When Miranda Kramer had her second child, she decided she did not wish to return to her £30,000 a year managerial job at a holiday travel company 25 miles from home. Her lengthy drive to work was getting her down, her husband had a full time job and she wanted to do something that would enable her to work more flexibly, to juggle the demands of being a parent to two young children. She had a talent for making and decorating cakes, and had made several for her friends’ children’s birthdays. She also made her sister’s wedding cake the previous year. Friends and family feedback from these cakes was very positive and she felt this may provide the idea for a business she could run flexibly from home.

Miranda conducted some market research and identified two main competitors to her business idea. One was a bakery shop, “Lyndsay’s”, in her local town and the other was another home-based service named “Sugar and Spice Baking”. Miranda made some calls to both businesses, acting as a potential wedding client, in order to find out about their products and services.
From this research, Miranda realised that she could segment her market into children’s party cakes and christening cakes, adult’s special occasion cakes and wedding cakes. Miranda then completed some more market research with 10 family friends, who she had met since having children. She made two novelty cakes and also showed pictures of others that she had made previously. She asked these friends many important questions, such as what they thought of her cakes, how much they would be prepared to pay for each one and how much notice they would expect to reasonably give when placing an order and receiving the cake. From this it seemed that most would be prepared to pay £20 to £30 for a good quality novelty birthday cake which could feed around 20 at a party. Everyone expected to have an order within 2 weeks of placing it and everyone liked the cake designs of her previous work.


1. Analyse the benefit to Miranda of being able to segment her market (6)