Market segmentation

Overview

Segmenting by age, gender, income, location and lifestyle, niche and mass markets, customer profiles, the risks of one narrow segment, and using segments to set price and advertising.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is market segmentation?

   Model answer

   Market segmentation is dividing a market into groups of customers with similar characteristics or needs.

2. 2

   Why do businesses segment their markets?

   Model answer

   Segmentation lets a business aim products and promotion at the customers most likely to buy. Marketing money is then spent more efficiently.

3. 3

   Name five ways a market can be segmented.

   Model answer

   A market can be segmented by age, gender, income, location and lifestyle.

4. 4

   How might a clothing retailer segment its market by age?

   Model answer

   A clothing retailer might design separate ranges for teenagers, young adults and older customers. Each age group has different tastes and spending habits.

5. 5

   Give an example of products targeted by gender.

   Model answer

   Razors and deodorants are often designed and advertised separately for men and women.

6. 6

   Why is income a useful way to segment a market?

   Model answer

   Income decides how much customers can afford to spend. A car maker can offer budget models for low incomes and luxury models for high incomes.

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