How have Airbus and Boeing segmented the market for commercial aircraft?

Answer 1

Airbus believe the future market is high capacity planes that can have good range (can see this in the A380).

Boeing believes the market is going to be mid-sized airplane with good range that can fly direct and more frequent (B787).

Only time will tell who is right....

Answer 2

By building better planes to give the customer an incentive to replace their old ones.