AQA A-Level Business (7138)

## Learning Outcomes

- Explain what a target market is and why businesses choose target markets
- Distinguish clearly between segmentation, targeting and positioning
- Identify the main methods of market segmentation used in AQA A-Level Business
- Analyse how target market choice affects the marketing mix and business performance
- Compare niche marketing with mass marketing and judge when each may be suitable
- Apply evaluative criteria such as size, growth, profitability and accessibility to target market decisions

## AQA A-Level Business (7138) Syllabus

For the AQA A-Level Business (7138), you are expected to understand target market decisions within marketing management, with a focus on the following syllabus points:

![Target market selection in the STP framework, from market segmentation to segment choice and product positioning.](https://static.pastpaperhero.com/images/aqa-a-level-business-7138-marketing-management-target-market_00.png)

_STP process is shown as dividing a heterogeneous market, evaluating segments, and establishing a clear position for chosen customers._

- Know that businesses use **segmentation, targeting and positioning (STP)** to make marketing decisions
- Identify the four main methods of segmentation: demographic, geographic, income and behavioural
- Explain the difference between market segmentation, target market selection and market positioning
- Understand why businesses may choose **niche marketing** or **mass marketing**
- Analyse how choosing a target market helps a business design a more effective marketing mix
- Assess target market options using factors such as segment size, growth, profitability and accessibility
- Recognise that **market mapping** or **perceptual mapping** can help businesses position products against competitors

## Test Your Knowledge

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, look more closely at that area during your revision._

1. What is the difference between market segmentation and a target market?
2. Name the four main methods of market segmentation.
3. Why might a small business choose niche marketing instead of mass marketing?
4. How does target market choice affect the marketing mix?
5. Why does a gap on a perceptual map not always mean a profitable opportunity?

## Introduction

Most businesses cannot sell effectively to everyone. Customers differ in age, income, location, lifestyle and buying habits, so one product and one message will not appeal equally to all of them. That is why businesses identify a **target market**: the group of customers they most want to attract.

This is a core part of marketing management because target market decisions shape product design, price, promotion, place and branding. In exams, strong answers do not just define a target market. They explain how choosing the right target market can lead to better customer satisfaction, more efficient spending and stronger sales or profit.

> **Key Term: target market**
> The specific group of customers a business chooses to aim its product and marketing at.

### STP: segmentation, targeting and positioning

AQA places target market within the wider **STP** process. This sequence matters.

First, a business divides the wider market into smaller groups. Second, it chooses which group or groups to focus on. Third, it creates a clear image of the product for that chosen group.

> **Key Term: market segmentation**
> The process of dividing a wider market into smaller groups of customers with similar needs, characteristics or behaviours.
>
> **Key Term: positioning**
> How a business wants its product or brand to be perceived by customers relative to competitors.

A simple way to remember it is:

- **Segmentation** = divide the market
- **Targeting** = choose the segment
- **Positioning** = shape customer perception

For example, a clothing business might segment the market by age and income. It may then target younger, higher-income consumers who want premium fashion. It would then position its products as stylish, high quality and trend-led.

This matters because the target market affects the whole marketing mix:

- **Product** features must suit the chosen customers
- **Price** must match willingness and ability to pay
- **Promotion** must use the right message and media
- **Place** must make the product available where target customers shop

A business that ignores STP risks wasting money on broad promotion that reaches many people but persuades very few.

> **Test Tip:** In 9-mark and 16-mark answers, do not treat segmentation, targeting and positioning as the same thing. Examiners reward precise use of terms.

### Methods of segmentation

Businesses need a basis for dividing the market before they can choose a target market. The main AQA methods are demographic, geographic, income and behavioural segmentation.

#### Demographic segmentation

This groups customers by personal characteristics such as:

- age
- gender
- family size
- marital status
- stage in life

This is common because buying behaviour often changes with life stage. Teenagers, parents with young children and retired consumers usually want different products, styles and prices.

A holiday company, for instance, may target older travellers with quieter trips and higher service levels, while another operator targets young adults wanting lower prices and nightlife.

#### Geographic segmentation

This divides the market by location, such as:

- region
- country
- urban or rural area
- climate

Location can affect needs and preferences. A business selling winter clothing may promote more heavily in colder areas. A takeaway chain may alter menus according to local tastes.

#### Income segmentation

This groups customers by earnings, purchasing power, occupation or social class. It is useful because ability to pay strongly affects demand. Premium brands often target higher-income consumers, while value retailers focus more on price-sensitive households.

A business should be careful here. A large group of low-income consumers may still be attractive if high volume sales are possible. A smaller high-income segment may be attractive if customers accept premium prices and high margins.

#### Behavioural segmentation

This is based on how customers act or what benefits they seek. Examples include:

- heavy or light users
- brand loyalty
- early or late adopters
- buying habits
- benefits sought

This method is increasingly useful because two people of the same age or income may buy very differently. One customer may be highly brand loyal, while another always switches for lower prices.

> **Key Term: behavioural segmentation**
> Dividing a market according to customers' buying behaviour, usage patterns, loyalty or benefits sought.

Businesses often combine methods. A gym brand may target urban, higher-income, health-conscious young professionals. That is more precise than using only one segment variable.

However, precision has limits. A business can over-segment the market and create groups too small or expensive to target profitably.

### Choosing a target market

Once segments have been identified, the business must decide which one or ones to serve. This is the actual targeting decision.

