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How should I segment the market?

By Ned Roberto, Ardy Roberto
Philippine Daily Inquirer
First Posted 21:27:00 02/10/2011

Filed Under: Marketing, business

WE ARE treating our readers to more excerpts from Dr. Ned Roberto?s latest book, ?Segmenting?How Market Segmenting, Self-Segmenting and Desegmenting Are Changing the Marketing Game,? now available at all major bookstores.

?What?s the best way for me to segment my market so that I can grow my business??

This is the traditional way marketing practitioners and researchers think about and do market segmentation.

This model of segmenting the market has its record of successes. But just because it worked in the past does not mean it will continue to reward its practitioners in today?s changed and changing market setting.

Let us now get reacquainted with the marketer-defined practice of market segmentation. This way, we can appreciate its many strengths and avoid the perils of its just as many weaknesses.

Market segmentation as a process

Marketers refer to market segmentation as a process by the acronym STP. That?s Segmentation (S), Targeting (T) and Positioning (P).

Segmenting is itself made up of two steps: partitioning and profiling.

A marketer partitions a market by dividing it into its component segments, such as the widely used socio-economic classification, or SEC.

This step results in classifying market segments into Class AB (or rich), Class C (or middle class), Class D (or borderline poor) and Class E (or extreme poor).

In profiling, the marketer describes the different market segments according to variables that would allow the marketer to compare the relative ?market attractiveness? of the segment against each other.

Practice versus marketing logic

We now look at the ?S? and ?T? steps of the STP process. We will do this using the more complete specification, the three-step partitioning-profiling-targeting process.

The actual practice of this sequence differs from that of marketing logic (i.e it does not make sense anymore to do this but it has become the prevailing practice.)

The prevalent practice is to follow these steps:

Partitioning. First is the partitioning of the total market.

For example, consider these three socio-economic class segments: Class AB segment, Class C segment and Class DE segment. For some reason, the very rich and the rich are combined into the one segment called Class AB, and the poor and the very poor into another segment called Class DE.

Segmenting. The second step is targeting a segment as the PTM (primary target market) segment, a secondary and a tertiary.

For example, the highly successful instant noodle brand Lucky Me! chose Class DE as its primary target market segment. Presumably, Class C is the secondary, and Class AB is the tertiary.

Profiling. The third step is profiling the PTM segment for positioning. In the case of Lucky Me!, the PTM segment of Class DE was profiled in terms of its priority product value for an instant noodle. Supposedly, the Lucky Me! marketer found that the Class DE consumers? priority product values for an instant noodle were ?tasty, affordable and filling.? These attributes became Lucky Me!?s positioning consumer values.


The profiling carried out here is therefore restricted to the chosen PTM segment. It should have been carried out in all the three alternative market partitions or segments. Why? That?s because a more rational choice of the primary target market segment could have been made. It?s more rational in the sense that the process could have used a common set of criteria, i.e., the four market attractiveness indicators, in comparing all three candidate segments.

What?s the alternative sequencing that marketing logic offers? It?s a sequencing that interchanges the second step and the third step.

We?ll go deeper into alternative sequencing next week.

(Get a copy of Dr Ned?s book ?Segmenting?? at any National Bookstore or Powerbooks branch. Questions or comments? Send them to marketingRx@pldtdsl.net or drnedmarketingrx@gmail.com.)

Copyright 2015 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.




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