Segmentation

Question 1

What does ‘the market’ mean? (think from the marketing managers perspective)

Answer 1

The demand there is for their product and what the sales are.

Question 2

What does niche market mean?

Answer 2

Niche market are small specialised markets catering for a very small part of the total market

Question 3

What does mass market mean?

Answer 3

Mass market is the main market targeting as many people as possible - original coke

Question 4

Managers will consider factors such as:

Answer 4

• The size of the market

- The growth of a market

Question 5

What is the equation for market growth?

Answer 5

Market growth = change in market size/original market size * 100

Question 6

If the market was worth £50,000 and is now worth 60,000 what is the market growth?

Answer 6

Market growth = 10,000/50,000 * 100

= 20%

Question 7

How can a business segment its customers?

Answer 7

• Age
• Gender
• Race
• Religion
• Nationally
• Location
• Income
• Stage in their life cycle

Question 8

What are the benefits of segmenting for a business?

Answer 8

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

Question 9

What do you think think targeting means?

Answer 9

Once a business has identified relevant segments in its market, it will need to decide which ones to focus on (target). A business will target segments where it thinks:
It 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