No business sells to "everyone" — segmentation is how a business breaks a huge, varied market down into groups small enough to actually target well.
Segmentation is the process of dividing a whole market into smaller groups of customers who share similar characteristics or needs. It's the practical follow-on from 3.5.1: understanding that customers have different needs is only useful once a business can organise those differences into groups it can actually design a product, price and promotion around.
No realistic business can design one single product or one single advert that appeals equally to every possible customer — a teenager and a retiree, or someone on a tight budget and someone with plenty to spend, rarely respond to the exact same offer. Segmentation solves this by letting a business choose which specific group (or groups) to focus on, and then design everything else — from the product itself to where it's advertised — around that particular group's needs.
A message, price or product designed for one specific segment usually resonates far more strongly than something generic aimed at "everyone."
Marketing budgets are limited — segmentation helps a business avoid wasting spend on groups unlikely to buy, focusing effort where it's most likely to pay off.
Breaking a market into segments can reveal a specific group whose needs aren't being well served by any existing competitor — a genuine niche opportunity (see 3.2.6).
Once a segment is chosen, decisions on price, product, place and promotion (3.5.4) can all be designed specifically for that group rather than guessed at generically.
A business can segment its market in many ways, but AQA specifically expects you to understand four: gender, age, location and income.
Some products naturally suit gender-based segmentation because of genuinely different customer needs or preferences, from clothing sizing to specific grooming and skincare formulations. Businesses using this basis often develop distinct product ranges and advertising campaigns aimed separately at male and female customers, rather than a single unisex offer.
Age strongly influences spending power, priorities and taste, from toy complexity aimed at different childhood age bands through to financial products aimed specifically at older customers planning for retirement. Age segmentation lets a business design something genuinely relevant to a life stage, rather than something that feels irrelevant to everyone outside a narrow age range.
Regional and local differences in climate, culture and demand mean a product or promotion that works well in one area may need adapting for another. A retailer might stock more waterproof clothing in a rainy region, or a chain might adjust its product range store by store based on the preferences of the local population it actually serves.
Businesses often segment by income to offer distinct product tiers at different price points — a budget range for cost-conscious customers and a premium range for those willing to pay more for extra quality or exclusivity — allowing the same overall business to serve very different income groups without either feeling poorly catered for.
These four bases aren't mutually exclusive — a business can, and often does, combine several at once. A gym chain might target a premium membership specifically at higher-income young professionals in a particular city, blending income, age and location segmentation into a single, tightly defined target group.
Drag each example into the segmentation type it best illustrates.
State two ways a business can segment its customers.
Structure guide: two correctly identified segmentation types — 1 mark each, no explanation required.
State and explain two reasons why Larkspur Fitness might benefit from segmenting its membership offer by age and income.
Structure guide: state a reason grounded in the case study (1 mark), explain it (1 mark) — repeated twice over.
Analyse how introducing a premium membership tier targeted at younger professionals might affect Larkspur Fitness.
Structure guide: a single developed line of reasoning grounded in the case study (eg: research shows younger professionals are willing to pay more for personal training and extended hours → introducing a premium tier lets Larkspur Fitness charge a higher price to this specific segment without changing its standard membership for everyone else → this could increase average revenue per member → though it would require Larkspur Fitness to invest in additional personal trainers and extended staffing to deliver on the promise).
Recommend whether Larkspur Fitness should introduce separate membership packages for older residents and younger professionals, rather than continuing with one standard package. Justify your answer using the case study.
Structure guide: a "recommend" question needs a justified judgement — weigh the confirmed demand from both groups described in the research against the cost and complexity of running multiple membership tiers instead of one simple package, before reaching a clear final recommendation.