market by elements such as, age, gender,
education, income, family size, race, occupation, nationality and more?
A. Behavioral Segmentation
B. Demographic Segmentation
C. Geographic Segmentation
D. Psychographic Segmentation

2. What offers an opportunity to pinpoint exactly what messaging will drive a

customer to make a purchase?
A. Market Auditing
B. Market Concepts
C. Market Responsibility
D. Market Segmentation

3. Which of the following is a subset of demographics which creates different

target customer groups based on boundaries?
A. Behavioral Segmentation
B. Demographic Segmentation
C. Geographic Segmentation
D. Psychographic Segmentation

4. All are types of segmenting the market EXCEPT:

A. Consumer Segmentation
B. Demographic Segmentation
C. Geographic Segmentation
D. Psychographic Segmentation

5. Which of the following is NOT an identifiable non-character trait of a

demographic segmentation?
A. Age
B. Gender
C. Lifestyle
D. Profession

6. Which of the following takes into account the aspects of consumer behavior
by dividing markets according to lifestyle, personality traits, values and more?
A. Behavioral Segmentation
B. Demographic Segmentation
C. Geographic Segmentation
D. Psychographic Segmentation

7. Which of the following refers to the WHO of market segmentation?

A. Behavioral
B. Demographic
C. Geographic
D. Psychographic

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8. Which of the following is an example of behavioral segmentation showing
behavioral patterns?
A. Educational level
B. Life attainment
C. Role in a company
D. Spending habits

9. What segment divides market by behavior and decision-making patterns such

as purchase, consumption and usage?
A. Behavioral Segmentation
B. Demographic Segmentation
C. Geographic Segmentation
D. Psychographic Segmentation

10. Which of the following is the main purpose of market segmentation?

A. Higher return of investment of the business
B. Identify different groups within target audience
C. Increase production and labor of the business
D. Proper allocations of business expenditures

11. Which of the following refers to the WHERE of segmenting the market?
A. Behavioral
B. Demographic
C. Geographic
D. Psychographic

12. Which of the following refers to the WHY of segmenting the market?
A. Behavioral
B. Demographic
C. Geographic
D. Psychographic

13. Which of the following is an example of market segmentation benefit?

A. Campaign history
B. Identifying niche market
C. Referral source
D. Shopping cart value

14. Which of the following refers to the HOW of segmenting the market?
A. Behavioral
B. Demographic
C. Geographic
D. Psychographic

15. All are ways of defining a geographic segmentation EXCEPT:

A. Beliefs
B. Climate
C. Country
D. Region

Great job! You are done with this module.

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References
Books
• A.B. Principles of Marketing. Reprint, Philippines: Rex Book Store, 2017.

Internet
• Thomas, Stephen Rotzsch. (2020). 4 Types of Market Segmentation

Links
• https://www.yieldify.com/blog/types-of-market-segmentation/
• http://web.itu.edu.tr/~elmadaga/MKT/MKT_PPT/CH072020Segmentation
https://blog.alexa.com/types-of-market-segmentation/

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 14
Explore - Assessment #3 Explore- Assessment #1
Gauge – Multiple Choice
*In any order Matching Type
1. B 9. B
Demographic 1. E
2. D 10. B
Religion, Education, Gender, 2. A
3. C 11. C
Ethnicity, Income, Race, Age 3. F
4. A 12. D
Occupation, Nationality 4. C
5. C 13. B
Psychographic 5. B
6. D 14. A
Social class 6. D
7. B 15. A
Interest of consumer Explore- Assessment #2
8. D
Lifestyle Fill in the blanks
Geographic 1. Market segmentation
Deepen Town, City, Country, Climate 2. purpose
Depends on the answer of Region, Postal code, Physical 3. enables
the learner/s and guided location 4. Demographic segmentation
by the rubric indicated in Behavioral 5. demographic
the activity. Benefits sought, spending 6. Geographic segmentation
habits, browsing habits, 7. Psychological segmentation
Jumpstart
Loyalty status, interaction 8. consumer
*In any order
with the brand, Usage rate 9. Behavioral segmentation
Behavioral
10. decision
Benefits sought
Loyalty status Target-Activity #1
Usage rate 1. Geographic
Demographic 2. Demographic
Religion 3. Psychographic
Target-Activity #2
Ethnicity M A R K E T I N G X E X A B C 4. Behavioral
Occupation E C I H P A R G O HC Y S P U 5. Demographic
G E O G R A P H I C U R C H S 6. Psychographic
Geographic
R E S I A R C H O NE U I I T
Town 7. Geographic
C A T T T W O M A DT N E L O
Region 8. Psychographic
U T O G R A C E N UO E N I M
Philippines S M A R K E B E E QM V C P R 9. Geographic
Psychographic T I M E L E G N V WE E E P G 10. Demographic
Social class O U T N U M N B E HA V I O R 11. Psychographic
M C U L T U R E A ME R S I A 12. Demographic
Interest of consumer
E A N I A N A B E AG E A N P
Lifestyle 13. Behavioral
R C C I H P A R G OM E D E H
L I F E S T Y L E L I F S S E 14. Demographic
15. Behavioral
Answer Key