Market Segmentation Flashcards
All 10 cards in this deck
What is market segmentation?
Dividing a market into groups of customers with similar characteristics so products can be targeted at them.
Name the five ways of identifying market segments in the specification.
Location, demographics, lifestyle, income and age.
What is a target market?
A group of customers which a business aims its products or services at.
Give one way a small business could use market segmentation to target customers.
Any one of: segment by gender and target different products at male or female customers; segment by income and develop a higher quality product for higher-income customers.
True or false? Revenue is a way of segmenting a market.
False. Revenue is the income from sales; segments are based on location, demographics, lifestyle, income and age.
What is a market map used for?
Spotting where there is a gap in the market, and showing where competitors are positioned.
Give one drawback of using market mapping to find a gap in the market.
The gap may exist because there is not enough demand, so the business targets a market that does not really exist.
True or false? A market map can be used to identify how many customers there are in a market.
False. A market map shows product positioning and gaps in the market, not the number of customers.
What are the steps to use a market map to find a gap in the market?
e.g. a shop mapping bikes
- Choose two features customers care about as the axes (e.g. low price–high price, basic–high performance).
- Plot each competitor's product on the map.
- Look for an empty space — that is a possible gap, e.g. low-priced high-performance bikes.
Give one benefit to a business of segmenting its market.
Any one of: products can be designed to meet each group's needs more closely; marketing can be aimed at the right customers, so less is wasted; it builds closer relationships with customers.