NOTRE DAME OF

TACURONG COLLEGE
Senior High School Department
City of Tacurong
LESSON 4

MARKET
IDENTIFICATION
Market Identification

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.
Strategic Marketing Approaches

Market Segmentation
Market Targeting
Market Positioning
Market Segmentation
 An entrepreneurial marketing strategy designed primarily to divide
the market into small segments with distinct needs, characteristics,
or behavior (Kotler & Armstrong, 2014).
 The entire market is composed of different segments with various
characteristics, behavior, culture, traditions, and needs.
 Since the entire market cannot be readily served because the
customers are heterogeneous, the entrepreneur has to find ways to
cater to homogeneous customers only.
 This is usually done by market segmentation.
Market Segmentation
 The entrepreneur must divide the total market and focus his/her
business strategy to a smaller market that is considered
homogeneous or have similar interests, preferences, needs,
wants, and other related variables.
 The identified market segment will be the market that can be
served better by the entrepreneurial venture based on its
competencies. This entrepreneurial approach is sometimes
called niche entrepreneurial marketing.
 There are no strict rules as to how the market will be
divided other than the assurance that the smaller
segments must be homogeneous.
METHODS FOR SEGMENTING THE MARKET

Geographic Segmentation
Demographic Segmentation
Psychological Segmentation
Behavioral Segmentation
Geographic Segmentation

In geographic segmentation the total market is

divided according to geographical locations in
the Philippines like provincial regions, cities,
provinces, municipalities, and even barangay
units. When the entrepreneur divides the total
market into a smaller segment using
geographical segmentation.
 Variables of Geographic Segmentation

1. Climate
2 Dominant ethnic group
3. Culture
4. Density (either rural or urban)
5. Classification of the geographical unit (eg, first class, second class, etc.)
For example, a telephone company is providing unlimited call and text services throughout
Mindanao. The features of these services for consumers in Cotabato may be different from
those for consumers living in Cagayan de Oro. The company must make sure that their
services will fit the needs of respective market segments even though they belong to the
same geographical unit.
Demographic Segmentation

In demographic segmentation, the market

is divided based on the demographic
variables of the consumers.
 Variables of Demographic Segmentation
1. Gender The most widely used and easiest method for segmenting the market
is the demographic method. Various reaches have also determined
2. Age
that there exists a direct relationship between the demographic
3. Income variables and the needs and wants of customers.
4. Occupation
The example about the powder milk products shows that the contents
5. Education
and nutrients of each milk product differ from one another. Their
6. Religion makers have segmented the market according to the ages and needs
7. Ethnic group of their uses. Most medicines and vitamins available in the market are
8. Family size individually prepared based on the agent of their intended users as
well. The manufacturers of shampoo and soap product, meanwhile,
usually divide their target market based on gender. Their products for
men are different from those for women.
Psychological Segmentation

In psychological segmentation the market

is divided in terms of what the customers
think and believe.
 Variables of Psychological Segmentation

1. Needs and wants Manufacturers of branded pants and shirts usually

2 Attitude segment the total market based on brand concept
3. Social class and only serve the customers who are brand-
4. Personality traits conscious. They do not serve the needs and wants of
5. Knowledge and customers in the population who are not conscious
awareness about the brands of the products they use.
6. Brand concept Entrepreneurs who own and manage elegant and luxury
7. Lifestyle hotels may have segmented the market based on social
class. These entrepreneurs intend to cater to the needs
and wants of the upper class in the market.
Behavioral Segmentation
 Variables of Behavioral Segmentation
Entrepreneurs who have constructed athletic
1.Perception
gymnasiums may have divided the market
2.Knowledge
based on the health benefits that their users
3.Reactions
will derive from them. Their makers intend to
4.Benefits
serve the needs and wants of health-conscious
5.Loyalty
customers. An entrepreneur producing powder
6.Responses
detergent may have segmented the market
based on loyalty of the customers, and intend to
serve only the needs and wants of loyal
customers.
 POINTS TO CONSIDER IN SEGMENTATION

Market segmentation is a strategy that can assist the

entrepreneur in identifying the particular homogeneous
segment to serve. After all the consumer population in its
entirety basically has different attitudes, characters,
perceptions, inclinations, or responses.
 FACTORS IN SEGMENTING THE MARKET
1. Accessibility of the market segment- The market segment
must be accessible to the business
2. Size of the market segment- The market segment must be
large enough to provide wealth to the entrepreneurial venture.
3. Distinction of the market segment- The market segment
must be easily differentiated from the total market.
MARKET IDENTIFICATION PROCESS
 Market targeting
Market targeting is a stage in market identification process that aims
to determine the set of buyers with common needs and characteristics.
They are the market segment that the entrepreneurial venture intends
to serve.
In the market targeting phase, the entrepreneur has already
divided the total market and is now in the process of
1. evaluating each market segment and
2. selecting the target market segment or segments to serve.
 MARKET SEGMENT EVALUATION

