UNIT 2 (Chapter 4, Lessons 1-3)

MARKET
IDENTIFICATION
Soriano, Kim Rodulph O

Learning Objectives
At this end of the discussion, students should be
able to:
• describe the concept of market segmentation;

• discuss market targeting, and
• determine the importance of market
positioning
2
• is a strategic marketing approach and process that is
intended to define the specific customer of the product.
• there are three strategic marketing approaches that will
assist the entrepreneur in defining the specific market of the
product. These are:
Market Identification
3
Market Segmentation
is the process of dividing

a market of potential customers
into groups, or segments, based on
different characteristics. The
segments created are composed of
consumers who will respond
similarly to marketing strategies
and who share traits such as similar
interests, needs, or locations.
Market Segmentation:
Illustration
5
6
Demographic Segmentation is one of the most popular
and commonly used types of market segmentation. It refers to
statistical data about a group of people.

• Age
• Gender
• Income
• Location
• Family Situation
• Annual Income
• Education
• Ethnicity
7
Psychographic Segmentation categorizes audiences and
customers by factors that relate to their personalities and
characteristics.
• Personality traits
• Values
• Attitudes
• Interests
• Lifestyles
• Psychological influences
• Subconscious and conscious
beliefs
• Motivations
• Priorities
8
While demographic and psychographic segmentation focus on who a
customer is, Behavioral Segmentation focuses on how the
customer acts.
• Purchasing habits
• Spending habits
• User status
• Brand interactions
9
Geographic Segmentation is the simplest type of market
segmentation. It categorizes customers based on geographic borders.
• ZIP code
• City
• Country
• Radius around a certain location
• Climate
• Urban or rural
10
Important Factors to consider
in Segmentation:
 Accessibility of the Market Segment

 Size of the Market Segment
 Distinction of the Market Segment
11
Market Targeting
Stage in the market identification process that
aims to determine the set of buyers with the
common needs and characteristics
• Evaluate each market segment

• Selecting the target market segment/s to
serve
12
Market Targeting:
Illustration
13
Market
Segment
Evaluation
14
Size of the Segment and its expected growth
• The size of the segment or its growth are the

two frequently asked details
• Considered favourable indicators for doing

business in that particular location.
• The more players in a particular location, doing

business becomes competitive.
• An entrepreneur must evaluate whether it is

good to compete in a market segment where
several businesses already exist.
15
Existing and probable structure of the
segment
• the entrepreneur may use Michael Porter’s 5 Forces of
Competition in evaluating the present and future
structure of the segment.
• the entrepreneur must properly address the following:

a. level of competition
b. are there existing and potential substitute products
c. who are the present and potential buyers
d. how strong is the bargaining
power of the suppliers in the
segment
16
Capability of the Business
• the entrepreneur must evaluate the internal
environment of the business – including
resources
• does the business have the required

competency to take advantage of the existing
opportunity
** if the entrepreneur do not have the

resources, and does not have the required
competency, he/she might not succeed in
its chosen market segment
17
Segmentation Matrix
Market segmentation is a strategy that divides a

market into different forms to allow a business
to better target its products to the appropriate
customers.
18
Market Segment
Selection
Basic Entrepreneurial Marketing
Strategies:
a. Individual or one-on-one marketing

b. Segmentation Marketing
(differentiated or concentrated
marketing)
c. Mass or Undifferentiated marketing
19
Individual or one-on-one marketing
(1:1marketing)
• The business provides a product that is suited or fitted to the

particular need of the customers.
• Based on the concept that consumers have different needs and
wants
tailoring shop – make clothes for

Ex: specific people
based on their respective request; furniture shop also
adopts this.
20
Differentiated Marketing
• The entrepreneur covers several segments of the total market and

designs a particular product for each segment based on the market
segment evaluation and capability of the firm.
Ex: different toothpaste and milk products in the market are

intended for different segments – each type is prepared to serve a
different set of customers from several segments.
21
Concentrated Marketing (Niche Marketing)
• The business only selects a few segments but intends to

serve a large number of customers in the chosen segment.
• The set of customers is the niche.
Ex: luxurybrands or items like sports car (Ferrari), or bags

like Louis Vuitton or Hermes.
22
Market Positioning
• Refers to the process of determining the
place of the business in the industry
• The process of arranging a product to

occupy a clear, distinct, and desirable place
in relation to other competing products in
the mindset of target consumers (Kotler and
Armstrong, 2013)
• Refers to the ability to influence consumer

perception.
23
Differentiating Market Positions
Process of determining the market position

of the product:
1. the entrepreneur determines if the market

position is distinct from others
2. the entrepreneur evaluates the advantages
or benefits of every possible market
position
3. the entrepreneur decides on the market
position
24
There are two dimensions that will
differentiate the product from its
competitors in the market:
“Lower Prices”
“More Benefits”
25
Positioning or Perceptual Map
It shows the position of similar products
competing in the market as perceived by
customers.
Ex: different brands of cars available in

the market
Positioning or Perceptual Map
Evaluating the Benefits of every Market Position
The following criteria may be considered in identifying the
attributes or benefits to be promoted:
Identifiable. the benefits or attribute is easily associated with the product. The
customers should be able to easily identify any benefit that can be derived from
the product.
Beneficial. the attribute provides valuable benefits to the target consumers
Distinctive Advantage. the attribute is distinct to the product and can hardly
be copied by the competitors
Efficient and rewarding. the cost in attaching the attribute or value to the
product is not higher than the expected benefits in terms of profit
28
Deciding on the
Market Position
The two basic dimensions that must be seriously

considered in deciding the market position of the product:
PRICE and QUALITY.
29
The entrepreneur may also consider the following guide
questions:
1. Will the product be sold at a higher price due to its attributes and
benefits?
2. Will the product be sold at the same price as the competitor’s
price in spite of its benefits?
3. Will the product be sold at the same price as the competitor’s
because they have similar benefits?
4. Will the product be sold at a lower price because it offers less
benefits?
5. Will the product be sold at a higher price even if offers less
benefits?
30

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MARKET

Soriano, Kim Rodulph O

• describe the concept of market segmentation;

is the process of dividing

 Accessibility of the Market Segment

• Evaluate each market segment

• The size of the segment or its growth are the

• Considered favourable indicators for doing

• The more players in a particular location, doing

• An entrepreneur must evaluate whether it is

• the entrepreneur must properly address the following:

• does the business have the required

** if the entrepreneur do not have the

Market segmentation is a strategy that divides a

a. Individual or one-on-one marketing

• The business provides a product that is suited or fitted to the

tailoring shop – make clothes for

• The entrepreneur covers several segments of the total market and

Ex: different toothpaste and milk products in the market are

• The business only selects a few segments but intends to

Ex: luxurybrands or items like sports car (Ferrari), or bags

• The process of arranging a product to

• Refers to the ability to influence consumer

Process of determining the market position

1. the entrepreneur determines if the market

Ex: different brands of cars available in

Beneficial. the attribute provides valuable benefits to the target consumers

The two basic dimensions that must be seriously

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