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Identifying

Market
Segments and
Targets

Chapter 8

Companies cannot connect with all customers in


large, broad, or diverse markets. But they can
divide such markets into groups of consumers or
segments with distinct
needs and wants. A company then needs to
identify which market segments it can serve
effectively.
This decision requires a keen understanding of
consumer behavior and careful strategic thinking.
To develop the best marketing plans, managers
need to understand what makes each segment
unique and different. Identifying and satisfying the
right market segments is often the key to
marketing success.

Bases for Segmenting


Consumer Markets

Market
Segment

Consumer Market
Consist of a group of
customers who share
similar needs and wants

The marketers task is to identify the appropriate number and


nature of market segments and decide which one(s) to target.

Researchers try to define segments by


looking at descriptive characteristics:

Geographic

Demographic

Behavioral

Psychographic

Geographic Segmentation
nations

neighborhoo
ds

states

cities

regions

counties

Demographic Segmentation
age,

family size

family life
cycle

income

occupation

education

religion

race

generation

nationality

social class

gender

Psychographic Segmentation
Buyers are divided into different groups on the basis
of psychological/personality traits, lifestyle, or values.
People within the same demographic group can
exhibit very different psychographic profiles.
Psychographics is the science of using psychology
and demographics to better understand consumers.

The VALS
Segmentation
System:
An Eight-Part
Typology

The four groups with higher resources are:


1. InnovatorsSuccessful, sophisticated, active, take-charge people with
high self-esteem. Purchases often reflect cultivated tastes for relatively
upscale, niche-oriented products and services.
2. ThinkersMature, satisfied, and reflective people motivated by ideals
and who value order, knowledge, and responsibility. They seek durability,
functionality, and value in products.
3. AchieversSuccessful, goal-oriented people who focus on career and
family. They favor premium products that demonstrate success to their
peers.
4. ExperiencersYoung, enthusiastic, impulsive people who seek variety
and excitement. They spend a comparatively high proportion of income
on fashion, entertainment, and socializing.

The four groups with lower


resources are:
1. BelieversConservative, conventional, and traditional people with
concrete beliefs. They prefer familiar, U.S.-made products and are
loyal to established brands.
2. StriversTrendy and fun-loving people who are resourceconstrained. They favor stylish products that emulate the purchases
of those with greater material wealth.
3. MakersPractical, down-to-earth, self-sufficient people who like to
work with their hands. They seek U.S.-made products with a
practical or functional purpose.
4. SurvivorsElderly, passive people concerned about change and
loyal to their favorite brands.

Behavioral Segmentation

In behavioral segmentation, marketers divide


buyers into groups on the basis of their
knowledge of, attitude toward, use of, or
response to a product.

Market Targeting
To be useful, market segments must rate favorably on five key
criteria:

PHILIPPINE BUSINESS
ENVIRONMENT

Outline of Presentation

I. Philippine economy vis--vis other ASEAN countries


II. Drivers of Philippine economic growth
III. Why should Chinese investors come to the Philippines?
IV. Overview of Philippines-China economic relations
V. Growth areas for PHL-China Economic partnership?

I.

Philippine economy vis--vis other ASEAN countries

Recently, Philippines has enjoyed better macroeconomic


fundamentals.

GDP growth rate


Inflation rate
Credit rating

Philippines has been enjoying a high growth rate, low inflation,


and good fiscal position.
With a strong domestic economy, Philippines is expected to be
economically stable in coming years.
Stable economy: Conducive environment to do business.

I.

Philippine economy vis--vis other ASEAN countries

GDP growth rate


Country

2010

2011

2012

2013

PHILIPPI
NES

7.6

3.6

6.8

7. 2

Indonesia

6.1

6.5

6.3

5.6 (Q3)

Malaysia

7.4

5.1

5.6

5.0 (Q3)

Thailand

7.8

0.1

6.4

2.7 (Q3)

Vietnam

6.8

6.0

5.0

5.5 (Q3)

Source: Bangko Sentral ng Pilpinas (BSP)

GDP growth rate


Projected growth in 2014 is 6.5-7.5%
From 2014-2016: targeted annual GDP growth is 7-8%

Inflation rate
Country

2010

2011

2012

2013

PHILIPPINES

3.8

4.6

3.2

2.9

Indonesia

5.1

5.4

4.3

7.0

Malaysia

1.7

3.2

1.7

2.8*

Thailand

3.3

3.8

3.0

2.2

Vietnam

8.9

18.7

9.3

6.6

* October-November
Source: Bangko Sentral ng Pilpinas (BSP)

Inflation rate
Philippines has been enjoying a high growth rate, low
inflation, and good fiscal position.
With a strong domestic economy, Philippines is expected
to be economically stable in coming years.

Stable economy: Conducive environment to do business.

II.

Drivers of Philippine economic growth

Population Size of Domestic market


Remittances from overseas Filipino workers (OFWs)
BPO services
Manufacturing

II.

Drivers of Philippine economic growth


Population

2nd largest domestic economy in ASEAN, with favorable demographics.


Country

Population Size in million


(July 2013 est.)

PHILIPPINES

105.7

Indonesia

251.1

Malaysia

29.6

Thailand

67.4

Vietnam

92.4

Source: CIA World Factbook

Remittances from overseas Filipino workers (OFWs)


YEAR

AMOUNT (US$ billion)

2007
2008
2009
2010
2011
2012
2013

14.45
16.43
17.35
18.76
20.12
21.39
22.76

Pillar of the domestic economy.


Source: Bangko Sentral ng Pilipinas (BSP)

Sources
US, Canada, Saudi Arabia, UK,
Japan, UAE, Singapore

Business Process Outsourcing (BPO)


Composition of the Philippine economy
Sector

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Agriculture

11.8

12.8

12.3

13.7

14.7

13.8

13.8

14.3

14.8

14.8

15

15

17

20

20

Industry

31.1

31.4

32.6

31.7

31.6

31.9

31.7

32.1

31.9

31.9

35

31

30

32

32

Services

57.1

55.8

55.1

54.6

53.7

54.3

54.5

53.7

53.2

53.2

50

54

53

48

48

ngths of the economy has been its services. BPO services has been a growth sec
, US$13.5 billion industry.
Source: Bangko Sentral ng Pilipinas (BSP)

Competitive Advantage of BPO Services in the Philippines


BFSI (banking, financial, services, insurance)
MDR (manufacturing, distribution, retail)
Healthcare
Telecommunications
Travel
Energy
Media

Favorable access to major markets


The Philippines top markets as of July 2013:
1. Japan
2. U.S.A.
3. China
4. Singapore
5. Hong Kong
6. South Korea
7. Thailand
8. Germany
9. Taiwan
10.Netherlands

Source: Department of Trade and Industry (DTI)

ASEAN FTAs with other countries


1.ASEAN-Australia-New Zealand
2.ASEAN-China
3.ASEAN-India
4.ASEAN-Japan
5.ASEAN-Republic of Korea
Source: www.asean.org