Segmentation (AQA GCSE Business)

Case Study

Devine Jewellery (DJ) plc is an international business that sells a range of luxury jewellery items such as bracelets, necklaces and rings. The business was started by British jewellery designer Dev Anand who developed a unique selling point (USP) of jewellery that can be personalised with a message or initials. This USP has attracted customers from all over the world. All DJ products are crafted from high quality gold and gemstones. This has enabled DJ to create an exclusive brand image that has attracted wealthy customers.

As a profitable business, DJ’s shareholders receive dividend payments each year. Dev understands that his business must be willing to respond to current trends to maintain sales levels. Silver jewellery is very common as it is much more affordable than gold. Reputable brands already sell jewellery in a range of precious metals, including silver.

Dev is keen to produce a new jewellery collection using silver instead of gold. The new collection would not be personalised or include gemstones. The current selling price of DJ’s best-selling gold bracelet is £4700. A silver version of this bracelet would be sold for £1175.

Case Study

Reusable drinks bottles are becoming more popular. Jake Webb is a product designer. A couple of years ago, Jake noticed that young people wanted to drink cold water on the go without having to buy single-use plastic bottles. He thought there was a gap in the market for lightweight, stylish bottles.

Last year, Jake developed a product he called the BEco Bottle. He bought some second-hand equipment to begin manufacturing bottles. The equipment can only produce small quantities meaning the unit cost per bottle is high. Jake has had to turn down orders with tight deadlines because production is so slow. Jake has also struggled to find a supplier who can provide the materials in the small quantities he needs. He eventually found a supplier, but it was unwilling to negotiate on the price.

When he set up his business, Jake used the Internet to collect secondary market research for his business plan. He used an Internet search engine to try and find up-to-date information to support his idea. Jake found a market research report from three years before. The report did not focus on Jake’s target market and he did not recognise the name of the company that had conducted the research. However, it did help him identify sales figures and trends for reusable bottles.

Case Study

Nadia Aslam is a wealthy entrepreneur. Two years ago, she bought a struggling airline and changed the name to Skyline plc. The airline offers low-price flights from the UK to popular European destinations. There are high levels of competition in this market.

Nadia has found out that Sibiu, a city in Romania, is becoming popular for city breaks, but no UK airlines currently fly there. Nadia is planning to buy an additional plane and start flying there. Fees and taxes at Sibiu International Airport are much higher than at other destinations. Nadia will need to consider how to cover these additional costs.

Nadia has rebranded the planes with the new Skyline plc logo and colours. To raise the finance needed she used a share issue which reduced her ownership of the business from 90% to 70%. Although her shareholders do not have a say in the day-to-day running of the business, they are able to vote on major decisions such as whether to expand. Nadia has worked hard for the past two years to make Skyline plc a profitable business. She would like to reinvest all the profits back into the business but whatever she does she must also keep her shareholders happy.

Case Study

Apple is one of the world’s largest information technology businesses. They sell a range of products such as the iPhone and Apple Watch.

Apple’s newest product, the Apple Watch, is a smartwatch. The most expensive Apple Watch costs US$17,000 and is aimed at the luxury segment of the smartwatch market. Apple have spent millions of dollars on television advertising and colour advertisements in expensive magazines to promote the Apple Watch. Sales are expected to increase over the next few years.

Case Study

Sonya has been working for a large business selling party products.

She recently organised a party for her daughter. Sonya’s friends were so impressed they have asked her to organise parties for their children.

Sonya visited a local play group to carry out primary market research. She asked 40 parents there to complete a survey. Sonya wanted to find out if these parents would pay her to organise a party for their children. The results of two questions are below.

Question 1 – On average how much do you spend on your child’s party

Question 2 – Would you use a party planner?

Sonya believes she has identified a gap in the market for organising children’s parties and is planning to start her own business.

Case Study

Ellie has decided to offer gardening services. There are already a lot of businesses offering home and gardening services in Ellie’s local area. Many of these businesses have loyal customers. Ellie has decided to segment her market and will focus on the family market. She has a lot of friends with children and understands what type of garden families want. To attract families with children, Ellie’s gardening services will include creating play areas for children, vegetable patches and BBQ patio areas.

Ellie would like to use leaflets to advertise her gardening services. Ellie has designed a leaflet herself that has a bright, fun design and includes images of play areas and vegetable patches to show families how their gardens could look. Ellie will offer a special discount to anyone who books using a code on the leaflet. Ellie’s parents think it would be better if she put an advert in the local newspaper which is read by around 8000 people every day. The newspaper has a ‘Family Fun’ section each week where local businesses targeting families often advertise. It would cost £150 each week for a minimum of four weeks to place a black-and-white advert in the local newspaper.

Case Study

Nadia Aslam is a wealthy entrepreneur. Two years ago, she bought a struggling airline and changed the name to Skyline plc. The airline offers low-price flights from the UK to popular European destinations. There are high levels of competition in this market.

Nadia has found out that Sibiu, a city in Romania, is becoming popular for city breaks, but no UK airlines currently fly there. Nadia is planning to buy an additional plane and start flying there. Fees and taxes at Sibiu International Airport are much higher than at other destinations. Nadia will need to consider how to cover these additional costs.

An additional plane will require extra investment of £72 million. Based on the age of the plane being considered for purchase, it is estimated that it has 12 years of service left. The plane will increase Skyline plc’s profit by £108 million over its lifetime

Case Study

HelloFresh is the world’s leading meal-kit delivery company. Each meal-kit contains all the ingredients and a recipe to cook a meal from scratch. HelloFresh deliver the kits to customers. The company was set up by two entrepreneurs in 2011 when they spotted a gap in the market to help busy people cook high quality meals at home. HelloFresh offer meal-kits to suit the needs of young families and couples who are prepared to pay a premium for its service.

HelloFresh are proud to be environmentally responsible and advertise that it is the ‘greener way to shop for groceries’. It uses recycled packaging and carefully plans delivery routes to make sure that vehicles travel the shortest possible distance.

Meal-kits are becoming very popular in the UK and HelloFresh is operating in an increasingly competitive market. HelloFresh tries to keep its customers interested by developing exciting new recipes each week that are different to the recipes that competitors are offering. This process is expensive and time consuming. HelloFresh is now looking for opportunities to reduce costs. It uses customer reviews to find out which foods customers like and dislike, but not all customers give regular feedback. Once HelloFresh has developed a new recipe the Finance and Production departments must work together to make sure the ingredients are available within the budget.