CAIE A-Level Business 3.1.6 Market segmentation

Bear Bears (BB)

BB is a business partnership owned by Sade and Chika. BB produces personalised teddy bears (toys) for children.

The toys are made using mass customisation targeted at specific market segments. Each toy has the same shape and size but it is customised with names and words provided by the customer. These are hand-stitched onto the toy and the employees are paid using piece rate. Customers receive their products within a week of ordering.

Each toy is sold for $ 50 and has a unit contribution of $ 6. Last month BB sold 4000 units with a margin of safety of 120 units.

BB currently holds a large amount of inventory in a temperature-controlled warehouse (see Table 2.1).

Sade thinks that BB should adopt a just in time (JIT) approach to inventory management. However, Chika is concerned about the possible impact on BB.

The stitching department is managed by Chika. She has recently received a complaint from David who is the only male employee in the stitching department (see Fig. 2.1).

I feel that I am being discriminated against because I am a man. There are no washroom facilities for me on the ground floor but there are for the women. I have to go up two floors for a washroom which takes me a lot of time.
I am given all the tasks which require heavy lifting. I am often asked to fix problems with other people's stitching machines, and this slows my production. I earn less money than anyone else in the stitching department.

After some further investigation, Chika believes there needs to be increased equality in the stitching department.

Identify one method of market segmentation.