Starter Describe the kind of person that typically would buy the following products:

Pepsi Challenge

Pepsi Challenge

What is segmentation? Learning Objectives LO2: Explain different types of segmentation LO1: Define segmentation LO3: Analyse the value of segmentation LO4: Define what is meant by a market What is segmentation?

What is meant by a market? Mass market is where there is a very large number of sales of a product Advantages Large sales Economies of scale Risk spread over a large product range Opportunities for growth with large potential sales Disadvantages Competition High Costs of advertising Standardised products produced so may not meet needs of customer

What is meant by a market? Cont Niche market is a small, usually specialised segment of a much larger market Advantages Small business can sell to niche markets as large firms focus on mass market Can focus on needs of individual customer unlike mass market Disadvantages Small and limited amount of sales Often just one product so if this fails often the business fails

Market Segmentation Most markets can be subdivided in several different ways Market segmentation is the acknowledgement by companies that customers are not all the same The market can be broken down into smaller sections in which customers share common characteristics

How do you do it? Research different types of customers See if they have common tastes/habits Identify the segment you wish to focus on, then conduct qualitative research Decide a product designed not for the whole market but for a specific segment

This is tricky but go for it! Task In your book think of one product Explain how the market for this product is segmented into different sub categories This is tricky but go for it!

Housekeeping Travel Split into customers with similar interests – not just male/female or age Gardening Weddings Arts and Crafts Hair

How do we segment markets? Socio-economic group Age Region/Location Gender Use of product By lifetstyle Task: In your books write a definition for each of these types of market segmentation Extension: Can you think of an example for each type of segmentation to demonstrate how it works?

What is the value of segmentation? Improved sales volume Increased prices Increased diversification, therefore less risk and more security Companies trying to target the younger market to boost sales Upmarket UK holiday from Butlins, designed the right product and now are used 97% of the year and made £20m in 2014 Made a mass product which was fashionable and cost $68 in October 2007, but by November 2008 they cost $1.50 as they went from hot to what?

Present your thoughts Each group is given a question. You have 5 mins to discuss your answer then you must present it to the rest of the group. Explain the benefits of producing a large range of cars aimed at different market segments? Explain why segmenting the market for sports shoes is important and give examples of 3 different segments? Why may segmentation by age become more important in the future? Why might it be necessary to use qualitative research before deciding finally on the right positioning for a new biscuit brand?

Galaxy Chocolate at 15p head for India Read the case and select two questions to answer (at least one from the bottom row) Define market segmentation and explain how it is used in the chocolate industry (4) Explain two possible reasons why Mars wants to build a market share in India (5) From the text, analyse how well Mars has used ‘segmentation, targeting and positioning’ in launching Mars Premium chocolate in India (9) To what extent do you think the pricing strategy for Galaxy is likely to prove successful for Mars? (14)