1.2.3 Market segmentation

Question 1

How businesses use market segmentation to
target customers:

Answer 1

● identifying market segments: location,
demographics, lifestyle, income, age

● market mapping to identify a gap in the
market and the competition.

Question 2

What is segmentation?

Answer 2

Market research will show that a particular
product appeals to a specific group of people

Question 3

Market segment - Location

Answer 3

A business may decide to
sell its product in just one
country, one region (like
Scotland), or in an even
smaller area

Question 4

Market segment - demographics

Answer 4

Demographics mean statistical data relating to the population
and particular groups within it

Question 5

Market segment - lifestyle

Answer 5

Customers can be grouped
according to the way they
lead their lives and the
attitudes they share

Question 6

Market segment - Holidays

Answer 6

A business may decide to segment
the market according to lifestyle

Question 7

Market segment - Income

Answer 7

The population can be segmented according
to annual salary (e.g. £15,000, £30,000 etc.) or
type of job and social class

Question 8

Market segment - Social Class

Answer 8

Social class segmentation categorises individuals according to their
occupation, a business may decide to target ABC1 or DE
consumers, depending on the product.

Question 9

Market segment
Age

Answer 9

Each age group will have different needs and
wants in terms of products and services

Question 10

Market Mapping – why?

Answer 10

1) Identify key features of competitors

Can spot a gap in the market

Can focus on features to make their products different
to competitors

2) Can help the business to make decisions about
products

Can make sure products are different to get more
sales

Question 11

Market mapping – how?

Answer 11

In order to identify a gap in the market, it may
be useful for a business to construct a diagram
of where competitors are on two axes (for
example price and quality):