market segmentation

Question 1

what is market segmentation?

Answer 1

dividing the market and grouping customers together based on a shared characteristic

Question 2

give 4 ways a business segments the market

Answer 2

demographic
geographic
psychographic
behavioural

Question 3

what is geographic segmentation

Answer 3

grouping customers together based on their location/ where they live

Question 4

what is psychographic segmentation

Answer 4

grouping customers together based on their lifestyle e.g runners

Question 5

what is demographic segmentation

Answer 5

grouping customers together based on age/ sex/ gender/ income etc. e.g ferrari

Question 6

what is behavioural segmentation?

Answer 6

grouping customers together based on their attitudes and buying habits e.g advent calendar/ loyalty cards

Question 7

LOA- benefit of market segmentation

Answer 7

• through segmentation a business can target market research at a specific group
• rather than trying to create a product for all customers
• this can help a business understand their customer needs more effectively
• meaning they can adapt their design mix to better their needs
• ensuring the business product is more differentiated
• so they can increase selling price without significant fall in demand
• increasing their sales revenue

Question 8

LOA- drawback of market segmentation

Answer 8

• need to create multiple products
• to meet needs of different segments
• for example using geographical segmentation to create different products for customers in different countries
• therefore unable to benefit from marketing economies of scale
• ?
• spread over less units
• leading to higher unit fixed costs
• lower operating profit margins