Market Definition & Segmentation Concepts

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Questions and Answers

What is the primary goal of clustering in the context of customer segmentation?

To randomly assign customers to different market segments.

To group customers based on demographic information only.

To group customers into homogeneous segments based on shared characteristics. (correct)

To create diverse groups of customers with varying preferences.

Which of the following best describes the role of a CRM system in marketing?

To use broad marketing strategies that targets all customers with a blanket approach.

To fine-tune marketing efforts based on detailed customer information. (correct)

To manage the budget for the marketing department only, without any impact on sales.

To limit the number of potential customers by focusing only on the loyal ones.

When might a company consider repositioning one of its products?

When customer perception of a product is aligned with the company's intended image.

When sales consistently exceed expectations for an identical period.

When physical changes to the production process are not feasible.

When competing products in the market appear very similar in customers' eyes. (correct)

What is the core focus of positioning in marketing?

How customers perceive and think about brands in a market. Signup and view all the answers

What key elements would be included in a positioning statement for a new product?

The target market description, product type, primary benefits, and differentiation from competitors. Signup and view all the answers

What is the primary challenge in defining a generic market?

The wide variety of product types competing to satisfy similar needs. Signup and view all the answers

What is the key difference between a generic market and a product-market?

Generic markets have diverse customer needs, while product-markets have very specific needs. Signup and view all the answers

When defining a customer type, what should marketers prioritize?

Identifying the final consumer or user of the product. Signup and view all the answers

What does the process of 'segmenting' mean to marketing-oriented managers?

Aggregating individual customers into clusters with similar needs. Signup and view all the answers

Which of these is NOT a characteristic of a 'good' market segment?

It includes the personality of buyers. Signup and view all the answers

What strategy is Gloria following if her company focuses on only one homogeneous segment?

Single target market approach. Signup and view all the answers

What is the core idea behind the multiple target market approach?

Treating two or more segments as separate target markets with different marketing mixes. Signup and view all the answers

Which company example illustrates the use of a multiple target market approach?

Procter & Gamble, due to its various products and brands. Signup and view all the answers

What is the primary goal of a combiner in target market selection?

To identify similarities across different submarkets. Signup and view all the answers

Which of the following is a significant risk faced by combiners?

Vulnerability to competition from other marketing strategies. Signup and view all the answers

Why is cost reduction usually more of a consideration for combiners than for segmenters?

Combiners often achieve economies of scale. Signup and view all the answers

Which of the following is NOT considered a geographic segmentation dimension?

Customer persona type. Signup and view all the answers

What is the primary purpose of a buyer persona in marketing?

To help develop empathy for target customers across an organization. Signup and view all the answers

What concern arises when firms move into international markets, regarding information?

Critical data is frequently less available and less dependable Signup and view all the answers

What is the function of a market grid in the process of market segmentation?

To visualize the broad product market along with smaller, homogenous segments. Signup and view all the answers

During which step of market segmentation is demographic data used to estimate the size of product markets?

Step 6. Signup and view all the answers

Study Notes

Market Definition

A market is a group of potential customers with similar needs, willing to exchange value with sellers.
A generic market has broadly similar needs but diverse ways to satisfy them.
A product-market has similar needs and sellers offering close substitutes.
Customer type refers to the final consumer or user of the product, distinct from the buyer.
Marketers should disaggregate (break down) all potential needs into generic markets & product-markets for profitable operation.

Market Segmentation

Marketing-oriented managers approach segmentation as aggregating individuals with similar needs into workable market segments.
A "good" market segment must be operational and demonstrably distinct.
Common segmentation dimensions include demographics (age, sex, income, location, family size), but not personality.

Target Market Approaches

Single-target market approach: Select one specific homogeneous segment as the target market.
This strategy entails segmenting the market, and then selecting one target segment to reach with the firm's marketing efforts.
Multiple-target market approach: Segment the market, identify multiple target segments, and develop different marketing mixes for each segment. This approach is used by firms serving diverse needs. (e.g., Proctor & Gamble)

Market Combining

Combiners target markets by identifying similarities rather than differences among submarkets.
This strategy reduces marketing mix complexity and decreases investment required.
Combining is often preferred when cost savings from economies of scale are possible.

Buyer Personas

Buyer personas are fictional representations of target customers, used across differing organizational functions to understand customers' needs.
They improve empathy and understanding of customer perspectives.

CRM for Segmentation

Customer Relationship Management (CRM) systems store extensive customer information.
This allows fine-tuning of marketing efforts based on insights from customer purchase behavior and other data.

Product Positioning

Positioning concerns how customers perceive products in the marketplace and their relationships to competing brands.
Understanding customer perceptions is key for positioning strategies.
A positioning statement includes explicit aspects of a new product and how it differs from competitors.

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Description

This quiz explores the definitions of markets, market segmentation, and target market approaches, focusing on how marketers identify and categorize customers based on similar needs. Gain knowledge on distinguishing between generic and product-markets, as well as the characteristics of effective market segments.