1. Monday 23rd September Mr Nicholls
Year 10 Business
Monday 23rd September
Mr Nicholls

2. Objectives
To consider how a business will segment their market in order to identify their target customers.

3. Today
Moving on from our last lesson on Market Mapping – we now need to consider how a business will split up (SEGMENT) their market in order to target specific customer types.
This is called MARKET SEGMENTATION.

4. Segmentation – it’s pretty simple really…

5. Segmentation – why? Better matching of customer needs.
Customer needs differ. Creating separate products for each segment makes sense and provides customers with a better solution.
Better opportunities for growth.
Market segmentation can build sales. For example, customers can be encouraged to “trade-up” after being introduced to a particular product with an introductory, lower priced product.
More effective promotion.
By segmenting markets, target customers can be reached more often and at a lower cost.
Gain a higher share of the market.
Through careful segmentation and targeting, businesses can often become the market leader, even if the market is small.

6. Demographic
Age
Businesses will quite often target certain age groups. Good examples are toothpaste – think about all of the different sorts there are for different ages.
Gender
Males and females all demand different types of the same product – think about clothing, hairdressing, magazines, toiletries and cosmetics.
Income
Many companies will target rich customers with luxury goods (Lexus/Mercedes etc). Other businesses focus on products that appeal directly to consumers on low incomes (Aldi/Lidl)
Social Class
Many businesses believe that a consumers ‘perceived’ social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products and services.

7. Geographic This divides markets using:
Regions – England/Scotland/Wales/N-Ireland in the UK, or counties etc.
Countries – could be categorized by size, development or membership of geographic region.
City/Town Size – population within ranges or above a certain level.
Population density – urban/suburban/rural/semi- rural

8. Exercise
For her recent project, Aliesha drew up a market map of her local area (Newquay. Cornwall). She identified that there were many takeaways and cafes offering fast food, but nowhere offering a smarter restaurant for special occasions. Her market research showed that 32 percent of adults locally thought they would go to a smart restaurant at least once a year. Aliesha was able to show that this business could be very profitable.
1). Outline one way in which Aliesha might have carried out her market research.
2). Construct a market map for take-aways and fast foods in the local area. Use as the scales: 1. Expensive – Cheap, 2. For Young People – For Old People.