A business cannot please everyone, so it chooses who it is for and shapes the marketing mix around them. This page shows how segmentation works and how to judge a choice in the exam.
If a business wants more sales, why would it deliberately aim at fewer customers?
A target market is the group of customers a business chooses to serve. Segmentation splits a market into groups by demographic, geographic, psychographic or behavioural traits. Firms then pick a niche or mass approach and adapt product, price, promotion and place to suit the chosen group.
Year 12 (7137/7138): This is AS content in 3.1.3 Marketing management, so it can appear on AS Paper 1 in 2027. It also sits in A-level Paper 1 in 2028. Learn all four bases of segmentation by name. You will be asked to Define, Explain and Analyse them, and to Assess or Evaluate a targeting choice.
Year 13 (7132, June 2027): You sit the outgoing specification, where this material sits in section 3.3 on marketing. Use this page as revision for segmentation, niche v mass markets and the marketing mix. The labels 'psychographic' and 'behavioural' are useful but you will not be tested on those exact terms. Check your own specification before you rely on them.
A market is where buyers and sellers meet. A target market is the specific group of customers a business decides to serve. Market segmentation means splitting a market into smaller groups of customers who share needs or traits.
The purpose is simple. Customers differ, so one offer rarely suits all of them. Segmentation lets a business match its offer to a group, so it can charge a fair price, spend less on wasted advertising and build loyalty.
| Base | Splits customers by | Example |
|---|---|---|
| Demographic | Age, gender, income, family size, occupation | A student railcard for 16 to 25 year olds |
| Geographic | Where they live or work | A café chain opening only in town centres |
| Psychographic | Lifestyle, values, attitudes, personality | Eco-conscious shoppers who prefer ethical brands |
| Behavioural | How they buy or use: frequency, loyalty, occasion, time of day | A loyalty app for frequent buyers; evening meal deals |
Most businesses combine bases. 'Parents in cities who care about sustainability' mixes demographic, geographic and psychographic traits.
A niche market is a small, specialised segment. A mass market is a large market with many customers who have broadly similar needs.
| Advantages | Disadvantages | |
|---|---|---|
| Niche | Less competition; loyal customers; premium prices possible; clear brand identity | Limited sales volume; risky if the segment shrinks; large rivals may enter |
| Mass | High sales volume; economies of scale (lower unit costs as output rises); wide brand reach | Intense competition; lower margins; one offer may fit nobody well; high promotion costs |
The marketing mix is product, price, promotion and place. Once a target market is chosen, each element is set to fit it. A premium niche might use high prices, specialist retailers and word of mouth. A mass-market brand might use low prices, supermarket shelves and television or social media adverts.
Illustrative figures: a market has 400,000 buyers. Segment A is 10% of buyers (40,000) and would pay £30. Segment B is 60% (240,000) and would pay £8. Segment A gives potential revenue of £1.2 million. Segment B gives £1.92 million. Segment B is larger, but it needs a bigger promotion budget and faces tougher rivals, so the better choice depends on costs and the objective.
No Annex 8 sophisticated concept is central here. Price elasticity of demand (PED, how sensitive demand is to a price change) helps when you judge pricing for each segment.
Greggs is a UK food-to-go chain. In 2025 it chose to grow sales in the evening, a behavioural choice about when customers buy. Evening sales were 9.4% of company-managed shop sales, up from 9.0% in 2024.[1]
To serve that group, it changed the mix. The menu gained hot food and sharing items, opening hours stretched later, and delivery grew. That is the mix adapted to a segment, so product, place and promotion move together.
Location is also a segmentation choice. Greggs opened many shops in places with no other Greggs nearby. This tests whether new geographic segments exist before it commits.[1]
In an exam answer, link the segment to the evidence in the case study. Name the base, say what the customers want, then say which mix element changes and why.
Evaluation means weighing the arguments and reaching a judgement. For targeting, the main points to weigh are these.
A strong judgement says which factor matters most in this case and why. For example, 'Because the firm has limited cash, a niche is more suitable in the short run, but it should review this once sales grow.'
Every AQA Business question uses one of five command words, each with a fixed mark tariff, and quantitative questions sit inside the 9 and 15-mark formats. The A-level papers have no 2 or 4-mark questions. Open each format to see how this topic appears in it. All questions here are original Curriculum Circle practice questions, not board questions.
On this topicYou are asked for the meaning of a term such as market segmentation, niche market or target market.
What earns the marksTwo AO1 marks for a clear definition with a key feature or short example.
