Chapter 9

Question 1

What are market segments?

Answer 1

The relatively homogenous groups of prospective buyers that result from the market segmentation process

Question 2

What does each market segment consist of?

Answer 2

People who are relatively similar to each other in terms of consumption behaviour

Question 3

What are product differentiation?

Answer 3

Strategy that involves a firm using different marketing mix activities, such as product features and advertising to help consumers perceive the product different from and better than competing products

Question 4

What is a market product grid?

Answer 4

A framework to relate the market segments of potential buyers to products offered or potential marketing actions by the firm

Question 5

When should you NOT segment markets?

Answer 5

When expenses are greater than the potentially increased sales from segmentation a firm should not attempt to segment its markets

Question 6

What are the 3 specific situations that illustrate effective market segmentation?

Answer 6

1. One product and multiple market segments
2. Multiple products and multiple market segments
3. Segments of one: mass customization

Question 7

What is cannibalization?

Answer 7

When the introduction of a product steals sales from existing products within the same organization

Question 8

What are the steps in the marketing segmentation process?

Answer 8

1. Group potential buyers into a segment
2. Group products to be sold into categories
3. Develop a market product grid and estimate size of markets
4. Select target markets
5. Target marketing actions to reach target markets

Question 9

What are the 5 criteria for a marketing manager to develop a market segment?

Answer 9

1. Potential for increased profit
2. Similarity of needs of potential buyers within a segment
3. Difference of needs of buyers among segments
4. Potential of a marketing action to reach a segment
5. Simplicity and cost of assigning potential buyers to segments

Question 10

What are the ways to segment markets?

Answer 10

1. Geographic segmentation: a marketer segments based on where the consumer lives
2. Demographic segmentation: this approach segments consumers by age, gender, income, education and occupation
3. Psychographic segmentation: segments according to personality or lifestyle
4. Behavioural segmentation: use consumers behaviour to divide the market

Question 11

What are the 5 criteria in selecting target segments?

Answer 11

1. Market size
2. Expected growth
3. Competitive positioning
4. Cost of reaching the segment
5. Compatibility with the organization objectives and resources

Question 12

What is product positioning?

Answer 12

The place an offering occupies in consumers minds on important attributes relative to competitive products

Question 13

What is product repositioning?

Answer 13

Changing the place an offering occupies in a consumer’s mind relative to competitive products

Question 14

What are the 2 approaches to product positioning?

Answer 14

1. Head to head positioning: involves competing directly with competitors on similar product attributes in the same target market
2. Differentiation positioning: involves seeking a less competitive, smaller market niches in which to locate a brand, usually stressing the unique aspect of the product

Question 15

What are perceptual maps?

Answer 15

A means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own and then taking marketing actions

Question 16

What is market (industry) potential?

Answer 16

The maximum total sales of a product by all firms to a segment during a specified time period under specific environmental conditions and marketing efforts of the firms