Page 150 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 3 Marketing

TEST YOURSELF
1 What is the difference between a niche market and a mass market?

2 Identify two limitations of niche marketing.
3 Identify two benefits of mass marketing.

Market segmentation
TOP TIP
One of the main limitations of mass marketing is that it may not give individual
When thinking about
consumers exactly the products they want. Market segmentation gives businesses
segmentation, who you

are selling to will have a big the opportunity to produce products that meet the needs of different groups of
influence on the price and the consumers.
product, and how it is sold.
What is market segmentation?

Nowadays one group of consumers oft en

wants something different from other

groups of consumers. There are several
reasons for this including diff erences in
culture, religious beliefs and consumer
tastes. The whole market can, therefore,

be divided into different parts according

to the different wants of each group

of consumers. Each part of the whole
148
KEY TERMS
market is known as a market segment.
Market segment: a part of the Dividing the whole market into diff erent
whole market in which consumers segments is called market segmentation.
have specific characteristics. In Figure 10.3 the market has been Figure 10.3 Market segmentation
Market segmentation: dividing divided into four segments. Each segment
the whole market into segments
represents part of the whole market.
by consumer characteristics and
then targeting diff erent products
to each segment. How markets can be segmented

The main methods of market segmentation are:
■ geographic segmentation
■ demographic segmentation.

Geographic segmentation
KEY TERM Geographic segmentation recognises that consumers in one location may have

different needs from consumers in another location. The locations may be:

Geographic segmentation:
dividing consumers in the market ■ different regions within the same country

by geographic area.
■ different regions of the world

■ different countries in the world.

The geographical differences may be due to cultural reasons, religious beliefs or

even diff erent climates.