Market Segmentation

Market segmentation

• divides customers into sub-groups

• is a method of promotion

• is a qualitative form of market research

• transports products to customers

Answer explanation

The correct option is number 1, which states that market segmentation divides customers into sub-groups. Market segmentation is a marketing strategy that involves dividing a larger market into smaller groups of consumers with similar needs or characteristics. This allows companies to tailor their marketing efforts and product offerings to specific groups, increasing the effectiveness of their marketing campaigns and ultimately driving sales.

Sparkling Jewellery Ltd uses cost plus pricing. The company sets its selling prices at cost plus 120%.

 

The selling price of a diamond ring which cost £800 to make would be:

      

• £1760

• £960

• £920

• £160

Answer explanation

Cost plus pricing means that the selling price is determined by adding a markup percentage to the cost of production. In this case, the markup percentage is 120%.

£800 x 120/100 = £960.  £800 plus £960 = £1760.

Which of these is an example of a secondary source of market research?       

• Face-to-face interviews with customers

• Focus groups

• Magazine articles

• Questionnaires sent to local residents

Answer explanation

The correct option is 3, magazine articles. A secondary source of market research is any information that has already been collected and published by someone else. Magazine articles are an example of this because they are written by journalists or experts who have already conducted research and compiled their findings into an article. Face-to-face interviews with customers, focus groups, and questionnaires sent to local residents are all examples of primary sources of market research because they involve collecting new data directly from the target audience.

A seller charges a high price for pre-orders of a soon-to-be-released video game.  The seller intends to charge a lower price for the video game once it has been released.

 

What is this high price an example of?        

• Skimming

• Penetration pricing

• Innovation

• Illegal behaviour

Answer explanation

The high price charged for pre-orders of a soon-to-be-released video game is an example of skimming. Skimming is a pricing strategy where a company charges a high price for a new product or service during its initial launch phase, and then gradually lowers the price over time to attract more price-sensitive customers. This strategy is often used for innovative or technologically advanced products, where early adopters are willing to pay a premium price to be the first to own the product.

Which of the following is not one of the four Ps of the marketing mix?     

• Packaging

• Place

• Price

• Promotion

Answer explanation

The solution to the question is option number 1, Packaging. The four Ps of the marketing mix are Product, Price, Place, and Promotion. These are the key elements that a company uses to promote its products or services to its target market. Packaging is not one of the four Ps of the marketing mix.