Market Segmentation Overview

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Questions and Answers

What is the main goal of positioning in marketing?

To break the heterogeneous market into homogeneous segments. (correct)

To maximize sales across all market segments.

To create products that appeal to a single customer.

To persuade all potential customers to buy the product.

Why is it important for positioning statements to highlight unique and meaningful benefits?

To focus solely on features rather than benefits.

To lower the price point of the product in the market.

To help the target market perceive the product positively. (correct)

To ensure that all competitors describe their offerings similarly.

What should marketers consider when choosing which market segments to target?

The number of competitors in each segment.

The preferences of existing customers only.

The historical sales of similar products.

The cost of reaching, marketing to, and serving the segment. (correct)

What is cannibalization in the context of product marketing?

When a new product reduces sales of existing products. Signup and view all the answers

How is the '80/20 Rule' related to market segmentation in marketing?

It highlights that 20% of customers often account for 80% of a company's profits. Signup and view all the answers

Which statement accurately describes the concept of a market?

A small group of customers that have similar needs, wants, and expectations for a given product. Signup and view all the answers

What is the purpose of market segmentation?

To have members of the target market perceive unique benefits of a product. Signup and view all the answers

Which statement is true regarding the sequence of segmentation, targeting, and positioning?

Segmentation should occur before targeting. Signup and view all the answers

Which statement best explains the concept of customer lifetime value?

It measures the total revenue a marketer expects from a customer throughout their relationship. Signup and view all the answers

Which scenario illustrates effective positioning of a product?

Positioning a product based on its unique attributes to fill a market gap. Signup and view all the answers

What is an incorrect statement about targeting market segments?

Marketers should target every segment available to maximize reach. Signup and view all the answers

Which statement is false regarding perceptual maps?

Perceptual maps are most effective for segmenting markets based on demographics. Signup and view all the answers

What is an erroneous assumption about positioning products?

Head-to-head positioning is unnecessary for competitive markets. Signup and view all the answers

Which statement about market segmentation is true?

Segmentation should aim for homogeneous needs within each segment. Signup and view all the answers

Which factor is considered a demographic variable for market segmentation?

Occupation and income level Signup and view all the answers

What is a primary reason for dividing markets into segments?

To accommodate the highly heterogeneous nature of buyer needs. Signup and view all the answers

Which option best describes an incorrect approach to market segmentation?

Segmenting markets to have dissimilar needs within each group. Signup and view all the answers

Which statement about psychographic factors in segmentation is false?

They solely focus on demographics such as age and income. Signup and view all the answers

What should a marketer strive for when segmenting a market?

Homogeneity within segments based on similar needs. Signup and view all the answers

Which is a true statement regarding B2B and consumer market segmentation?

Psychographic factors are less significant in B2B segmentation. Signup and view all the answers

What is an essential characteristic of effective market segments?

Segments should cater to buyers with similar expectations. Signup and view all the answers

Study Notes

Market Segmentation

Demographic factors are not always the best way to segment consumer markets.
Psychographic/lifestyle factors are not always the best way to segment consumer markets.
Psychographic/lifestyle factors are more applicable to segmenting consumer markets than B2B/Organizational markets.
The best variable to segment a market is the one that most accounts for the heterogeneity of buyer needs, wants, and expectations.
Demographic factors used to segment markets include age, income, occupation, marital status, and socioeconomic status.
Demographic factors are less effectively used to segment B2B markets than consumer markets.
Markets should be segmented so that potential buyers within each segment have similar needs, wants, and expectations.
Segmentation is necessary because markets tend to be highly heterogeneous in terms of buyer needs, wants, and expectations.
An initial goal of market segmentation is to break the heterogeneous market into homogeneous segments.
Marketers need to produce multiple different products for members of a market segment that have highly homogenous needs, wants, and expectations for the product.
A market is best defined as a group of customers that have similar needs, wants, and expectations for a given product.
The “target market” for a product is the segment (or segments) of the market that the marketers focuses on with its marketing strategy.
Marketers should target more than one segment of the market.
The best segment to target is not necessarily the one with the highest sales/revenue potential.
Segmentation should occur before targeting.
Targeting should take place before positioning.
Positioning should not be done before market segmentation.

Positioning

The main goal of positioning is to have members of the target market perceive your product to possess and deliver unique and meaningful benefits to them.
The concept of “positioning” suggests that a relatively small number of high usage rate consumers account for a disproportionately large percentage of overall product purchases and consumption of most products.
"Customer lifetime value" suggests that customers should be viewed in terms of their potential financial value over the course of the relationship with the marketer rather than on a one-time transactional basis.
“Perceptual maps” are most typically used to position or re-position products.
Products should be positioned in “head-to-head” fashion.
The highest “customer lifetime value” will be seen with high usage rate customers that are loyal to the marketer for long periods of time.
The main goal of POSITIONING IS NOT to break the heterogeneous market into homogeneous segments.
Positioning statements should be formulated to have members of the target market perceive your product to possess and deliver unique and meaningful benefits to them.

Target Market

A marketer should consider the cost of reaching, marketing to, and serving the people or organizations in a given segment when choosing a target market.
A marketer should consider the level of competition faced or high cost of serving a large, high usage rate segment of the market.
Marketers should not engage in segmentation and targeting with the goal of "cannibalizing" sales of existing products.
"Cannibalization" occurs when sales for a new product designed to cater to a new customer segment instead more significantly takes sales away from existing products.
The main goal of "positioning” is NOT to convince all members of the market that they have highly similar needs, wants, and expectations.
The concept of "customer lifetime value" is consistent with the practice of relationship marketing.
The "80/20 Rule" is closely related to the segmentation variable of "usage rate".

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Description

This quiz covers the key concepts of market segmentation, focusing on demographic and psychographic factors. It discusses their effectiveness in both consumer and B2B markets and highlights the importance of understanding buyer needs and expectations. Test your knowledge on how to effectively segment markets for better targeting.