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Market segmentation.pptx
Built from the lesson script on 24 September 2026.
EDEXCEL GCSE BUSINESS · PAPER 1
Market segmentation
Spotting a business opportunity
Lesson 3 of 5
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EDEXCEL GCSE BUSINESS · PAPER 1
Last Lesson
Spotting a business opportunity
Lesson 3 of 5
Answer from memory before the answers appear.
1
What is the difference between primary and secondary research?
2
Give two methods of primary research.
3
What is qualitative data?
4
How can a business make its research more reliable?
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EDEXCEL GCSE BUSINESS · PAPER 1
Last Lesson - Answers
Spotting a business opportunity
Lesson 3 of 5
1
What is the difference between primary and secondary research?
Primary is new, first-hand information; secondary already exists and was collected by someone else.
2
Give two methods of primary research.
Any two of: survey, questionnaire, focus group, observation, interview.
3
What is qualitative data?
Opinions, feelings and reasons.
4
How can a business make its research more reliable?
Use a larger, representative sample and avoid bias.
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EDEXCEL GCSE BUSINESS · PAPER 1
Learning Objectives
Spotting a business opportunity
Lesson 3 of 5
1
Explain what a market segment is.
2
Explain how a market can be segmented by location, demographics, lifestyle, income and age.
3
Explain how businesses use market segmentation to target customers.
4
Explain the benefits of market segmentation to a business.
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EDEXCEL GCSE BUSINESS · PAPER 1
What Is Market Segmentation?
Spotting a business opportunity
Lesson 3 of 5
Market segmentation means dividing a market into smaller groups of customers with similar needs.
Market
All the customers who might buy a type of product, for example everyone who buys trainers.
Segment
A smaller group within the market whose customers share similar characteristics and needs, for example runners, fashion buyers or children.
Target market
The segment or segments a business chooses to aim its product and marketing at.
Why do it?
A product designed for everyone often suits no one well. Aiming at a segment lets a business meet those customers' needs exactly.
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EDEXCEL GCSE BUSINESS · PAPER 1
PART ONE
Ways to Segment a Market
Five ways to group customers with similar needs.
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EDEXCEL GCSE BUSINESS · PAPER 1
Ways to segment a market
Spotting a business opportunity
Lesson 3 of 5
Location
▸ where customers live or work
▸ local, national, international
▸ town or country
Demographics
▸ gender
▸ family size
▸ ethnicity
▸ religion
▸ occupation
Lifestyle
▸ hobbies
▸ interests
▸ attitudes
▸ how customers spend their time
Income
▸ low, middle and high earners
▸ budget, mid-range and luxury products
Age
▸ children
▸ teenagers
▸ adults
▸ over-60s
Ways to segment a market
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EDEXCEL GCSE BUSINESS · PAPER 1
Location
Spotting a business opportunity
Lesson 3 of 5
Grouping customers by where they live or work.
What it means
Customers in different places often have different needs - a city, a village, the coast or another country.
Why it matters
Climate, culture and local tastes change what people buy. A shop in a student area will stock different things from one in a retirement town.
Example
Supermarkets change their ranges store by store, and sell more barbecue food in areas with hot summers.
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EDEXCEL GCSE BUSINESS · PAPER 1
Demographics
Spotting a business opportunity
Lesson 3 of 5
Grouping customers by the characteristics of the population.
What it means
Dividing customers by features such as gender, family size, ethnicity, religion and occupation.
Why it matters
Each group can have different needs - a family of five needs a bigger car than a single person.
Example
Car makers sell small city cars to single people and seven-seat cars to large families.
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EDEXCEL GCSE BUSINESS · PAPER 1
Lifestyle
Spotting a business opportunity
Lesson 3 of 5
Grouping customers by how they live and what they care about.
What it means
Dividing customers by their hobbies, interests, attitudes and habits.
Why it matters
People with the same age and income can live very differently - one spends weekends hiking, another gaming.
Example
Gyms, vegan food brands, outdoor clothing and gaming accessories all target lifestyle segments.
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EDEXCEL GCSE BUSINESS · PAPER 1
Income
Spotting a business opportunity
Lesson 3 of 5
Grouping customers by how much they earn.
What it means
Dividing customers into low, middle and high earners.
Why it matters
Income decides what customers can afford and how much they are willing to pay.
Example
Hotel chains offer budget rooms, mid-range hotels and luxury suites to customers with different incomes.
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EDEXCEL GCSE BUSINESS · PAPER 1
Age
Spotting a business opportunity
Lesson 3 of 5
Grouping customers by how old they are.
