chapter 6

Question 1

what is the title of chapter 6?

Answer 1

Identifying Market Segments
and Target Customers

Question 2

Effective targeting requires that marketers:

Answer 2

1. Identify distinct groups of buyers who differ in their needs and wants (segmentation).
2. Select one or more market segments to enter (targeting).
3. For each target segment, establish, communicate, and deliver the right benefit(s) for the com-
   pany’s market offering (developing a value proposition and positioning).

Question 3

the process of identifying customers for whom the company will optimize its offer-
ing?

Answer 3

targeting

Question 4

the firm ignores segment differences and goes after the whole market with one
offer. It designs a marketing program for a product with a superior image that can be sold to the broad-
est number of buyers via mass distribution and mass communications.

Answer 4

mass marketing

Question 5

is the ability of a company to meet each customer’s requirements—to pre-
pare on a mass basis individually designed products, services, programs, and communications.

Answer 5

mass customization

Question 6

focuses on customers whose needs the company can fulfill by ensuring that
its offerings are customized to their needs

Answer 6

strategic targeting

Question 7

identifies the ways in which the company
can reach these strategically important customers

Answer 7

tactical targeting

Question 8

identifies multiple segment with different needs, allowing for better design, pricing and communication to counter competitors

Answer 8

differentiated marketing

Question 9

two principles of strategic targeting

Answer 9

target compatibility and target attractiveness

Question 10

is a reflection of the company’s ability to outdo the competition in fulfilling the
needs of target customers—in other words, to create superior customer value.

Answer 10

target compatibility

Question 11

essential resources for the success of a company’s targeting strategy include factors such as:

Answer 11

business infrastructure
access to scarce resources
skilled employees
technological expertise
strong brands
collaborator networks

Question 12

includes assets such as manufacturing infrastructure that
houses the company’s production facilities and equipment

Answer 12

business infrastructure

Question 13

gives the company a distinct competitive edge because it restricts the
strategic options of competitors

Answer 13

access to scarce resources

Question 14

with technological, operational, and business expertise—especially those
involved in research and development, education, and consulting—are prime strategic assets

Answer 14

skilled employees

Question 15

the expertise required to develop an offering that addresses a particular
customer need, includes a company’s proprietary processes, its technological processes, and its
intellectual property such as patents and trade secrets

Answer 15

technological expertise

Question 16

enhance value by conferring unique identification on the offering and generat-
ing meaningful associations that create value over and above the value created by the offering’s attributes

Answer 16

strong brands

Question 17

include vertical networks of collaborators in the company’s supply chain
(suppliers and distributors) and horizontal networks of research and development, manufacturing, and promotion collaborators that help the company create its offering and inform customers about it

Answer 17

collaborator networks

Question 18

characteristics of core competencies

Answer 18

(1) it is a source of competitive advantage and makes a significant contribution to perceived customer benefits
(2) it has applications in a wide variety of markets
(3) it is difficult for competitors to imitate

Question 19

reflects the ability of a market segment to create superior value for the company

Answer 19

target attractiveness

Question 20

target customers can create two kinds of value for a company:

Answer 20

monetary and strategic

Question 21

consists of the capability of customers to engender profits for the company

Answer 21

monetary value

Question 22

monetary value includes:

Answer 22

customer revenues
costs of serving target customers

Question 23

involve money received by the company from customers for the right to own or use its offering

Answer 23

customer revenues

Question 24

include the expense of tailoring the offering’s benefits to the needs of target customers, along with communicating and delivering the offering to them

Answer 24

costs of serving target customers

Question 25

refers to nonmonetary benefits that customers bring to the company

Answer 25

strategic value

Question 26

three main types of strategic value

Answer 26

social value scale value information value

Question 27

reflects the influence of target customers on other potential buyers

Answer 27

social value

Question 28

denotes the benefits derived from the scale of the company’s operations. The eco- nomics of its business model might lead a company to target low-margin or sometimes even unprofitable customer

