Market Segmentation
Overview
An aircraft leaves Doha for Nairobi with 280 people on it. They depart at the same moment, arrive at the same moment and land at the same airport. The cheapest of them paid 180 US dollars and the most expensive paid nine times that. The airline is not cheating anybody. It has worked out that the people on that aeroplane are not one market but several, that a family travelling for a wedding and a consultant travelling for a meeting want different things badly enough to pay differently for them, and that charging everybody the same price would leave money on the table at one end and empty seats at the other.
That is market segmentation, and this lesson is about doing it deliberately. You will learn the four bases the specification names, gender, age, location and income, and see how each one changes not just the price but the product, the promotion and the place. You will learn to test whether a segment is real before building a business on it, weigh a niche against a mass market, and choose the marketing methods that suit a given group. That last skill is examined directly: the specification asks you to recommend the most appropriate marketing methods for given situations, and Recommend is the second highest-scoring command word on this paper.
Objectives
- Types of segmentation.
Mind map
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Market Segmentation. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which one of the following best describes market segmentation? A. Selling the same product to everybody at the same price B. Dividing buyers into groups that share characteristics C. Reducing the price of a product to attract customers D. Moving production to another country Answer: B
- Which one of the following is a basis for segmentation named in the specification? A. Income B. Interest rates C. Exchange rates D. Production method Answer: A
- A business sells 240 units a month at 50 dollars. It adds a budget version at 30 dollars and sells 160 of those without losing any full-price sales. By how much does monthly revenue rise? A. 3,200 dollars B. 4,800 dollars C. 8,000 dollars D. 12,000 dollars Answer: B
- Which one of the following is the main risk of serving a niche market? A. Unit costs are very low B. There are usually many competitors C. The business depends on one small group of customers D. The margin on each sale is very small Answer: C
- A cinema charges students less on weekday afternoons only. Why is the time restriction important? A. It reduces the cinema's electricity costs B. It stops full-price customers using the cheaper price C. It is required by consumer protection law D. It increases the price paid by students Answer: B
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Work through these questions in the app
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