What it means
Dividing customers into age groups such as children, teenagers, young adults, families and the over-60s.
Why it matters
Needs change as people get older - in what they buy, where they buy it and how they hear about it.
Example
Saga sells holidays and insurance designed only for people aged over 50.
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EDEXCEL GCSE BUSINESS · PAPER 1
Same Market, Different Segments
Two groups of customers, two very different sets of needs.
Spotting a business opportunity
Lesson 3 of 5
Age and lifestyle: young, active customers.
Age and income: retired customers with time to travel.
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EDEXCEL GCSE BUSINESS · PAPER 1
Segmenting the Market for Holidays
Spotting a business opportunity
Lesson 3 of 5
Segment
Customers
What they need
Age
Families with young children
Kids' clubs, pools, short flights
Age
Over-60s
Comfort, organised trips, quieter resorts
Income
Low income
Cheap package deals and camping
Income
High income
Luxury hotels and first-class travel
Lifestyle
Adventure seekers
Hiking, diving and activity holidays
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EDEXCEL GCSE BUSINESS · PAPER 1
PART TWO
How Businesses Use Segmentation
Target the right customers, with the right product, in the right way.
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EDEXCEL GCSE BUSINESS · PAPER 1
The Benefits of Market Segmentation
Spotting a business opportunity
Lesson 3 of 5
Segmentation helps a business spend its money where it will work.
Meets needs better
A product designed for one segment can meet those customers' needs exactly, so they are more likely to buy it.
Targeted marketing
The business can advertise where its target customers will see it, so it wastes less money on promotion.
Spots gaps
Looking at segments can reveal a group of customers whose needs no business is meeting.
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EDEXCEL GCSE BUSINESS · PAPER 1
The Benefits of Market Segmentation (cont.)
Spotting a business opportunity
Lesson 3 of 5
Higher sales and loyalty
Customers who feel a product is made for them are more likely to buy again.
Can charge more
A product that meets a segment's needs exactly may justify a higher price.
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EDEXCEL GCSE BUSINESS · PAPER 1
Spotting a business opportunity
Lesson 3 of 5
CASE STUDY
Saga: A Business Built on One Segment
Saga began in the 1950s by offering cheap out-of-season holidays to retired people, who could travel when hotels were quiet. It now sells holidays, cruises and insurance designed only for people aged 50 and over. By targeting one age segment, Saga can design its products around those customers' needs - comfort, reassurance and organised trips - and advertise where they will see it.
50+
The age of Saga's target customers
1950s
Saga's first holidays for retired people
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EDEXCEL GCSE BUSINESS · PAPER 1
Key Terms
Spotting a business opportunity
Lesson 3 of 5
Market
All the customers who might buy a type of product.
Market segment
A group of customers within a market who share similar characteristics and needs.
Market segmentation
Dividing a market into segments of customers with similar needs.
Target market
The segment a business aims its product and marketing at.
Demographics
Characteristics of the population, such as gender, family size, ethnicity and occupation.
Lifestyle
How customers live: their hobbies, interests and attitudes.
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EDEXCEL GCSE BUSINESS · PAPER 1
Spotting a business opportunity
Lesson 3 of 5
YOUR TASK
Segment the Trainers Market
12 minutes
The market for trainers is huge. Divide it into four segments using at least three different ways of segmenting (location, demographics, lifestyle, income or age). For each segment, describe the customers and one thing they need from a pair of trainers.
1
Name each segment and the method used.
2
Describe the customers in it.
3
Give one need those customers have.
WHAT A GOOD ANSWER SHOWS
Four clearly different segments, each named by its method of segmentation, with a specific customer need for each.
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EDEXCEL GCSE BUSINESS · PAPER 1
Can I...?
Spotting a business opportunity
Lesson 3 of 5
Explain what market segmentation is.
Explain segmentation by location, demographics, lifestyle, income and age.
Give a real example of each.
Explain how segmentation helps a business target customers.
Explain the benefits of market segmentation.
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EDEXCEL GCSE BUSINESS · PAPER 1
Summary & Exam Focus
A market segment is a group of customers with similar needs.
Markets can be segmented by location, demographics, lifestyle, income and age.
Businesses choose a target market and design the product and marketing around it.
Segmentation meets needs better, targets marketing and reveals gaps in the market.
EXAM FOCUS
Explain one benefit to a business of segmenting its market. (3 marks)
Name one benefit and build a chain: segment, then better-targeted product or marketing, then what that means for sales, costs or profit.
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