Question 1: Define market segmentation in your own words.

Answer: Market segmentation is the process of dividing a broad target market into smaller, specific groups of consumers who have similar needs, preferences, or characteristics.

Question 2: Identify and describe two different types of market segmentation that a clothing retailer might use.

Answer: Demographic segmentation, which groups customers based on age, gender, income, etc., and psychographic segmentation, which groups customers based on lifestyle, interests, and values.

Question 3: A toy company wants to target children aged 3-8 years old. Which type of market segmentation are they using? Explain your answer.

Answer: They are using demographic segmentation because they are dividing the market based on age group.

Question 4: Explain why a luxury car brand might focus on targeting customers with a high income.

Answer: Because high-income customers are more likely to afford luxury cars, making them a suitable target market for premium products.

Question 5: Describe how geographic segmentation might be used by a fast-food chain.

Answer: A fast-food chain might target specific regions or cities where there is high foot traffic or demand for quick meals, tailoring their menu to local tastes.

Question 6: Sketch a simple diagram showing how a business might divide its market into segments. Label each segment with a different characteristic (e.g., age, income, lifestyle).

Answer: A large circle divided into smaller sections, each labeled with different characteristics such as 'Teenagers', 'High Income', 'Fitness Enthusiasts', 'Parents'. The diagram should clearly show segmentation into groups based on different traits.

Question 7: Give an example of a product and describe a specific customer segment that would be interested in it.

Answer: A high-end smartwatch might appeal to tech-savvy professionals aged 25-40 with a high disposable income who value fitness and technology.

Question 8: Why is market segmentation important for businesses? Give two reasons.

Answer: It helps businesses target their marketing more effectively, increasing sales and customer satisfaction. It also allows companies to allocate resources efficiently by focusing on specific customer groups.

Question 9: Imagine you are launching a new energy drink aimed at athletes. Which segmentation criteria will you consider and why?

Answer: I will consider psychographic segmentation (lifestyle and interests in fitness) and demographic segmentation (age 18-35) because these groups are more likely to be interested in energy drinks for sports or physical activity.

Question 10: Identify one potential challenge of market segmentation for a new business.

Answer: A challenge could be accurately identifying and reaching the right segments, which requires research and can be costly.