market segmentation

What is demographic segmentation?

It identifies subgroups of the population based on their demographic profile or characteristics.

Name some characteristics used in demographic segmentation.

Age, gender, level of education, race, religion, family size, and stage in life are examples.

What do demographics typically examine regarding individuals and households?

Demographics look at the social and economic characteristics of individuals and households.

How does geographic segmentation define market categories?

It defines market categories based on where people live, such as regions or cities.

Why is geographic segmentation important?

People in different geographical areas display different characteristics and needs, and tastes and traditions can vary between countries.

What are some factors that can influence the price elasticity of demand for a product or service?

Factors include income (disposable income), the type of product (whether it's a luxury or necessity), and the level of competition.

How does competition affect price elasticity of demand?

If there is another business selling a similar product or service at a cheaper price, customers may choose that alternative, making the product more price elastic.

What is income segmentation?

It is identifying subgroups of the market based on their levels of income and socio-economic groupings.

Which socio-economic grouping typically includes chief executives and directors?

A - Higher managerial.

Which socio-economic grouping includes solicitors, accountants, and doctors?

B - Intermediate managerial.

What types of workers are typically found in the C1 socio-economic grouping?

Supervisory, clerical, or junior professionals such as teachers.

What is the C2 socio-economic grouping defined by?

Skilled manual workers such as plumbers, electricians, and carpenters.

Which socio-economic grouping includes semi and unskilled workers like rubbish collectors and window cleaners?

D.

Who is included in the E socio-economic grouping?

Pensioners, casual workers, students, and the unemployed.

What is behavioural segmentation?

It characterises subgroups based on the behavioural patterns of the consumer.

Name one factor used to characterise subgroups in behavioural segmentation related to purchases.

Reasons for making purchases (e.g., needs, emotional, rewards), frequency of purchase (e.g., heavy or light user), or time of purchase (e.g., seasonal, weekly, late at night).

What are two other factors used in behavioural segmentation besides purchase reasons, frequency, and time?

Brand loyalty and method of purchase (e.g., online).

List one key benefit of market segmentation for a business.

It can meet specific needs of a group, provide useful data, make advertising more effective, increase customer satisfaction, gain loyal customers, reduce risk, or gain competitive advantage.

How can market segmentation help a business gain a competitive advantage?

It allows the business to promote its Unique Selling Proposition (USP) more closely to specific customer groups.

What is a key benefit of identifying profitable and unprofitable customers through market segmentation?

The most and least profitable customers can be identified.

How does market analysis assist in product development?

It makes it easier to identify new products and helps improve existing products and customer service.

What is 'targeting' in business strategy?

Targeting is the process of deciding which segment of the market to focus on.

What factors influence a firm's targeting decisions?

Influencing factors include perceived level of demand, degree of competition, nature of the product, mission and objectives, and an understanding of the needs and wants of a specific segment.

Define a 'niche market'.

A niche market is when a firm targets a small subsection or a previously unexploited gap in a larger market.

Can you provide examples of products typically associated with a niche market?

Examples include specialized skincare, high-end luxury cars like Aston Martin, and specific cricket products.

What is a 'mass market'?

A mass market is when firms target the whole of a market rather than a particular segment.

Which companies are common examples of firms targeting a mass market?

Cadbury, Apple, and Ford are examples of companies targeting a mass market.

What are the advantages of niche marketing?

Advantages include the ability to use premium pricing, greater focus on customer needs leading to loyalty, a stronger USP and often first-mover advantage, and less competition resulting in greater market share.

What is 'first-mover advantage'?

First-mover advantage is an advantage gained by a company that is the first to market a new product or service in a market.

What are the disadvantages of niche marketing?

Disadvantages include a lack of economies of scale due to small-scale production, and the market can be quickly affected by changes in tastes and fashion.

What is income segmentation?

Identifying subgroups of the market based on their levels of income and socio-economic groupings.

Which socio-economic group includes chief executives and directors?

A - Higher managerial

Which socio-economic group includes solicitors, accountants, and doctors?

B - Intermediate managerial

Which socio-economic group includes teachers?

C1 - Supervisory, clerical or junior professionals

Which socio-economic group includes plumbers, electricians, and carpenters?

C2 - Skilled manual

Which socio-economic group includes rubbish collectors and window cleaners?

D - Semi+unskilled workers

Which socio-economic group includes 'pensichers', casual workers, students, and the unemployed?

E

What is behavioural segmentation?

Characterising subgroups based on the behavioural patterns of the consumer.

What are some characteristics used in behavioural segmentation?

Reasons for making purchases (needs, emotional, rewards), frequency of purchase (heavy or light user), time of purchase (seasonal, weekly, late at night), brand loyalty, and method of purchase (e.g., online).

What is one of the key benefits of market segmentation for a business?

It allows the business to meet the specific needs of a particular group, gain a USP, and increase customer satisfaction.

How can market segmentation positively impact advertising spend?

Advertising spend becomes more effective as it can be targeted specifically to relevant groups.

How does segmentation help a business reduce risk?

By targeting specific customer needs, businesses can reduce risk associated with product development and marketing.