Answer 28

scale value

Question 29

the worth of the information that customers provide

Answer 29

information value

Question 30

involves identifying target customers, as does strategic targeting, it has a different objective: to determine which customers to target and which to ignore, and to determine how the company’s offering can be effectively and cost-efficiently communicated and delivered to the target customers that have already been selected

Answer 30

tactical targeting

Question 31

involve demographic, geographic, behavioral, and psychographic descriptors

Answer 31

customer profile

Question 32

include age, gender, income, occupation, level of education, religion, ethnicity, nationality, employment status, population density (urban or rural), social class, household size, and stage in the life cycle

Answer 32

demographic factors

Question 33

reflect the physical location of target customers

Answer 33

geographic (geolocation) factors

Question 34

describe customers’ actions. These factors can include customers’ prior experience with the company’s offering, which can be as current customers, competitors’ customers, or new-to-the-category customers

Answer 34

behavioral factors

Question 35

involve aspects of an individual’s personality—such as attitudes, value system, interests, and lifestyle

Answer 35

psychographic factors

Question 36

An essential element of tactical targeting is ascertaining the profile characteristics of strategically important customer segments.

Answer 36

Aligning Customer Value and Customer Profile

Question 37

To effectively reach and communicate with strategically important customer segments

Answer 37

Aligning Customer Value and Customer Profile

Question 38

detailed profiles of one, or perhaps a few, hypothetical target consumers, imagined in terms of demographic, psychographic, geographic, or other descriptive attitudinal or behavioral information.

Answer 38

Personas

Question 39

the firm markets to only one particular segment

Answer 39

single-segment targeting

Question 40

As markets become more fragmented, an increasing number of companies develop offerings targeting a greater number of smaller customer segments. As their customer base becomes more diverse, these companies transition from a single offering to a product line containing offerings that fit the needs of the diverse customers it serves.

Answer 40

targeting multiple segments

Question 41

the firm sells a certain product to several different market segments

Answer 41

product specialization

Question 42

the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories.

Answer 42

market specialization

Question 43

divides a market into well-defined slices. A market segment consists of a group of consumers who share a similar set of needs and/or profile characteristics

Answer 43

market segmentation

Question 44

types of segmentation

Answer 44

demographic geographic behavioral psychographic

Question 45

One reason variables such as age, family size, family life cycle, gender, income, occupation, education, religion, race, generation, nationality, and social class are so popular with marketers is that these variables are often associated with consumer needs and wants

Answer 45

demographic segmentation

Question 46

Demographic Segmentation Variables

Answer 46

Age Stage in the Life Cycle Gender Income Race and Culture

Question 47

divides the market into geographic units such as nations, states, regions, counties, cities, or neighborhoods

Answer 47

geographic segmentation

Question 48

marketers divide buyers into groups on the basis of their actions. Many marketers believe variables related to users or their usage—user status, usage rate, buyer-readiness stage, loyalty status, and occasions—are good starting points for constructing market segments.

Answer 48

behavioral segmentation

Question 49

behavioral segmentation variables

Answer 49

user status usage rate buyer-readiness stage loyalty status occasions

Question 50

Based on their prior experience with the company’s offering, consumers can be clas- sified into nonusers, potential users, first-time users, regular users, and ex-users.

Answer 50

user status

Question 51

We can segment markets into light, medium, and heavy product users.

Answer 51

usage rate

Question 52

Some people are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy

Answer 52

buyer-readiness stage

Question 53

Based on brand loyalty status, consumers can be divided into four main segments: hard-core loyal consumers who buy only one brand all the time, split-loyal consumers who are loyal to two or three brands, shifting-loyalty consumers who move from one brand to another, and switchers who show no loyalty to any brand.

Answer 53

loyalty status

Question 54

Consumers buy a company’s products and services for different reasons. We can distinguish buyers according to the occasions when they develop a need, purchase a product, or use an offering

Answer 54

Occasions

Question 55

buyers are divided into groups on the basis of psychological traits, lifestyle, or values

Answer 55

psychographic segmentation

Question 56

same variables that we use in consumer markets

Answer 56

segmenting business markets

Question 57

common segmentation variables for business markets:

Answer 57

Demographic factors Purchasing approaches Situational factors Personal characteristics Operating variables