Market Segmentation

Question 1

What is market segmentation?

Answer 1

Splitting the market into different groups based off similar characteristics

Question 2

What are the 4 types of ways to segment the market

Answer 2

Psychographic
Demographic
Behavioural
Geographic

Question 3

Benefit of Market Segmentation? (7)

Answer 3

1. Can target a specific group
2. Rather than create a product for all groups
3. Can understand and adapt to wants and needs effectively
4. Product will be differentiated
5. More price Inelastic
   6.Increase price without significant fall in demand
   7.Increase revenue etc

Question 4

Drawback of Market Segmentation? (7)

Answer 4

1. Need to create multiple products
2. To meet the needs of different segments
3. Therefore unable to benefit from the marketing economies of scale
4. As they target at a smaller group of customers
5. This means R&D used to produce the product
6. Will be spread over less units leading to an increase in fixed costs per unit
7. Lower Operating profit