Market Segmentation
Business: Cambridge International GCSE (2027 Exams), topic 3.1.8
Market Segmentation
Market segmentation is the process of dividing potential customers into different groups based on characteristics like age, gender, income and much more. Businesses use market segmentation for a variety of reasons:
Choosing products for a segment
- When choosing the product, geographic, promotional, and price segmentation can help a business understand its customers’ needs and wants.
- Segmentation can also be based on lifestyle, for example, targeting people who are active and health-conscious with sportswear.
- Example: Next provides clothing aimed at infants and toddlers using its Next Kids range.
Choosing promotion
- Advertising in a newspaper probably is not the best way to target teenage girls, but a teenage magazine like Bliss might be.
- Segmenting a market can give businesses ideas about how best to promote their products.
Market mapping
- Market mapping is a process to identify a gap in the market by looking at what competitors offer.
Disadvantages of market segmentation
- Segmentation can be costly because it requires research and tailored marketing.
- Segments may change over time, so businesses need to continually adapt.
- Targeting a small segment may limit potential sales if the group is too narrow.
Test yourself on Market Segmentation
If a cruise ship business wanted to target the elderly segment, which promotion channel would make the most sense?