1.2.3 market segmentation

• What’s market segmentation?

  Dividing a market into distinct groups based on characteristics such as demographics, behaviour, or needs. In order to make it easier to develop products aimed at their target audience.
• How can a market be segmented?

  Location - geographical, based on where a target market lives.

  Demographics- characteristics of people.

  Behaviour - how people behave in relation to purchases at different times of the year.

  Lifestyle - what sort of lives the people in the target market live

  Income - how much people earn and disposable income
• What are the benefits of segmentation for a business?

  To meet customer needs,

  Differentiate its products,

  Focus on a specific group of customers,

  Target it’s marketing activity,

  Develop a unique brand image,

  Build a close customer relationship
• What are limitations of segmentation for a business?

  Targeting a range of different customers with different products and services can be costly,

  Focusing on one group of customers can cause a business to miss another opportunity,

  Customer characteristics can change over time
• What’s market mapping?

  Market mapping is a technique used to visually represent the positioning of products or brands in relation to each other in a market based on different variables, e.g. price and quality
• What can a market map be used for?

  To identify potential gaps in the market for a business, and an area for opportunities where customer needs are not being met
• What are the benefits of market mapping?

  Helps identify gaps in the market,

  Helps business identify their closest rivals,

  Supports market segmentation,

  Helps a business make decisions about marketing and positioning its brand
• What are the limitations of market maps?

  Based on opinions and the perceptions - rather than on accurate data,

  Compares businesses based on only two variables - simplistic,

  Can be difficult to identify the most appropriate variable