Cha pte r 5:

MARKE
SEGMENTATIO
TN
 Introduction
Market segmentation refers to the process of dividing the market
into distinct groups each group has common characteristics.
Segmentation is the initial step in targeting the market. Many
companies recognize the importance of understanding the diversity
of the customers or market. This means understanding the needs of a
particular market and satisfying those needs. Segmentation is not
treating the market as a homogenous group same products are
offered to all.
 Intended Learning
Outcomes
e d iff er en t ty p e s
analyze th
t se g m e n t a ti o n ;
of marke

distinguish the two types

of market

contrast the different

strategies of market
coverage.
 Market Segmentation refers to the process of dividing
the market into distinct groups where each group has
common characteristics.

Segmentation is the initial step in targeting the market.

WHAT IS
MARKET Many companies recognize the importance
understanding the diversity of the customers or market.
of

SEGMENTATION? This means understanding the needs of a particular

market and satisfying those needs.

Segmentation is not treating the market as a

homogenous group where same products are offered to
all.
 MARKET
CLASSIFICATIO
N

These are various ways a company can divide or

segment the market. This can be done through
dividing the market into different segments:
demographic, geographic, behavioral, and
psychographic segmentation.
 Demographic
Segmentation
1
T he mar ket is divided based on variables such as age,
gender income, education, nationality, r eligion, and
f amily cycle. A publishing company, f or instance,
pr oduces books intended f or diff erent age br ackets or
level of education. T her e ar e books designed f or
pr eschool, gr ade school, high school, or those in
tertiar y level. T he same is tr ue w ith milk supplier s. I n
supermarkets, consumers tend to buy milk products
suitable for diff er ent age gr oups – infants, toddler s, and
adults. T here ar e also milk br ands especially made for
pr egnant w omen and f or the elderly.
 Geographic
2
Segmentation
means the mar ket is divided or
segmented based on ter ritory or
geogr aphical units such as regions and
cities ( rural or ur ban).
 Psychiatric
Segmentation
4
gr oups the market accor ding to
lif estyle, per sonality, or social class.
 Behavioral
Segmentation
4
divides the mar ket into groups based on
know ledge, attitudes, or the mar ket’s
r esponse to a pr oduct.
 Consumer and
Industrial Market

C o n s u m er Mark et refe rs to i n d iv i d u a ls
w h o p u rch ase p ro d u c ts f o r th ei r o w n
co n s u m p tio n o r p erso n al u s e.

I n d u s tr ia l Mark et re fer s t o t h e
b u y e rs w h o p u r ch as e p ro d u ct s in
o r d er t o p r o d u c e an o th er p ro d u ct .
 MARKET
TARGETING AND
POSITIONING
Market Targeting is th e p ro cess o f l o o k in g i n t o
the most attractive mark et t h at a co mp an y is
capable of serving. In ch o o si n g th e rig h t
segment, it is necessary fo r a co mp an y t o
consid er its resources.

P r o d u c t P o si t i o n i n g i s t h e p ro c e ss o f e m p h a si zin g a p ro d u ct’s
b e st fe a t u re . O n e o f t h e fe a t u r e s c a n b e t h e p ro d u ct ’s p ri ce,
w h i c h c a n b e t h e mo st re a so n a b l y p ri c e d p ro d u ct amo n g v ari ed
c o m p e t i t o rs. S o m e t i m e s, c o mp a n i e s p o si t i o n t h eir p ro d u ct o r
b ra n d b y e m p h a si z i n g i t s b e n e fi t s o r e ff e c t iv en ess o r i t s
a c c e ssi b i l i t y t o t h e m a rk e t .
 COMPETITIV
E
ADVANTAGE
In orde r for a market to re member the produc t, a
busine ss ente rprise must cre a te its produ c t’s
c ompe titive a dvanta ge . A c ompe titive a dvan ta ge
to the uniqueness of the company’s product th a t
se ts it a pa rt from its c ompe titors. A c ompe titive
a dva ntage of a product ca n be in a form of
improved produc t fe ature , value for money, or
a ffordability of its pric e .
 STRATEGIES
MARKET ON
COVERAGE
U n d i ff er en t i at ed Mar k et Co v er ag e

- Th i s s t ra t egy i s used whenever a b u s i n e s s

ent e rp ri s e o ffe rs an ent i re market wi t h on e t y p e o f
pro d u c t . It i g n ores t he segment di fference s o f e a c h
ma rk e t . It fo c u s es on t he si mi l ari t i es of t he n e e d s o f
t he ma rk e t ra t h er t han t he di fferences.

- Un d i ffe re n t i a t ed market coverage rel i es h e a v i l y o n

ma s s d i s t ri b u t i o n and mass promot i ons of a p ro d u c t .
 STRATEGIES
ON
MARKET Disa dva nta ge s:

COVERAGE 1. It is difficult to satisfy se ve ral

Advantages:
1. With one-product-fits-all stra tegy,
a company minimizes its produc t
distribution, promotions, a nd
distribution costs.
2. Undifferentiated market covera ge
strategy aims to get a great numbe r of
customers by targeting more tha n one
segment of the market.
se gme nts of the market with one bra nd
of produc t since e ac h ha s diverse
c ha ra cteristic s a nd leve l of ne eds.
2. There ma y be a he a vy c ompe tition in
a pa rtic ula r s egment of the marke t,
ma king busines s opera tions le ss
profitable to the c ompa ny.
3. Whe ne ver c ompetition is s trong in
one s egment, a busine ss enterpris e
tends to de velop produc t offering that
focus es on the large r s egment of the
ma rket; thus, sa tisfying the de ma nd of
the smalle r se gme nt les s.
 STRATEGIES
ON
MARKET
COVERAGE
D i ff e r en t i at ed Mar k et Co v er ag e

- Th i s ma rket coverage st rat egy t arg e t s

s e v e ra l ma rket segment s, offeri ng vari e d
p ro d u c t d esi gns. Di fferent i at e mark e t
c o v e ra g e mat ches t he product offered o f
t h e fi rms t o t he needs of t he market .
 STRATEGIES
ON
MARKET
COVERAGE
A dva nta ge s :

1. It c re a te s highe r produc t s a le s be c a us e the

produc ts offe re d by the firm m a tc he s th e
c us tom e rs ’ ne e ds a nd pre fe re nc e . The re fore ,
re pe a t produ c t purc ha s e is high a nd the re is
s trong te nde nc y of the m a rke t to be loya l to
the bra nd .

2. D ue to he a vy c om pe tition in diffe re ntia te d

m a rke t c ove ra ge , c om pa nie s build s tron g
produc t pos itioning in a pa rtic ula r s e gme nt.
 STRATEGIES
ON
MARKET
COVERAGE
Co n c e n t ra t ed Market Coverage

- Co mp a n i es wi t h l i mi t ed resources fo c u s e s
mo re o n ut i l i zi ng concent rat ed ma rk e t
c o v e ra g e s t rat egy. For t hi s reason, t hey s e t a
h i g h p ro d u ct di fferent i at i on for cust ome rs t o
p a t ro n i z e t hei r product offeri ngs.
 STRATEGIES
ON
MARKET
Adva nta ge s :
COVERAGE
1. The c om pa ny ha s s trong produc t
pos itioning be c a us e the c om p a ny D is a dva nta ge s :
ha s high know le dge of its ma rk e t
s e gme nt. 1. H igh ris k is pre s e nt
pa rtic ula rly w he n a c om pa ny
2. C ompa nie s e xpe rie nc e h igh s a le s fa lls s hort the c us tom e rs ’
due to high produ c t diffe re ntia tion. e xpe c ta tions .
THANK
YOU!