Segmentation

Question 1

Market growth equation

Answer 1

Market growth (%) = change in market size / original market size *100

Question 2

Market growth can be….

Answer 2

Growth in value (revenue generated)
Growth in volume (number of units sold)

Question 3

Ways of segementing a market

Answer 3

Age, income, location, gender, stage of life cycle ect

Question 4

Segmentation

Answer 4

Occurs when a market is divided into different groups with varying needs and wants

Question 5

Benefits of segmentation

Answer 5

Allows a business to:
-develop it’s products to fit customer demands
-target customer wants more precisely
-set the price appropriately

Question 6

Targeting

Answer 6

After identifying relevant segments in a market, it needs to decide which ones to focus on. A business will target a segment where it thinks:
-it can make a high enough return (some segments may be too small or not very profitable)
-it can compete effectively (is capable of winning market share)
-opportunity cost is covered (there are no better alternatives)