3.3 Making Marketing Decisions (AQA A Level Business): Flashcards
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Define market segmentation.
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Define market segmentation.
Market segmentation is dividing a single market into submarkets ('segments'), each with a slightly different set of consumer characteristics.
Give one advantage of market segmentation.
Marketing can be targeted more precisely, it is less wasteful, and it can increase loyalty.
Give one disadvantage of market segmentation.
A segment may be hard to identify or too small to be profitable, and it needs costly research.
Name the four methods of segmentation.
Demographic, geographic, income, and behavioural.
What is demographic segmentation?
Splitting a market by customer characteristics such as age, gender and family circumstances.
What is geographic segmentation?
Splitting a market by where customers live, work or spend leisure time (e.g. urban vs rural).
What is income segmentation?
Splitting a market by customers' income and wealth (e.g. Mulberry for high income, Primark for budget).
What is behavioural segmentation?
Splitting a market by customers' lifestyle, health or dietary choices, purchase frequency, or brand loyalty.
Luxury brand Mulberry targets high-income customers, while budget shoppers are served by brands such as H&M and .
Luxury brand Mulberry targets high-income customers, while budget shoppers are served by brands such as H&M and Primark.
Consumers can belong to segments at the same time, which makes segmentation difficult.
Consumers can belong to multiple segments at the same time, which makes segmentation difficult.
True or False?
Market segmentation recognises that not all consumers are identical.
True.
Segmentation recognises that consumer groups do not share the same tastes and preferences.
Give an example of geographic segmentation.
City-dwellers buying small electric cars vs rural customers preferring larger, all-terrain vehicles.
True or False?
Segmentation always guarantees a profitable market segment.
False.
A segment may be identified but too small and unprofitable to cater for.
Give an example of behavioural segmentation.
Beyond Meat targeting vegans, vegetarians and flexitarians, or rewarding brand-loyal customers with points.
The crisp market is divided into segments such as dinner party snacks, health-conscious crisps and lunchbox snacks.
The crisp market is divided into segments such as dinner party snacks, health-conscious crisps and lunchbox value snacks.
Name two factors that affect the choice of target market.
The level/nature of demand, intensity of competition, company resources/capabilities, and accessibility/profit potential (any two).
Define a niche market.
A niche market is a narrowly defined part of a bigger market whose customers have specialised needs.
Define the mass market.
The mass market is the broadest part of a market, where a product appeals to most people most of the time.
Give one advantage of targeting a niche market.
Less direct rivalry, price power (premium prices), and a loyal customer base.
Give one disadvantage of targeting a niche market.
Limited growth potential, high unit costs, and vulnerability to mass-market copies.
Give one advantage of targeting the mass market.
Huge sales volume, economies of scale (low unit costs), and brand visibility.
Give one disadvantage of targeting the mass market.
Fierce competition, heavy marketing spend, and one-size-fits-all risk.
Niche markets have high average costs per unit because economies of are unlikely.
Niche markets have high average costs per unit because economies of scale are unlikely.
Define a market map.
A market map plots a product and its rivals against two key characteristics (e.g. price and quality) to show how it is perceived by customers.
What does a gap on a market map suggest?
A possible market niche — but it needs careful research, as the gap may exist because it is not profitable to fill.
What does it mean if there are no spaces on a market map?
The market is saturated — high competition and likely low profits, with no niche to exploit.
Give one limitation of market mapping.
Only two criteria can be used (too simplistic), it may need costly primary research, and it's only a snapshot in time.
Name two influences on how a business positions a product.
Business strengths, available resources, likely competitor responses, economic conditions, and fit with the existing range (any two).
True or False?
A niche product can often be sold at a premium price with high profit margins.
True.
Niche customers value a product that fits their needs and will often pay more, allowing high margins.
True or False?
Market mapping can only ever use one product characteristic at a time.
False.
A market map uses two characteristics (e.g. price and quality) plotted against each other.
How can economic conditions influence positioning?
In downturns, brands position as affordable (e.g. Dacia); in booms, as aspirational/luxury (e.g. Tesla).
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