LO1: Market Segmentation

Question 1

What is market segmentation?

Answer 1

The group of people that a product is aimed at

Question 2

How do cutomers need vary?

Answer 2

• Their requirements about the product/service (E.g. vegan products)
• The amount of money they are able to pay
• The amount of money that are willing to apy
• The quantity of goods they require
• The quality of goods they require
• Time and location they wish to purchase the goods

Question 3

How do businesses segment their market?

Answer 3

• Age
• Gender
• Occupation
• Income
• Location/geographic
• Lifestyle

Question 4

What are the benefits of market semgmentation?

Answer 4

• To ensure that the customers needs are met
• So the business can understand what types of marketing best suits that product
• To increase cutomer retention
• They may also poteintially increase their market share

Question 5

What is market research?

Answer 5

The process of finding out waht customers want and need

Question 6

What is primary reaseach and what are are the methods?

Answer 6

Primary research/field research is research that the business carries out themselves, it dosen’t already exist
* Observations - watching people’s buying habits in stores
* Surveys - tallying responses to ‘quick-fire’ questions
* Focus groups - gathering small groups of people to answer questions and discuss opinions
* Consumer trials - giving produces for people to try and asking for their opinions

Question 7

What are the advantages and disadvantages of primary research?

Answer 7

Advantages:
* more likely to reach a business’s research needs as they have designed it themselves
* generate data that isn’t availiable to competitors
Disadvantages
* Can take longer to generate data, as it dosen’t currently exist
* Can be more expensive to carry out

Question 8

What is secondary research and what are the methods?

Answer 8

Secondary/desk research is reaseach that already exists that the business can use (it may be purchased)
* Internal data - using data from within the business, such as sales figures
* Books and Magazines - using published materials to carry out data
* Competitors’ data - using data from competitors, such as the prices they charge for their products
* Government statistics and purchased research material - using official statistics and data from the govenment or purchafing data from a research company, such as Mintel

Question 9

What are the advantages and disadvantages of secondary research?

Answer 9

Advantages:
* Are often cheaper to carry out
* Are usually quicker to carry out as information already exists
Disadvantages:
* May not fully suit a business’s needs as that’s not what the data was intended for

Question 10

What is cutomer feedback and the methods of carrying it out?

Answer 10

Asking customers for their opinion after they have purchased a product or communicated with the employees
* Social medua pages and reviews on shopping websites
* Online communities which solely exist to gather reviews
* Online surveys for customers to complete
* Customer comment cards
* Telephone surveys
* Verbal comments made to staff

Question 11

Why do businesses gather customer feedback?

Answer 11

• To understand how to improve their business (addressing common issues)
• So that their customers feel that their opinion is valued and listened to
• So that potential customers can see past experiences of other customers - can encorage or discorage them