A target segment is the group of customers a business chooses to serve first, defined by something they need. In a case question you use stated needs, such as survey answers or customer comments, to pick the group and justify the choice.
This skill opens marketing choices, because price, promotion and distribution all depend on knowing who the customer is. It builds on the evidence skills in market research.
How do you define a segment from needs?
Start from what customers said they want, not from what the owner assumes. Then group customers who want the same thing. Last, describe the group so the business could find and reach it.
A useful segment answer has four parts:
- The need: what the customers say they want.
- The group: who they are, only as far as the case tells you.
- The evidence: a number, quote or observation from the case.
- The limit: what the evidence cannot show, such as a small or biased sample.
Worked example
Kedai Roti Pelita is a bakery in Seremban. The owner asked 60 customers one question: “What matters most to you when you buy from us?” The answers were:
| Stated need | Customers |
|---|---|
| A quick pick-up before work | 24 |
| Less sugar in cakes and buns | 21 |
| The lowest possible price | 15 |
Step 1, check the total. 24 + 21 + 15 = 60, so every customer is counted once.
Step 2, find the shares. 24 ÷ 60 = 0.40, which is 40%. 21 ÷ 60 = 0.35, which is 35%. 15 ÷ 60 = 0.25, which is 25%. The three shares add to 100%.
Step 3, choose a segment. The largest group is customers who want a quick pick-up before work. The owner could define the segment as “workers near the shop who want a fast breakfast on the way to work”.
Step 4, justify and limit. The 40% share is the biggest of the three, and the need is clear. But the sample is only 60 customers who already visit, so it says little about people who have never come in. The owner should test the idea before changing the shop.
Notice that the segment came from the need first. The words “near the shop” and “workers” came from the case, not from a guess.
The mistake to watch for
A common slip is to name a group by one trait and stop.
Mistaken answer: “The target segment is young people because they buy a lot of snacks.”
The answer gives no stated need, no evidence from the case, and no reason why this group suits this business.
The correction is to ask “what does this group say it needs?” and quote it. A better answer: “The target segment is workers who want a quick pick-up before work. 40% of the 60 customers surveyed named this as their main need, which was the largest share.”
Check yourself
Answer on paper first, then open each answer.
1. Warung Sari Laut surveyed 50 diners. 30 said they wanted a cheap lunch under RM10, and 20 said they wanted a quiet place to talk. Calculate the share for each need and name the larger segment.
Show answer
30 ÷ 50 = 0.60, so 60% want a cheap lunch. 20 ÷ 50 = 0.40, so 40% want a quiet place. The larger segment is diners who want a cheap lunch under RM10. The sample is only 50 existing diners, which is a limit.
2. A student writes: “Our segment is all Malaysians who like coffee.” Give two weaknesses.
Show answer
First, it is far too broad. It does not choose a group, so the business cannot decide what to offer. Second, “like coffee” is a liking, not a stated need linked to evidence in the case. A better answer names a specific need, such as a quiet place to study, and uses a case figure.
3. Rewrite this into a stronger segment: “Parents.”
Show answer
One example: “Parents of primary school children who say they want less sugar in snacks. In the survey, 35% of customers named this need.” The answer now has a need, a group and a piece of evidence.
Where this leads next
Once you can name a segment from evidence, you can explain a product-positioning choice for that group. Test the whole module later with the marketing choices practice set, and keep slips in a mistake log if the same one repeats.
Some students can define a segment in class but lose marks when the case gives messy or partial evidence. Our teachers can work through that with you in online one-to-one Business tuition.