A business does not always choose the biggest segment. The best target market is the one that matches the firm's resources and objectives.

Useful criteria include:

- **Size**: Is the segment large enough?
- **Growth**: Is demand rising?
- **Profitability**: Can the business make enough profit?
- **Accessibility**: Can the segment be reached through promotion and distribution?
- **Fit with resources**: Does the business have the finance, staff and expertise to serve it well?

For example, a small start-up may identify a broad market for sports clothing, but it may lack the finance to compete with major brands across the whole market. Instead, it might target a smaller group such as premium yoga wear buyers. This allows a more focused use of resources.

The textbook also highlights wider targeting approaches:

- **Undifferentiated marketing**: one offer aimed at the whole market
- **Differentiated marketing**: separate offers for several segments
- **Concentrated marketing**: focus on one or a few segments

Concentrated marketing is closely linked to niche strategy. It is often suitable for smaller businesses because they cannot afford to appeal to everyone.

A chain of analysis examiners like is:

chosen target market -> tailored marketing mix -> stronger appeal to customers -> higher sales conversion -> improved revenue, market share or profit

But this only works if the chosen segment is genuinely attractive.

Problems can arise if:

- the segment is too small
- the segment is shrinking
- competitors copy the idea
- the business misreads customer needs
- tastes change quickly

A business may also miss opportunities elsewhere by focusing too narrowly on one group.

> **Key Term: niche marketing**
> A marketing approach that focuses on a small, specialised segment with specific needs.
>
> **Key Term: mass marketing**
> A marketing approach aimed at the whole market with a broadly similar offer.
>
> **Test Tip:** When asked to analyse a target market choice, move beyond “it meets customer needs”. Explain how this affects sales, costs, market share or profit.

### Niche marketing, mass marketing and positioning

A major exam issue is whether a business should target a narrow segment or a broad market.

#### Niche marketing

Niche marketing focuses on a specific customer group. This can be effective because:

- competition may be lower
- marketing can be more focused
- products can be adapted closely to customer needs
- customers may accept higher prices for specialist products
- smaller firms may compete more effectively

For example, a business selling clothing only for tall customers serves a narrower market, but it may build loyalty because it solves a specific problem better than mass-market rivals.

However, niche marketing also has weaknesses:

- limited sales volume
- dependence on one segment
- greater risk if tastes change
- some niches are too small to be profitable

#### Mass marketing

Mass marketing aims at a broad market with one main offer. This can bring:

- much larger potential sales
- economies of scale
- stronger brand recognition
- lower average marketing or production costs per unit

But mass marketing usually means intense competition. It may also be harder to satisfy different customer needs with one standard offer.

#### Positioning and market mapping

Choosing a target market is not enough on its own. The product must also be positioned clearly.

A premium coffee brand aimed at higher-income professionals might position itself as high quality and ethically sourced. A budget chain might position itself as cheap, fast and convenient.

> **Key Term: market mapping**
> A diagram showing how products or brands are perceived against key criteria such as price and quality.

A **perceptual map** helps compare brands on two axes, such as price and quality. This can show whether a product appears premium, budget or somewhere in the middle.

A business may look for a gap on the map, but this does not guarantee success. A gap may exist because there is no customer demand there, or because costs would be too high.

For example, a “very cheap, very high quality” gap may look attractive, but it may be impossible to deliver profitably.

This is where evaluation matters. A good target market choice depends on demand, competition, costs and business capabilities, not just on a visual gap.

### How to structure an evaluative answer

For 16-mark or 20-mark style evaluation, use a clear pattern:

- **On the one hand**: explain why the chosen target market could work
- **On the other hand**: explain the risks or reasons it may fail
- **It depends on**: identify the factors that change the answer
- **Judgement**: decide which factor matters most in the context given

Financial evidence to use might include:

- likely sales revenue
- expected profit margins
- size of marketing budget
- market growth
- market share potential

Non-financial factors might include:

- brand image
- fit with business objectives
- staff capability
- speed of changes in consumer taste
- level of competition

Avoid generic evaluation such as “it depends on many factors”. Name the factors and explain why they matter.

A strong judgement might be:

A smaller niche target market may be better than a larger mass market if the business has limited finance, wants a clear brand identity and can charge premium prices. However, if the business has strong resources and the product has broad appeal, mass marketing may generate greater long-term sales and market share.

## Key Point Checklist

_This article has covered the following key knowledge points:_

- A target market is the specific group of customers a business chooses to aim its products and marketing at
- Target market decisions sit within the STP process: segmentation, targeting and positioning
- Segmentation means dividing the market into groups with similar needs or behaviours
- The main segmentation methods are demographic, geographic, income and behavioural
- Businesses choose target markets because resources are limited and customers do not all want the same thing
- A well-chosen target market can lead to a better marketing mix, more efficient promotion and stronger sales
- Businesses should judge segments by size, growth, profitability, accessibility and fit with their capabilities
- Niche marketing focuses on a small specialised segment, while mass marketing aims at the whole market
- Niche marketing may allow closer customer focus, but it brings the risk of limited demand
- Mass marketing offers larger sales potential, but competition is often stronger
- Positioning is about how a product is perceived relative to competitors
- A gap on a perceptual map does not automatically mean there is profitable demand

## Key Terms and Concepts

- target market
- market segmentation
- positioning
- behavioural segmentation
- niche marketing
- mass marketing
- market mapping


Marketing management - Target market