Segmentation

CHAPTER 3
SEGMENTATION
LEARNING OBJECTIVES
After this session, students are expected to understand the
following:
1. Why do marketers think about segmentation?
2. What are segments?
3. What kinds of customer knowledge can be used to identify
segments?
4. How do you know a good marketing segmentation when you
see one?
SEGMENTATION IN MARKETING:
• Segmentation is the process of dividing a market into

distinct groups of buyers with similar needs,
characteristics, or behaviors, who might require
separate products or marketing strategies.
WHY MARKETERS THINK ABOUT
SEGMENTATION:
• Targeted marketing: by identifying specific segments, marketers

can tailor their products, services, and marketing strategies to meet
the unique needs and preferences of each segment.
• Resource optimization: segmentation helps in efficient resource
allocation by focusing efforts on high-potential markets, reducing
the waste of resources on irrelevant or less responsive segments.
WHY MARKETERS THINK ABOUT
SEGMENTATION: (CONT.)
• Competitive advantage: understanding and catering

to the diverse needs of different segments can give a
competitive edge, as products and messages resonate
more effectively.
WHAT ARE SEGMENTS?:
• Segments are distinct groups within a market that share

common characteristics. These characteristics can include
demographics, psychographics, behavior, or geographic
location.
• Mass marketing – means that all customers would be
treated the same. This approach might sound attractive
because it simplifies the business (only one product needs to
be offered), but it is unrealistic (because customers differ).
• One-to-one marketing – means that each customer serves
as his or her segment. This approach sounds appealing from
the customers’ point of view because the product would be
tailored specially for each person’s idiosyncratic desires.
• Niche marketing – is a type of segmentation in
which the company strategically focuses, targeting a
smaller market, with particular needs that the
company can serve well.
EXAMPLES OF SEGMENTS:
1. Demographic segmentation: dividing the market based on age,

gender, income, education, etc. For example, a product like life
insurance might be marketed differently to young professionals
compared to retirees.
2. Psychographic segmentation: dividing the market based on
lifestyle, interests, values, and personality traits. For example, a
fitness app might target individuals with an active and health-
conscious lifestyle.
EXAMPLES OF SEGMENTS: (CONT.)
3. Behavioral segmentation: grouping customers based on

their behaviors, such as usage patterns, brand loyalty, or
buying occasions. An example could be marketing a loyalty
program to frequent shoppers.
CUSTOMER KNOWLEDGE FOR
SEGMENTATION:
1. Demographic information: age, gender, income, education,

occupation.
2. Psychographic insights: hobbies, interests, lifestyle, values.
3. Behavioral data: purchase history, product usage, brand
loyalty, response to marketing efforts.
4. Geographic data: location, climate, cultural factors.
IDENTIFYING A GOOD MARKETING
SEGMENTATION:
1. Measurable: segments should be quantifiable and

identifiable to effectively target and measure success.
2. Accessible: marketers should be able to reach and serve the
identified segments through appropriate channels.
IDENTIFYING A GOOD MARKETING
SEGMENTATION:
3. Substantial: segments should be large enough to justify the

resources required for targeting and serving them.
4. Differentiable: each segment should have distinct needs
and characteristics that make them unique from other
segments.
EXAMPLES:
• Apple’s iPhone: apple targets different segments based on income

(iPhone SE for budget-conscious consumers, iPhone Pro for high-end
users) and demographics (younger users with features appealing to
their lifestyle).
• Coca-Cola: Coca-Cola markets different variants to various
segments – Coke Zero for health-conscious consumers, diet Coke for
those looking to reduce sugar intake, and regular Coke for traditional
cola lovers.

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CHAPTER 3

• Segmentation is the process of dividing a market into

• Targeted marketing: by identifying specific segments, marketers

• Competitive advantage: understanding and catering

• Segments are distinct groups within a market that share

1. Demographic segmentation: dividing the market based on age,

3. Behavioral segmentation: grouping customers based on

1. Demographic information: age, gender, income, education,

1. Measurable: segments should be quantifiable and

3. Substantial: segments should be large enough to justify the

• Apple’s iPhone: apple targets different segments based on income

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