Market Segmentation (Cambridge (CIE) IGCSE Business): Revision Note

Why businesses segment the market

• Market segmentation is where a single market is divided into submarkets, or 'segments'

  • Each segment represents a slightly different set of customer characteristics

  • This allows businesses to tailor products to suit specific groups, making customers more likely to buy

    • For example, a skincare company can offer different products for teenagers and older adults, who have different skin concerns

• Marketing messages can be designed to appeal directly to each segment, making advertising clearer and persuasive

  • For example, a fitness brand may use social media to target young adults, but email newsletters for older gym-goers

• Focusing on specific segments helps businesses avoid wasting time and money advertising to people who are unlikely to be interested

  • For example, a luxury brand avoids promoting its products to low-income customers who are unlikely to buy

How markets can be segmented

Ways to segment a market

1. Age

• Businesses group customers by age, as different age groups tend to have different interests, needs, and spending habits

  • For example, a toy retailer targets products like Lego at children aged 6–12, while mobile phone brands may market to teens using social media platforms like TikTok

2. Income

• Customers are grouped based on how much money they earn. Some products are aimed at budget-conscious buyers, while others target higher-income customers willing to pay more

  • For example, Primark sells low-cost clothing for price-sensitive shoppers, while brands like Gucci or Rolex target high-income luxury buyers

3. Location

• This involves targeting customers based on where they live. Products and promotions may change depending on local tastes, climate, or culture

  • For example, a surfwear brand might advertise more heavily in coastal areas, while supermarkets in colder regions may stock more winter foods during certain months

4. Gender

• Some products are marketed differently to men and women based on preferences or roles in society, though this is now approached more carefully to avoid stereotypes

  • For example, razor brands often sell separate product ranges for men and women, with different colours, packaging and advertising styles

5. Lifestyle

• Lifestyle segmentation focuses on people's interests, hobbies, values, or how they spend their time

  • For example, a supermarkt may target protein shakes at people who are fitness-focused, while promoting eco-friendly cleaning products to environmentally conscious consumers

Advantages and disadvantages of market segmentation