At a recent pricing seminar a participant talked about a promotion she ran that generated a strong increase in sales only among one segment of her market, with the rest of her market being much less excited about it.

She was concerned because her promo failed to reach its overall target but her concern actually highlights something that a lot of marketers capitalize on to their advantage, which is that the market out there is far from uniform. People have different needs and even when they feel the same need, they may feel it at different intensities. Marketers can and should group consumers into segments, where the people in each segment are driven mainly by the same need when they choose a brand in that category or in how they use it.

When designing account-specific promotions, many marketers actually deliberately choose to focus on only one segment of their total market because the retail channel they will be promoting in has a clientele biased toward one of its segments. For example a very successful 2012 promotion of a J&J anti-allergy drug in the US focused only on one segment of the market which uses anti-allergy drugs. It focused only on adult women although the brand itself did not limit itself to that segment in its overall marketing. On a national basis the brand went for a wide range of allergy sufferers.

But it chose to focus on adult women in an account-specific promotion because it was promoting in a retail channel whose clientele was somewhat biased in favor of adult women. In its promotion, it positioned its brand as some women’s “beauty secret”. And to drive home its point, it tied up with a make-up brand in a joint effort. The promotion was very successful, aided no doubt by its focus on a very particular need important to a segment of its market.

How then should people segment markets? You can only do that well if you make the effort to understand your market and it usually takes a few rounds of trial segmentation to come to a final segmentation system that really works. Understand what are the important needs that are satisfied by buying products or services in your category. Some research must be done into which of needs are satisfied by using the product category. Then to understand how those needs play in relation to each brand in the category, the same thing should be done for each of the brands in the category. There you will usually find that a somewhat different mix of needs are satisfied by each of the different brands within a category.

For example, if you are talking machine tools, different brands could be used for very different reasons. Probably the more durable brands would be more likely to be used by those whose technical, construction, or engineering work require heavy duty tools. On the other hand, those who use such tools only once in a while would go for the less expensive but also less durable brands. However, within the professional segment, the ability of a brand to provide after sales service, and the quality of that after-sales service, as well as its cost and its easy availability will come into consideration in the purchase decision process. This would result to sub-segmentation of the professional market.

Segmentation is clearly something to consider when determining your pricing and where you would like to set prices that your target segment will find acceptable overall versus the alternatives. It is not just a question of pricing lower: You must take into account the overall offer of the brand. This includes its availability, durability, performance, reputation, known users, and so on.

In certain categories, like hotels or airlines, brands set different prices to meet the needs of different segments, such as the business traveler, the weekender, the tourist in a tour group, etc. A key consideration there is to manage the separation of segments so people in one segment are kept from taking advantage of lower prices offered to another segment. To do that, marketers build “fences” into their pricing structures, by setting conditions and exclusions.


Benedicto “Poch” Cid is the Chief Brand Adviser of Mansmith and Fielders, Inc. (www.mansmith.net), the leading marketing and sales training company in the Philippines.Please email info@mansmith.net call (+63-2) 584-5858 /412-0034 or text (63) 918-81-168-88. Please also send your marketing, sales and strategy questions to mentors@mansmith.net.