Market Segmentation (Edexcel GCSE Business)

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

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