CC practice questionDefine 'market segmentation'. (2 marks)
On this topicYou explain one way a business segments its market or one reason it matters, using a short context.
What earns the marksAO1 for the idea and AO2 for applying it to the business named.
CC practice questionA bakery chain offers cheaper meal deals after 5pm. Explain one reason why this is an example of behavioural segmentation. (4 marks)
On this topicYou build a chain of reasoning about why a firm adapts one element of the mix for a segment.
What earns the marksAO1 knowledge, AO2 application and AO3 analysis through linked 'because' and 'so' steps.
CC practice questionA trainer brand targets 16 to 24 year olds on social media. Analyse how this target market might affect its promotion. (6 marks)
On this topicYou weigh up the advantages and disadvantages of a niche or mass approach for a named firm, then judge.
What earns the marksAO1 to AO3 for the arguments, and AO4 for a justified judgement.
CC practice questionA small firm sells handmade vegan chocolate to health-conscious adults. Assess the advantages and disadvantages of staying in a niche market. (9 marks)
On this topicYou compare two targeting options, such as entering a new segment or deepening an existing one, and recommend one.
What earns the marksAO1 to AO4, with the highest credit for a recommendation justified against the context and what it depends on.
CC practice questionA café chain can target office workers with fast service or families with a larger menu. Evaluate which target market it should choose. (15 marks)
On this topicCase study data on segment size, spend or market share is used to compare segments before you judge.
What earns the marksAO1 and AO3 for correct calculations and AO4 for using them to judge the better segment.
CC practice questionIllustrative figures: Segment A has 25,000 buyers spending £40 each. Segment B has 90,000 buyers spending £9 each. Analyse which segment gives more revenue, then assess which the firm should target if promotion to B costs £300,000 and to A costs £80,000. (9 marks)
| Weight | What it is | What it means on target markets and segmentation | |
|---|---|---|---|
| AO1 | 32.5% AS · 24.44% A-level | Knowledge and understanding of terms, concepts, theories, methods and models | Know the four bases, the niche and mass trade-offs, and the four parts of the marketing mix, and define them accurately. |
| AO2 | 27.5% AS · 24.44% A-level | Application to the business context in the case study | Name the customers in the case, say which base fits, and show which mix element changes for them. |
| AO3 | 20% AS · 26.66% A-level | Analysis of issues and their impact on individuals and organisations | Link the choice of segment to costs, revenue, loyalty or competition through 'because' and 'so' chains. |
| AO4 | 20% AS · 24.44% A-level | Evaluation of quantitative and qualitative information to make judgements | Weigh segment size, rivals, resources and objectives, then judge which choice suits this business and what would change your view. |
Weightings are approximate and taken from the AQA AS 7137 and A-level 7138 specification [0].
A UK sportswear brand sells mainly to young adults in cities. It is considering entering the over-50s fitness market. Evaluate whether it should enter this new target market. (15 marks)
The over-50s segment may be large and growing, so it could raise sales beyond the brand's current customers. This is a demographic segment, so the mix would need to change: comfort-focused products, clearer sizing, and advertising in places older customers use. Because the brand's image is youthful, the new promotion may cost more to build, so margins may fall in the early years.
The decision depends on how much the brand's image limits it and how large the segment really is. If market research shows strong demand and the firm has spare cash, entering is sensible, because it spreads risk away from one age group. If research is weak, a smaller range sold online would be safer. On balance, a staged entry is the better recommendation, because it tests demand before the firm commits large sums.
Greggs, the UK food-to-go chain, reported that evening sales were 9.4% of company-managed shop sales in 2025, up from 9.0% in 2024. It also ranked fourth in the market for dinner visits, according to market data firm Circana. This shows a behavioural segment (time of day) being built through opening hours and menu.[1]
In 2025, 53% of Greggs new shop openings, excluding relocations, were in areas with no other Greggs within a mile. This is a geographic targeting choice, because it tests demand in places the brand did not serve before.[1]
Greggs said its app was scanned in 26.7% of company-managed shop transactions in 2025. In the same results it launched a Bake-at-Home range with Tesco, selling to customers through a supermarket as well as its own shops. Both moves adapt place and promotion to different buying habits.[2][3]
Everything above is the topic page. The pieces below take it further. Each one trains a particular assessment objective rather than covering the topic again, and they are added over the year.
Figures and facts were checked against these sources on 2 November 2026. Worked numbers labelled "Illustrative figures" are invented for teaching.
For more practice on segmentation questions, the CC Business revision platform and the Inner Academy's recorded lessons go further.
See the Business platformThe Inner Academy