market segmentation Flashcards
What does ‘the market’ mean?
The demand there is for their product and what the sales are.
There are two types of market, niche and mass with an example explain what you think they mean.
Mass market is the main market targeting as many people as possible - original coke
Niche market are small specialised markets catering for a very small part of the total market
Examples: M - Dairy milk, milk, eggs etc
N - gluten free, wedding dresses, maternity clothes
Market growth equation
Market growth = change in market size/original market size * 100
If the market was worth £50,000 and is now worth 60,000 what is the market growth?
Market growth = 10,000/50,000 * 100 = 20%
Last year the number of sales was 300,000 units and the average price was £12.
this year the number of sales is 330,000 units and average price is £15.
1. What is the growth of sales volume?
2. What is the growth in sales value?
- 30,000/300,000 * 100 = 10%
2. 1,350,000/3,600,000 * 100 = 37.5%
Different ways a market can be segmented
Age Gender Race Religion Nationality Location Income Stage in their life cycle
What are the benefits of segmenting for a business?
A business can develop its products to fit customer needs more closely
A business can target customers more precisely
A business can set the price appropriately
If a particular market segment is worth 40% of total sales and the turnover in the whole market is £2.6 million, what is the value of the segment?
£1,040,000
Once a business has identified relevant segments in its market, it will need to decide which ones to focus on (target). What would make them want to target it
- t can make a high enough return; some segments may be too small or not profitable enough
- It can compete effectively, that is, it has the skills and resources to win market share
- It covers the opportunity cost - there are no better alternatives
Market capitalisation formulae
Share price x shares sold
