Amelia Taylor

Segmentation work
Management of Business Unit 2

Topic: Market Segmentation

Complete the worksheet in the spaces provided

1. What do you understand by the term “market segmentation”?

3 mks
Market segmentation can be explained to be the categorization of a market into different
groups/segments based on their difference or uniqueness. These groups are identifiable based on
their unique needs, wants, purchasing power, demands, habits, location, behavior, beliefs, and
traditions. This process is therefore extremely important, as it helps many organization reach
their target market and its opportunities, contributes to the increase in profits, and aids in
marketing research.
An example of market segmentation would be the categorization of persons based off their age,
tradition or reaction to a product.

2. Outline THREE benefits to a nightclub owner of market

segmentation. 6 mks
● The club owner will have a better insight into his target customers to effectively cater to
their needs, an example of this would be a club located in an upscale environment like
Hollywood. This nightclub would benefit from market segmentation as he would
understand that upscale people require upscale services whether it be in beverages or
environment set up.
● Another benefit of market segmentation to a club owner would be the ability to improve
their brand loyalty and customer retention, he or she may be able to observe their
customer, see what they like and enhance/ improve it to ensure that they become loyal
customers.
● Segmentation may also pose as a benefit to club owners when deciding opening ours due
to, traditions, social class, lifestyle ect. An example of this would be a club owner who
targets University students or working class citizen, he or she would realise that on
 weekends club hours can be extended until early morning with cheaper prices, because
those two segments are normally free on weekends than on weekdays.

3. Outline TWO possible drawbacks to market segmentation for a

biscuit manufacturer. 4 marks
● As the target market of a biscuit manufacture may overlap several segments, a drawback
would be over manufacturing products in the event that these segment buying habbits
may change or vary. As a biscuit manufacturer normally mass produce, in the event that
consumer buying habits change, they woul suffer a massive loss, along with emmence
amount of production resources waste.
● Another drawback would be the cost of manufacturing and advertising to effectively
cater, reach and distribute the product and its information to the population.

4. Explain “demographic segmentation”. 2 marks

Demographic segmentation is the categorization of the population/ market based off their
demographic characteristics such as age, gender, income, education level ect. An example of
this segmentation would be the market segment of women in their fertility years who uses
sanitary napkins; women of ages 11-60.

5. Explain TWO ways in which a FOOD manufacturing company

could use geographic factors to segment the market. (6 mks)

● Food manufacturing company can use geographic factors to segment their market in ways
such as considering climatic demands. Hotter countries would demand colder foods,
while colder climatic counteries would demand hotter foods. This means, a company that
produces frozen products such as Icecream, yogurts, ice cups ect. Would most likely be
in demand in hotter regions such as the caribbean. Therefore that company would
consider the caribbean as their target segment to conduct business.
 ● Another geographic factor that could aid in segmentation would be population density
and their work ethic. Segments where the population density is compact may be areas of
city like, fast running activities, thus consumers would demand fast foods and grab and
go commodities, this means that fast food restaurants and coffee shops would more than
likely be profitable in this segment.

6. Outline, with the aid of examples, how “usage” could be used to

segment a market. 4 mks
Usage, as it relates to market segmentation, is basically the categorization of a market based
on the frequency at which a consumer interacts with a product. These can be moderated by light,
medium and heavy users. With this said an example of which usage is used to segment a market
would be the drinking of wine. This product is highly used in by women of ages 30 and older,
this segments the market into non users (ages 0-20) mid users ages (21-30) and heavy users ages
( 30+). This directs marketers to targeting the segment to heavy user audience with their product.

END OF ACTIVITY