(a) Define the term market segmentation. (b) List six factors that influence market segmentation. (c) State five advantages of advertising.

Answer Details

(a) Market segmentation

Market segmentation is the process of dividing a large, varied market into smaller distinct groups of buyers who share similar needs, characteristics or buying behaviour, so that each group can be served with a suitable marketing approach.

(b) Factors that influence market segmentation

1. Age of consumers
2. Income or purchasing power
3. Sex or gender
4. Geographical location
5. Occupation or social class
6. Taste, preference and lifestyle

(c) Advantages of advertising

• It informs customers: Advertising makes consumers aware of the existence, features and prices of goods and services.
• It increases sales: By creating and stimulating demand, advertising helps the producer to sell more goods and earn higher profit.
• It creates and sustains goodwill: Regular advertising builds a favourable image and brand loyalty for the firm and its products.
• It supports mass production: The wide demand created by advertising enables firms to produce on a large scale and enjoy lower unit costs.
• It provides employment: Advertising creates jobs for artists, marketers, media houses and others engaged in the advertising industry.