Market segmentation

Question 1

Market segmentation

Answer 1

The process by which aids businesses in dividing markets or potential customers in sub groups.

Question 2

Market segment - location

Answer 2

Splitting up the market by the location of potential customers. Business can choose to alter their product offering according to the location of their customers.

Question 3

Market segment - Behaviour

Answer 3

Relates to consumer buying behaviour and how it varies between industries and specific segments of the market. How often and how much people purchase is a key factor for this segment.

Question 4

Market segment - Demographic

Answer 4

Age, gender, race, sexual orientation, religion. Based on the characteristics of the target market. E.g. Gym shark have clear target market of 18-25 year olds, they promote their brand and products through influencers who their target market can relate to.

Question 5

Market segment - Lifestyle

Answer 5

Focused on hobbies and interests of people, alongside their wants and needs according to the type of life they lead. The rapid rise of veganism is a clear example of businesses reacting to change of lifestyle choices in a segment of their market.

Question 6

Market segment - Income

Answer 6

Focused on how much the typical person earns and how much disposable income they have. Tesla and Rolex target people with high earning potential with high amounts of disposable income.

Question 7

Benefits of market segmentation

Answer 7

• Increased brand loyalty and repeat customers
• Enables businesses to understand and meet the needs of the customers more effectively.
• Reduces price sensitivity around brand, helping to improve revenue and profitability.

Question 8

Drawbacks of market segmentation

Answer 8

• Increased costs linked to research and product development
• Potential for brand to lose it’s identity and less able to exploit economies of scale
• Additional marketing activities required due to business targets more segments.