DECA Retail Merchandising Practice Exam

Which attribute must a market segment have to be considered substantial?

1. The market must be large in size

2. The segment must have significant purchasing power

3. The market must be easily reachable

4. The segment should include multiple demographic groups

The correct answer is: The segment must have significant purchasing power

For a market segment to be considered substantial, it is essential that it has significant purchasing power. This means that the consumers within this segment not only make up a large portion of the market but also have the financial capability to make purchases. Substantial segments are those that can drive sales and justify marketing investments. Without purchasing power, even a large segment would not be effective for a business because it won't translate into actual sales. While the other options touch on important aspects of market segmentation, they do not encapsulate the core requirement of a substantial segment. A market being large in size does not guarantee that it will be profitable. Similarly, the ability to reach a market is necessary for marketing but does not itself define a segment's potential for revenue. Including multiple demographic groups can provide diversity, but without purchasing power, the segment may lack the financial viability necessary for a business to focus on it effectively. Therefore, the key characteristic that defines a substantial market segment is its significant purchasing power.