Price
Market segments and price
Market segments are groups of customers with similar characteristics, such as age, income or lifestyle. Each segment may have different incomes, needs and willingness to pay, so the price that suits one group may be wrong for another. The price must suit the target segment.
Why segments pay different prices
A price must match what the target segment can afford and values. Customers on lower incomes are usually more price sensitive, while customers who need convenience or exclusivity may accept a higher price. For example, a soft-play centre might use these prices:
| Segment | Price | Why this price suits the segment |
|---|---|---|
| Families with pre-school children (weekday mornings) | £3.50 | Many families have less to spend and can attend at quiet times, so a low price fills empty sessions. |
| Working parents (after school) | £5.50 | Need that specific time and have less flexibility, so they are willing to pay more. |
| Birthday party groups | £12 per child | Includes food and a host; parents will pay more for a special occasion. |
Different strategies for different segments
A business may use a different pricing strategy for each segment. A segment that values luxury or exclusivity might be charged a consistently high price (premium pricing), while a price-sensitive segment might see a lower price. Another segment might be given a price designed to look more attractive (psychological pricing). The strategy should fit the segment's income and what it values, not just the business's costs.
Practise this
Edexcel GCSE Business · 2.2.2 Price