Segmentation Flashcards

All 9 cards in this deck

What is market segmentation?

Dividing potential customers into groups (segments) based on different characteristics.

Why do businesses segment their markets and target particular groups?

Segmentation enables the business to meet the needs of its customers better and target them more precisely when advertising.

What is location segmentation (also called geographical segmentation)?

Splitting the market by where people live, so products suited to that area are targeted there.

e.g. selling surfboards in coastal areas.

How does a business use income segmentation to target customers?

e.g. customers with high disposable income

It sets the price appropriately to meet those customers' budgets.

True or false? Targeting a single segment lets a business meet that group's needs more closely, but leaves it with fewer potential customers.

True. Focus improves how well needs are met, but the target market is smaller.

What are the steps to decide which segment a business should target?

e.g. a new gym choosing between students and high-income professionals

1. Identify the segments by characteristic: age/income.
2. Compare which segment's needs it can meet best and most profitably.
3. Choose that segment and justify it.

e.g. target high-income professionals as they can afford higher membership prices.

What are the steps a business takes to segment its market by gender and target customers?
e.g. a business selling make-up

1. Identify which gender the product mainly appeals to: make-up is bought mostly by female customers.
2. Design the product and its packaging to suit that group.
3. Advertise in media used by that group, so customers are targeted more precisely.

Which category of segmentation does gender belong to?

Demographic segmentation.
e.g. splitting a clothing range into menswear and womenswear.

True or false? A business that segments its market by age is not allowed to sell to customers outside that age group.

False. Segmentation aims the product and advertising at a chosen age group, but other customers can still buy.