The entrepreneur, after segmenting the market, does not simply select
any market segment to serve. He/She must instead conduct a proper
and critical evaluation of every While doing so, he/she must consider
the following important factors:
 
1. Size of the segment and its expected growth
2. Existing and probable structure of the segment
3. Capability the business
 Size and Growth of the Segment

The size of the segment or its growth are the two frequently asked details every time
new business is about to be opened. The size and growth of segment are considered
favorable indicators for doing business in that particular location. Hence, entrepreneurs
tend to flock in that area. However, they fail consider that when there are too many
players in particular doing business in it becomes too competitive.
Small entrepreneurial ventures in terms of capital base may find such
environment unfavorable even though the size of the industry is large enough
and the segment is growing. The entrepreneur, therefore, has to critically
evaluate whether it is good to compete in a market segment where several other
businesses already.
 Structure of the Segment
Another important factor that the entrepreneur must consider in evaluating
which segment to serve are the existing and expected structures of the
segment. The entrepreneur may use Michael Porter's five forces of competition
in evaluating the present and future structures of the segment. He/She must
properly address the following questions:
1. What is the level of competition in the market segment? Are there strong and
aggressive competitors?
2. Are there existing and potential substitute products? Are the barriers to substitute
products strong?
3. Who are the present and potential buyers in the segment? Is the bargaining power of
the buyers strong in the segment?
4. How strong is the bargaining power of the suppliers in the segment?
 Structure of the Segment

The structure of each segment varies. The entrepreneur must study the different
barriers that will lessen the forces of competition in every segment. Usually, a highly
competitive segment limits the profitability and growth of a particular venture. In a
similar manner, substitute products with low prices in the market may attract the
shifting of customers. The shifting process can easily be facilitated once the
switching cost is minimal.

The strong bargaining power of the buyer can easily bring the prices of the
products down. Similarly, suppliers with powerful forces that can control the
price of the product is one particular segment. It will not be good for small
entrepreneurs to join a segment like this.
 Capability of the Business

Another factor that must be carefully evaluated by the

entrepreneur is the internal environment of the business,
including its sources Does the business have the required
competency to take advantage of the existing opportunity? The
answer must be a resounding yes Otherwise the entrepreneurial
venture may not be able to succeed its chosen market segment.
 SEGMENTATION MATRIX
The segmentation process is easily facilitated through the use of the segmentation matrix The
size of the segment is usually expressed in terms of estimated product demand, while the
expected growth may be expressed in terms of potential profitability of the segment.
The forces of competition may be classified as strong moderate, or weak. The force is considered
strong when the barriers to it are generally weak or low. In contrast the force is considered weak
when the barriers are strong.
In the segmentation matrix that follows although the size and growth of segment 2 is lower than
that of segment 1, the different forces of competition, however, are weak and the business is
highly capable. Hence segment 2 becomes the priority segment to be served.
 MARKET SEGMENT SELECTION

The number of segments to serve determines the appropriate

entrepreneurial marketing strategy to use Generally, the
entrepreneur can select one segment or all segments of the
market with different entrepreneurial marketing strategies.
 Basic Entrepreneurial Marketing Strategies

1. Individual or one-on-one marketing

2. Segmentation marketing (differentiated or concentrated)
marketing
3. Mass or undifferentiated marketing
 1. Individual or One-on-One Marketing

In the individual or one-on-one marketing strategy, the business

provides a product that suited or fitted to the particular need of
the consumers. It is based on the concept that the consumers
have differentiated needs and wants.
For example, tailoring shops use the one-on-one marketing strategy
since they make clothes for specific people based on their respective
requests. Furniture manufacturer also adopt the one on-one marketing
strategy for clients who order customized furniture.
 2. Differentiated Marketing
Differentiated marketing is a variation of the segmentation marketing strategy. Here the
entrepreneur covers several agents of the total market and design a particular product for
each segment based on the market segment evaluation and the capability of the business.
The basic concept of differentiated marketing is for the business to exist in total segments
but to serve few customers only in each segment. AS such several products from the same
maker will be available and compete with each other in the market.

