5.2 Segmentation

Question 1

What do managers need to consider when thinking about the market?

Answer 1

The market size

The growth of the market

Question 2

What is sales volume?

Answer 2

Measures the amount of sales sold

Question 3

What is sales value?

Answer 3

Measures the revenue generated

Question 4

How do you calculate the growth of the market?

Answer 4

Market Growth = (Change in market size/Original market size)X100

Question 5

What is segmentation?

Answer 5

How the market is split up into different segments

Eg big cars and small cars, Rich and Poor

You may target a segment

Question 6

What are the benefits of segmentation?

Answer 6

A business can fit customers needs more closely leading to more satisfied customers

A business can target there customers more precisely - may lead to less money wasted on advertising / developing bad products for your customers

A business may be able to set better prices eg if they know that they have a rich/poor customer base they can raise/lower prices

Question 7

How may a business segment the market?

Answer 7

Gender
Age
Income
Location

Question 8

What is targeting?

Answer 8

The proses of which a business targets 1 or a few segments

Question 9

What may influence a business decisions of what segment to target?

Answer 9

The business aims
Can it compete effectively
Will it be profitable
Does it have the best opportunity cost