Question 1: Define market segmentation and explain why businesses use it.

Answer: Market segmentation is the process of dividing a broad market into smaller groups of consumers with similar needs or characteristics. Businesses use it to target specific customer groups more effectively, tailor their marketing strategies, and increase sales.

Question 2: Identify three different ways a business can segment its market.

Answer: Demographic segmentation (age, gender, income), geographic segmentation (region, city, climate), psychographic segmentation (lifestyle, values, interests).

Question 3: Describe a scenario where a clothing retailer might target teenagers. What segmentation method are they using?

Answer: A clothing retailer might advertise trendy, affordable clothing specifically for teenagers through social media platforms popular among youth. They are using demographic segmentation based on age.

Question 4: Explain the difference between niche marketing and mass marketing.

Answer: Niche marketing targets a small, specific segment of the market with tailored products, while mass marketing aims to reach a broad audience with the same product and message.

Question 5: Sketch a simple diagram showing the relationship between a broad market and two specific market segments. Label the diagram clearly.

Answer: A large circle labeled 'Market', divided into two smaller circles labeled 'Segment 1' and 'Segment 2' that are part of the larger circle. The sketch should clearly show the segments within the broader market.

Question 6: A company selling luxury watches decides to target high-income professionals. Which type of segmentation are they using and why?

Answer: They are using demographic segmentation based on income, because high-income professionals are a specific demographic group with similar purchasing power.

Question 7: Why might a business choose to focus on a niche market rather than the whole market? List two reasons.

Answer: Focusing on a niche allows the business to meet specific customer needs better, reducing competition. It can also enable the business to become a specialist and build loyal customers.

Question 8: Draw a diagram illustrating the concept of psychographic segmentation. Include at least three different lifestyle groups.

Answer: A diagram with a central circle labeled 'Market' branching into three smaller circles labeled 'Health-conscious', 'Tech-savvy', and 'Eco-friendly'. Each circle represents a different lifestyle group.

Question 9: Identify and explain one advantage and one disadvantage of market segmentation.

Answer: Advantage: Allows businesses to tailor their marketing and products for specific groups, increasing sales. Disadvantage: Segmentation can be costly and complex to research and implement.

Question 10: A bakery offers gluten-free, vegan, and traditional bread options. How is this an example of market segmentation?

Answer: It shows segmentation based on dietary needs or preferences, targeting different customer groups with specific products.