Chapter 5

Question 1

Learning Objective 5-1
Define what markets are and explain how they are generally classified.

Answer 1

a group of individuals and/or organizations that have a desire or needs for products in a product class and have the ability, willingness, and authority to purchase those products.

Question 2

consumer market

Answer 2

Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits or serve an organizational need

Question 3

business market

Answer 3

Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations

Question 4

Learning Objective 5-2
List the five steps of the target market selection process.

Answer 4

Step 1: Identify the Appropriate Targeting Strategy
Step 2: Determine Which Segmentation Variables to Use
Step 3: Develop Market Segment Profiles
Step 4: Evaluate Relevant Market Segments
Step 5: Select Specific Target Markets

Question 5

Learning Objective 5-3
Compare three targeting strategies.

Answer 5

• Undifferentiated Targeting Strategy
• Concentrated Targeting Strategy through Market Segmentation
• Differentiated Targeting Strategy through Market Segmentation

Question 6

undifferentiated targeting strategy

Answer 6

A strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product

Question 7

homogeneous market

Answer 7

A market in which a large proportion of customers have similar needs for a product

Question 8

heterogeneous market

Answer 8

A market made up of individuals or organizations with diverse needs for products in a specific product class

Question 9

Market segmentation

Answer 9

The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs

Question 10

market segment

Answer 10

Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs

Question 11

concentrated targeting strategy

Answer 11

A market segmentation strategy in which an organization targets a single market segment using one marketing mix

Question 12

differentiated targeting strategy

Answer 12

A strategy in which an organization targets two or more segments by developing a marketing mix for each segment

Question 13

Segmentation variables

Answer 13

Characteristics of individuals, groups, or organizations used to divide a market into segments

Question 14

Learning Objective 5-4
Identify the major segmentation variables.

Answer 14

Consumer:
- Demographic Variables
- Geographic Variables
- Psychographic Variables
- Behavioristic Variables
Business:
- Geographic Location
- Type of Organization
- Customer Size
- Product Use

Question 15

Market density

Answer 15

The number of potential customers within a unit of land area

Question 16

Geodemographic segmentation

Answer 16

A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information

Question 17

Micromarketing

Answer 17

An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets

Question 18

Benefit segmentation

Answer 18

The division of a market according to benefits that consumers want from the product

Question 19

Learning Objective 5-5
Explain what market segment profiles are and how they are used.

Answer 19

A market segment profile describes the similarities among potential customers within a segment and explains the differences among people and organizations in different segments. Marketers use market segment profiles to assess the degree to which their products fit potential customers’ product needs.

Question 20

Learning Objective 5-6
Describe how to evaluate market segments.

Answer 20

• Sales Estimates
• Competitive Assessment
• Cost Estimates

Question 21

Market potential

Answer 21

The total amount of a product that customers will purchase within a specified period at a specific level of industry-wide marketing activity

Question 22

Company sales potential

Answer 22

The maximum percentage of a market that an individual firm within an industry can expect to obtain for a specific product

Question 23

breakdown approach

Answer 23

Measuring company sales potential based on a general economic forecast for a specific period and the market potential derived from it

Question 24

buildup approach

Answer 24

Measuring company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period, multiplying the estimate by the number of potential buyers, and adding the totals of all the geographic areas considered

Question 25

Learning Objective 5-7 Identify the factors that influence the selection of specific market segments for use as target markets.

Answer 25

the firm’s management must investigate whether the organization has sufficient financial resources, managerial skills, employee expertise, and facilities to compete effectively in the selected segments. The firm must also consider the possibility that the requirements of some market segments are at odds with the firm’s overall objectives, and that possible legal problems, conflicts with interest groups, and technological advancements will render certain segments unattractive. Finally, marketers must consider long-term versus short-term growth.

Question 26

Learning Objective 5-8 Discuss sales forecasting methods.

Answer 26

- Executive Judgment - Surveys - Time Series Analysis - Regression Analysis - Market Tests - Using Multiple Forecasting Methods

Question 27

sales forecast

Answer 27

The amount of a product a company expects to sell during a specific period at a specified level of marketing activities

Question 28

Executive judgment

Answer 28

A sales forecasting method based on the intuition of one or more executives

Question 29

customer forecasting survey

Answer 29

A survey of customers regarding the types and quantities of products they intend to buy during a specific period

Question 30

sales force forecasting survey

Answer 30

A survey of a firm’s sales force regarding anticipated sales in their territories for a specified period

Question 31

expert forecasting survey

Answer 31

Sales forecasts prepared by experts outside the firm, such as economists, management consultants, advertising executives, or college professors

Question 32

Delphi technique

Answer 32

A procedure in which experts create initial forecasts, submit them to the company for averaging, and then refine the forecasts

Question 33

time series analysis

Answer 33

A forecasting method that uses historical sales data to discover patterns in the firm’s sales over time and generally involves trend, cycle, seasonal, and random factor analyses

Question 34

Trend analysis

Answer 34

An analysis that focuses on aggregate sales data over a period of many years to determine general trends in annual sales

Question 35

cycle analysis

Answer 35

An analysis of sales figures for a three- to five-year period to ascertain whether sales fluctuate in a consistent, periodic manner

Question 36

seasonal analysis

Answer 36

An analysis of daily, weekly, or monthly sales figures to evaluate the degree to which seasonal factors influence sales

Question 37

random factor analysis

Answer 37

An analysis attempting to attribute erratic sales variations to random, nonrecurrent events

Question 38

regression analysis

Answer 38

A method of predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income

Question 39

market test

Answer 39

Making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts