Market Segmentation (Edexcel GCSE Business)
Revision Note
Written by: Steve Vorster
Reviewed by: Jenna Quinn
Using Market Segmentation to Target Customers
Market segmentation is the process in which a single market is divided into sub markets or 'segments'
Each segment represents a slightly different set of consumer characteristics
Firms often segment their markets according to factors such as geographical location, demographics, behavior and lifestyle, age or gender
Businesses can choose to segment markets in a variety of ways
A market for a product such as crisps is not simply seen as one market e.g. the crisp market is divided up into many market segments such as
Dinner party snacks (Walkers Sensations, Pringles, Burts) are targeted at middle to upper earners/professionals with a premium price
Health conscious crisps (Walkers lite, Walkers baked, Revita lite) are targeted at the health conscious market
Lunch box value snacks (multipacks, hoola hoops etc) are targeted at families and the mass market
The Advantages & Disadvantages of Market Segmentation
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Using Market Mapping to Identify gaps in the Market
Market mapping is a tool for identifying the position of a product within a market
A market map refers to a two-dimensional diagram that shows the attributes or characteristics of a product in comparison to rivals’ products
Only two criteria can be chosen, e.g. price (high/low) and quality (high/low), age (young/old) and income (high/low), etc
M&M has positioned itself as low price and low quality in this example of a market map
Market Map Analysis
If there were no spaces left on the market map, it indicates that the market is saturated
This means that there are no opportunities to exploit a market niche in the market
Competition is likely to be high and profits low
However, the existence of a space on the market map may indicate the existence of a market niche
This needs to be researched carefully before the business commits e.g. it looks like there is a gap in the market in high price / low quality area in the map above
This gap does not represent a worthwhile market as the business would find it impossible to build and maintain a loyal customer base
The Usefulness & Limitations of Market Mapping
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