Market segments

• What makes customers different?

  • Amount of money they are able/willing to pay
  • Quantity of goods they require
  • Quality of goods they require
  • Time and location they wish to purchase the goods (convenience)
  • Choice
• Demographic segmentation types


  • Higher managerial or professional
  • Age
  • Gender
  • Intermediate managerial or professional
  • Occupation
  • Socio-economic group
  • Supervisory, clerical, junior managers
  • Skilled manual workers
  • Semi & Unskilled manual workers
  • Casual workers, pensioners, benefits
• Demographic segmentation types


  • Baileys aimed at females
• There can be problems with classifying market segments by using socio-economic groups
• Socio-economic group classification


  • Higher managerial, professional. Doctors, judges, company directors (3%)
  • Administrative, Intermediate managerial, teachers, solicitors, nurses (20%)
  • Supervisory/clerical, secretaries, admin, retail managers (28%)
  • Skilled manual, electricians, plumbers, builders (21%)
  • Semi-skilled and unskilled factory workers, cleaners, shop workers (18%)
  • Casual labourers, unemployed, state pensioners (10%)
• Benefits of market segmentation

  • Helps to better understand the company's target market including its characteristics, needs and wants
  • Allows a firm to better design their marketing mix to increase sales and market share
  • Helps them to build a strong brand identity and establish loyalty
  • Helps a firm to plan new suitable products to meet their chosen market segments
• Difficulties with market segmentation

  • Firms can find it difficult to identify the most important segments for a product
  • Constant research is needed
  • Products may become too specific to one market segment not catering to the tastes of others thereby reducing sales
  • Companies may ignore potentially lucrative segments
  • Firms may find it difficult to reach their chosen market segment, for example, younger audiences not reading as much physical print and streaming television and films online means avoiding traditional advertising channels
• Market targeting


  Deciding the market segments the company will aim to sell their products/services to; known as their target market
• Market targeting strategies


  • Concentrated marketing
  • Differentiated marketing
  • Undifferentiated marketing
• Product proliferation


  When a firm sell a range of products aimed at different markets
• Market positioning


  Where a firm's products/services are in a market in relation to its rivals
• Unique selling point (USP)

  Something that differentiates a firm from its rivals to provide it with a sustainable competitive advantage
• Niche marketing


  • Lower levels of competition
  • Possible to build intense customer loyalty
  • Firms are able to set up and operate on a smaller scale
  • Niche market businesses can more easily differentiate themselves to create sustainable competitive advantage by tailoring their products/services to meet their consumers' specific tastes
  • Higher prices can be charged with this USP and higher added value
  • It is easier to design your marketing mix and target customers when you know the exact characteristics, needs and wants of your specific target market
• Disadvantages of niche marketing

  • Lower profits may be made as firms operate on smaller scales and cannot reduce their unit costs through economies of scale
  • New rivals entering the market will have a considerable impact particularly as the barriers to entry are relatively small
  • Larger rivals may enter the market if it become very profitable
  • Changing consumer tastes will have a considerable impact
• Mass marketing


  • Large-scale production and economies of scale may be possible
  • Higher sales, revenue and profit is possible
  • High barriers to entry may mean decreased competition for already established firms
• Disadvantages of mass marketing

  • High costs as larger-scale operation and manufacture is needed to meet mass market demand
  • Products must appeal to a wide range of consumers so firms are unable to easily add value by tailoring products to consumers specific tastes
  • Consumer tastes change more quickly in mass markets and are harder to keep up to date with
  • More competition often from large international rivals who compete using lower prices