For example, the different toothpaste and milk product in the market
are intended for different segments. Each type of tooth and milk
product in prepared to set of customers from several segments.
 2. Concentrated Marketing

Concentrated marketing or sometime called niche marketing

is another Variation of segmentation marketing where the
business selects only few segments but intends to serve a
large number of customers in the chosen segments This set of
customers is the niche.
 3. Mass or Undifferentiated Marketing
Undifferentiated marketing strategy takes into consideration the fact that the customers
have common needs and wants. The entrepreneur does not have to differentiate them
according to their needs and wants but rather assumes that his/her product will cater to
all types of customers in general. This type of entrepreneurial marketing strategy in
usually applicable when the product is a simple commodity that can actually be used by all
types of customers regardless of their differences in geographical location demographic
profile and psychological and behavioral concerns.
For example, an entrepreneur engaged in the production of refined white sugar
does not necessarily have to segment the whole market but rather mass produce
sugar for the whole market. It is a staple commodity that is used by people
regardless of gender, age, and socioeconomic status.
 Market positioning

Plays a significant role in the practice of entrepreneurship. It is even

believed to be the most important aspect of an entrepreneurial
venture. The term positioning simply refers to the p a in place In the
field of entrepreneurship, it may wither refer to the act of placing the
but in a specific place in the industry or placing the podcast in a
certain place in the market. There are conceptual differences between
business positioning and product or market positioning.
 Market positioning
Business positioning simply refers to the process of determining the place of the
business in the industry. The entrepreneur must conduct industry analysis of the
different forces that are strong in the industry in order to determine the correct position
of the proposed venture. On the other hand, market positioning refers is the process of
arranging a product to occupy a clear. distinct, and desirable place in relation to other
competing products in the mind-set of target consumers (Kotler & Armstrong 20 It is
considered the last stage in the product Identification process after the entrepreneur
has conducted market segmentation and has already died the particular segment to
serve.
DIFFERENTIATING MARKET POSITIONS
 DIFFERENTIATING MARKET POSITIONS

Since the foremost objective of market positioning to have a distinct of the target comes
the concept of differentiation becomes inherent and directly linked to the process.
The process of determining the market position of the product includes the following
steps
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 in the market position.
 DIFFERENTIATING MARKET POSITIONS

The first logical step that the entrepreneur most perform in market positioning is
determine that the product is truly differentiated from competitors primarily in terms
of value and benefits that the customers will gain from it.
There are two major dimensions that will differentiate the product from its
competitors in to the market. These are “lower price” and "more benefits” than those
sold at a higher price.
Filipino consumers are generally price-conscious. The first thing that we check when we go
shopping is the price of the product. We prefer to buy products that are reasonably priced
Thus when the price of the product can hardly be lowered, the entrepreneur must define its
substantial benefits that the product is more expensive because it offers more value and
benefits to the customers This must be stated clearly on the packaging and emotional
materials of the product.
 Positioning or Perceptual Map

Market positioning is usually done with the help of the porting or

perceptual map. The positioning or perceptual map shows the position of
similar products competing in the market as perceived by the
customers. The different products are represented in the form of circles
and are plotted on the perceptual map as low or high in terms of price
and quality. The size of the circle represents the market share of the
product.
 EVALUATING THE BENEFITS OF EVERY MARKET POSITION

Once the target position in terms of price and quality dimensions has been evaluated the
entrepreneur determines the advantages, benefits, and attributes of the product. There are no
specific rules on how many attributes or benefits the product must have. It is highly suggested,
however, that it must have at least one attribute which is considered distinct from other products.
The entrepreneur must strongly promote the said attribute or benefit to the consumer.

For example, powder detergent may take pride in the following lines that describe
its attributes and at the same time can be easily recalled by household
consumers: banayad sa kamay, ang bango-bango, ang amoy rosas.
Similarly powder milk products may put emphasis on the muscle building protein
requirements for the youth and risk reduction of osteoporosis for adults.
The following criteria may be considered in identifying the
attributes or benefits to be promoted:
1. Identifiable- The benefit on attribute is easily associated with the
product. The customers should be able to easily identify any benefit
that can be derived from the product.
2. Beneficial- The attribute provides valuable benefits to the target
consumers.
3. Distinctive advantage- The attribute is distinct to the product and can
hardly be copied by the competitors
4. 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.
 DECIDING ON THE MARKET POSITION

The last phase of market positioning after differentiating the product from the others in terms of benefit
or attribute is to make a decision on where to position the product. There are two basic dimensions that
must be seriously considered in deciding the market position of the product. These are price and quality.
In addition, the entrepreneur may also consider the following guide questions in deciding the market
position of the product
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? Will the product be
sold at a higher price even if it offers less benefits?
Normally a product sold at a lower price is expected to be of inferior quality
and offers les benefits, while a product sold at a higher price is expected to
be of better quality and offers more benefits
END