Key Terms
What is market segmentation?
Dividing a large market into smaller groups of customers with similar needs or characteristics.
A business groups customers by age, income, and gender. What kind of segmentation is this?
Demographic segmentation
A business sells toddler toys. Which customer group is most likely to be the target market: teenagers, parents of young children, or retirees?
Parents of young children.
If more customers care about the environment, what might businesses change?
Packaging, materials, branding, or product design to be more sustainable.
Name one of the three main filters used to judge market viability.
Attractiveness, profitability, or reachability/accessibility.
What is a target market?
The specific group of customers a business chooses to focus on.
A surf shop creates different ads for people living on the Gold Coast and people living in inland Queensland. What kind of segmentation is this?
Geographic segmentation.
A budget airline is most likely to target customers who care most about what?
Low prices / affordability / saving money.
Why do businesses need to pay attention to changes in customer behaviour?
Because customer needs and preferences change, and businesses need to adjust to stay relevant.
If a market has lots of potential customers, but they cannot afford the product, which viability criteria is weak?
Profitability
What is a niche market?
A small, specialised group of customers with specific needs or interests.
A brand targets customers who care about fitness, self-care, and healthy living. What kind of segmentation is this mostly using?
Psychographic segmentation.
Why is a target market profile useful for a business?
It helps the business understand who it is selling to and how to design products and marketing for that customer.
A business keeps advertising expensive luxury items during a cost-of-living crisis. What problem could this create?
Fewer customers may buy because the products no longer match what many people can afford or want.
If a business has the right product but no good way to advertise or deliver it to customers, which viability filter is weak?
Reachability/accessibility.
What is a mass market?
A very large market where a business tries to sell to as many people as possible.
A café rewards repeat customers with a loyalty card because it knows they buy coffee every morning. What kind of segmentation is this
Behavioural segmentation.
A business targets 25–40 year old gym-goers in Brisbane who value health and convenience. Give two details that should be included in their target market profile.
age, location, lifestyle, interests, values, or buying behaviour.
If people are trying to save money because life is expensive, what kind of products might they buy more of?
Cheaper products, discounts, home brands, or value-for-money items.
A business sells luxury handbags. It makes a large profit on each item, but does not sell many items. Is this an example of high margin or high volume?
Margin
What does viability mean in business?
Whether a market can support a business successfully over time
A business targets university students in Brisbane who value low prices and regularly order food through apps. Name three segmentation types being used.
Demographic, geographic, and psychographic.
A business sells premium reusable water bottles to city-based young adults who care about health and sustainability. Is this more likely a mass market or a niche target market? Why?
Niche target market, because it is aimed at a more specific group with particular values and interests.
Explain how one customer trend could change the way a business targets its market.
If customers want cheaper products because of cost of living, a business may target value-focused customers by lowering prices or promoting affordability.
What is a saturated market?
A market with so many competitors that growth and success are difficult.