1.2.3 Market segmentation

Question 1

What is a market segment?

Answer 1

a group of buyers with similar characteristics and buying habits.

Question 2

What are some of the ways the market can be segmented?

Answer 2

• age
• gender
• income
• location
• lifestyle
• demographic

Question 3

What are the benefits of segmentation?

Answer 3

• meets specific customers needs
• differentiate its product
• focus on a specific group of customers
• target its marketing activity
• build close customer relationships

Question 4

What are the limitations of segmentation?

Answer 4

• focusing on one group of customers can cause a business to miss another opportunity
• customer characteristics change over time, like lifestyle, income and demographic

Question 5

What is market mapping used for?

Answer 5

• used to position and compare products in a market

- identify a gap in the market based on 2 variables, such as price and quality

Question 6

What are the benefits of market mapping?

Answer 6

• help identify potential gap in the market
• help identify a business closest rivals
• help business make decisions about marketing and positioning its brand

Question 7

What are the limitation of market mapping?

Answer 7

• based on opinions and perceptions rather than accurate data
• difficult to identify appropriate variables
• based on only two variables-simplistic

Question 8

What are some ways to compete?

Answer 8

• better design
• lower prices
• wider product range
• better customers service
• stronger brand image
• more convenient location
• higher quality

Question 9

What is product differentiation?

Answer 9

making a product different from others in some way

Question 10

What does differentiation help businesses do?

Answer 10

• position their products and target different market segments
• gain an advantage over rivals when faced with competition