What is an example of market segmentation? (A) A bank offering reward points to loyal customers (B) A breakfast cereal manufacturer using advertising to target specific age groups (C) A sporting goods store dividing the floor space into sections to assist customer flow (D) A biscuit manufacturer repackaging its product as a result of increased market competition - HSC - SSCE Business Studies - Question 5 - 2007 - Paper 1

Market segmentation refers to the process of dividing a broader target market into smaller, more defined categories. This is done to tailor marketing strategies to meet the specific needs of different groups within the target market.

In this case, option B illustrates market segmentation effectively. A breakfast cereal manufacturer using advertising to target specific age groups shows a strategic approach to identify and reach a defined audience, thus segmenting the market according to demographics. This targeted advertising allows the manufacturer to resonate better with their selected audience compared to a one-size-fits-all approach.

In contrast, the other options do not encapsulate the essence of market segmentation:

• Option A discusses loyalty rewards, which is more about customer retention than segmentation.
• Option C relates to store layout rather than audience targeting.
• Option D describes a response to competition without segmenting the market.