chapter 2

Question 1

individual differences

Answer 1

A person’s stable and consistent way of responding to the environment in a specific domain.

Question 2

“Big Five” traits

Answer 2

openness, conscientiousness, extraversion, agreeableness, and neuroticism

Question 3

life experiences

Answer 3

Events and experiences unique to the person’s life that have a lasting impact on the value and preferences they place on products and services, which then affect preferences, independent of individual differences

Question 4

functional needs

Answer 4

Personal decision weightings across functional attributes based on their personal circumstances

Question 5

self identity / image

Answer 5

Customers actively seek products that they believe will support or promote their desired self-image

Question 6

marketing activities

Answer 6

Firms’ attempts to build linkages between their brands and prototypical identities or meaning

Question 7

functional needs

Answer 7

The relative importance of functional attributes (e.g., design and features) to an individual based on their personal circumstances

Question 8

self identity

Answer 8

The defining characteristic of a person in their social context

Question 9

marketing activities

Answer 9

Strategic initiatives aimed at generating value to a customer through a firm’s product or service offerings

Question 10

latent customer heterogeneity

Answer 10

Potential differences in desires that are unobserved and have not manifested in different customer purchases or behaviors.
-may stem from legal (government regulations, patents),
economic (prohibitive prices, due to the size of market or production costs), technological (only way known to make something), or innovative (no firm has yet identified and satisfied the need) constraints.

Question 11

mass marketing (undifferentiated marketing)

Answer 11

A marketing strategy that utilizes mass media
to appeal to an entire market with a single message; where a firm mostly ignores customer heterogeneity based
on the assumption that reaching the largest audience possible will lead to the largest sales revenue.

Question 12

niche marketing

Answer 12

A marketing strategy that focuses marketing efforts on well-defined, narrow segments of consumers in hopes of gaining a competitive advantage through specialization.

Question 13

segmenting

Answer 13

The process of dividing the overall market
into groups where the potential customers in each group have similar needs and desires for
a particular category of product or service while also maximizing the differences among groups.

Question 14

key points to segmentation:

Answer 14

1. Segmentation must start with a random sample of potential customers in the market, not just the firm’s existing customers
2. Customers should be divided into groups on the basis of their needs and desires in the product category
3. It is important that customers in one group have similar preferences; it is ideal to maximize the differences between segments.

Question 15

cluster analysis

Answer 15

A technique that uses customer preferences to cluster individual customers into a given number of groups.

Question 16

factor analysis

Answer 16

A way to meaningfully reduce the number
of variables being investigated in a research study. An important preceding step for any cluster analysis, depending on the number of items included in a research study.

Question 17

multiple discriminate analysis

Answer 17

A technique to classify research respondents into appropriate segments using a
set of demographic characteristics as the predictors.

Question 18

market attractiveness

Answer 18

A measurement that captures the external market characteristics that make a given segment strategically and financially valuable to serve, such as size, growth rate, and price sensitivity.

Question 19

competitive strength

Answer 19

A measurement that captures the relative strength of a firm versus competitors at securing and maintaining market share in a given segment.

Question 20

An ideal target segment would meet six criteria:

Answer 20

1. Based on customer needs – customers care.
2. Different than other segments – little crossover competition.
3. Differences match firm’s competencies – firm can meet their needs with existing resources.
4. Sustainable – can keep customers from switching to the competition.
5. Customers are identifiable – can find targeted customers.
6. Financially valuable – valuable in the long term.

Question 21

GE Matrix

Answer 21

An analysis tool designed to helps managers visualize and select target segments.

Question 22

perceptual maps

Answer 22

Maps that depict customer segments, competitors, and a firm’s own position in a multidimensional space, defined by the purchase attributes identified during the segmentation process.

Question 23

repositioning

Answer 23

The process by which a firm shifts its target market.

Question 24

positioning statement

Answer 24

Words that capture the key marketing decisions, internal and external, needed to effectively appeal to customers in the firm’s target segment that include the who, what, and why the firm is targeting. (who what why statement)

Question 25

SWOT analysis

Answer 25

Analysis of strengths, weaknesses, opportunities, and threats.

Question 26

industry segmentation.

Answer 26

How can the marketplace be described using homogeneous groups? 2 What does each group of potential customers want?

Question 27

target segment

Answer 27

What set of segments will the firm pursue? 2 How does the firm identify each group of target customers?

Question 28

Segmenting

Answer 28

-To initiate the segmentation, managers need to identify the key purchase attributes. -With a list of purchase attributes in hand, managers can start collecting responses from a random sample of potential customers about the importance of these attributes. -Next, managers should analyze the data by grouping similar questions (factor analysis) and grouping similar customers (cluster analysis).

Question 29

Targeting

Answer 29

The targeting process follows naturally from segmentation, to identify which segments the firm wants to sell to, based on the attractiveness of each segment and the firm’s competitive strength in each segment

Question 30

Positioning

Answer 30

1. Simply, positioning involves adjusting a firm’s offering (tangible and intangible factors) to match the targeted segment’s preferences, so a key first step is to identify any existing gap between desired attributes and perceived attributes. 2. Visual representations of customer perceptions can facilitate positioning analyses. Perceptual maps are an excellent tool for visualizing gaps in the offerings and the firm’s relative position 3. Finally, the positioning statement for each target segment encapsulates the essence of the STP process, by addressing who customers are, what needs the offering satisfies (key purchase attributes), and why this offering or firm is best at satisfying the need (relative advantage)

Question 31

Building Customer Centricity

Answer 31

building a customer-centric organization is different from executing an STP process. It requires top-down, enduring commitment from senior leaders to institute a customer-centric philosophy across the entire organization.