Question

Explain the use of price to segment consumer markets.

Answer 1

Segmentation in consumer markets can be on the basis of different consumer's behaviour, their habits, demographic differences on the basis of age, sex, income, race, nationality etc, geographical differences and different lifestyles and preferences. Prices play an important role in creating market segmentation on the basis of above characteristics. Prices are able to differentiate customers by charging different prices or charging them in a different manner. Without any difference in the prices, market segmentation cannot take place. Hence, prices are the medium through which markets are segmented and the sole way through which segmentation is possible.