Target Market (AQA A Level Business): Flashcards
Exam code: 7132
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Define target market.
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Define target market.
A target market is the specific group of customers a business aims its products and marketing activity at.
Why should a business identify a clear target market?
It allows resources and marketing spending to be focused where they are most likely to generate sales.
Define niche market.
A niche market is a small, specific segment of a larger market with distinct needs or preferences that are not fully met by mainstream products.
True or False?
Average costs per unit are usually low in niche markets.
False.
Unit costs are usually high, as economies of scale are unlikely and specialised inputs and short production runs push costs up.
Why can niche businesses often charge premium prices?
Customers value a product that perfectly fits their needs and will often pay more for it.
Niche businesses are vulnerable to mass-market ____, as larger firms' scale advantage can squeeze smaller brands out.
Niche businesses are vulnerable to mass-market copies, as larger firms' scale advantage can squeeze smaller brands out.
Why may a niche business have limited potential to grow?
New sales may be difficult to achieve once the niche is saturated.
Define mass market.
The mass market is the broadest part of a market, where a product appeals to most people the majority of the time.
Why can mass-market businesses keep average costs per unit low?
They can achieve economies of scale, such as bulk buying materials and components and using automated production lines.
True or False?
Profit margins in mass markets may be limited because of low prices and fierce competition.
True.
Mass markets usually have low-to-moderate prices and fierce competition, so profit margins may be limited.
Demand in a mass market is more ____ because the business is not dependent on a small group of customers.
Demand in a mass market is more stable because the business is not dependent on a small group of customers.
What is the one-size-fits-all risk of targeting a mass market?
Shifting consumer tastes can leave a mass product looking bland or dated.
Define market segmentation.
Market segmentation is the process of dividing a broad market into smaller groups of consumers who share similar characteristics.
How can segmentation lead to more efficient use of marketing budgets?
Resources are directed at the most relevant customers rather than wasted on untargeted campaigns.
True or False?
Consumers within the same market segment can still behave differently from one another.
True.
Segments are generalisations, so individual variation remains within a segment.
Why might an identified segment be unattractive to a business?
A segment may prove too small or unprofitable to serve commercially.
Define demographic segmentation.
Demographic segmentation divides a market based on measurable personal characteristics such as age, gender, family circumstances and ethnicity.
Why is demographic segmentation so widely used?
Demographic data is relatively straightforward to collect and analyse.
Define geographic segmentation.
Geographic segmentation divides a market based on location: where customers live, work or spend their time.
Segmenting by _____ helps explain why demand for sunscreen, waterproof clothing and heating systems varies across regions.
Segmenting by climate helps explain why demand for sunscreen, waterproof clothing and heating systems varies across regions.
Define psychographic segmentation.
Psychographic segmentation divides a market based on lifestyle, values, attitudes, interests and personality traits.
True or False?
Psychographic segmentation is cheaper to research than demographic segmentation.
False.
Psychographic segmentation is more complex and costly to research, but it can be powerful for brand positioning and building emotional connections with customers.
Define behavioural segmentation.
Behavioural segmentation divides a market based on how customers actually interact with a product or brand, such as usage habits, loyalty and purchase frequency.
What is meant by segmenting by benefits sought?
Different consumers buy the same product for different reasons. For example, some choose running shoes for performance, others for fashion or comfort.
Thorntons segments by purchase ______, targeting consumers buying gifts for birthdays, Christmas and Valentine's Day.
Thorntons segments by purchase occasion, targeting consumers buying gifts for birthdays, Christmas and Valentine's Day.
What must a business decide once it has segmented a market?
It must decide which segment(s) to target and how to enter that market.
Why might a business deliberately choose a smaller niche as its target market?
Choosing a smaller niche can help a business avoid intense competition.
What does the potential profitability of a target market depend on?
It depends on the price customers will pay, the likely volume of sales and the cost of reaching and serving those customers.
Define barriers to entry.
Barriers to entry are obstacles that make it difficult for new competitors to enter a market, such as economies of scale, brand loyalty and high set-up costs.
Licences and patents are examples of legal and ________ barriers that restrict who can operate in a market.
Licences and patents are examples of legal and regulatory barriers that restrict who can operate in a market.
True or False?
Choosing a target market and entering it are the same challenge.
False.
Deciding which market to target and actually getting into it are two different challenges.
How can established competitors limit a new entrant's access to suppliers and distributors?
Established competitors may have exclusive agreements with key suppliers or distributors.
How should a target market fit with business objectives?
The chosen market must align with the business's wider aims. For example, a business committed to sustainability may target environmentally conscious consumers.
Define penetration pricing.
Penetration pricing is setting a low initial price to attract price-sensitive consumers and build market share quickly.
Define price skimming.
Price skimming is charging a high price initially before gradually reducing it as the product matures and targets a broader market.
Why do luxury brands often use exclusive distribution?
Selling only through select, high-end outlets maintains a premium image and a sense of exclusivity.
True or False?
Television advertising is most effective for mass-market products.
True.
Television reaches a broad audience, so it is best suited to mass-market products rather than niche ones.
Why must the elements of the marketing mix be consistent?
A mismatch between any element creates confusion and undermines the brand. For example, a budget product sold at a high price through exclusive boutiques will confuse its target market.
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