CH06: Market Segments and Target Customers

Question 1

targeting

Answer 1

the process of identifying customers for whom the company will optimize its offering

Question 2

mass marketing

Answer 2

go after the whole market; ignore segment differences; largest potential impact with lowest cost, but lowest average effectiveness

Question 3

targeted marketing

Answer 3

sell different products to all the different segments of the market

Question 4

one-to-one marketing

Answer 4

ultimate level of targeting; the target market consists of a single customer (e.g. fully custom)

Question 5

mass customization

Answer 5

semi-customized offerings within a range (e.g. car specs, NikeID, Subway sandwiches, Starbucks drinks); preparing individually designed products on a mass basis

Question 6

strategic marketing

Answer 6

focusing on customers whose needs the company can fulfill by ensuring that its offerings are customized to their needs; deliberately reaching a specific target market

Question 7

target compatibility

Answer 7

whether the company can create superior value for the target customers; hinges on compatibility of company resources

Question 8

target attractiveness

Answer 8

whether the target customers can create superior value for the company (e.g. are these customers worth targeting)

Question 9

the 6 factors of target compatibility

Answer 9

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

Question 10

core competency

Answer 10

• competitive advantage
• wide applications
• difficult to imitate

Question 11

the 2 types of value related to target attractiveness

Answer 11

• monetary value (revenues from customers minus costs of serving customers)
• strategic value (social value (networks), scale value (economies of scale), information value (data))

Question 12

tactical targeting

Answer 12

how the company can reach all important customers effectively and cost efficiently (nuts and bolts of marketing campaign)

Question 13

the 4 factors of a customer profile

Answer 13

• demographic (who they are)
• geographic (where they are)
• behavioral (what they do)
• psychographic (values, sexual orientation, etc.)

Question 14

personas

Answer 14

detailed profiles of hypothetical target customers (including all types of factors related to customer profiles)

Question 15

single segment targeting

Answer 15

niche marketing; starting with a single offering aimed at a specific target market and achieving wider customer adoption over time

Question 16

product specialization

Answer 16

the firm sells a certain product to several different market segments (e.g. Hallmark sells all sorts of greeting cards)

Question 17

market specialization

Answer 17

the firm concentrates on a specific buyer group (e.g. industrial supply company that only sells to university labs)

Question 18

market segmentation

Answer 18

dividing the market into well-defined slices; each group of customers shares a similar set of needs and/or profile characteristics

Question 19

demographic segmentation

Answer 19

• age
• life-cycle stage
• gender
• income
• race/culture

Question 20

geographic segmentation

Answer 20

based on location; nations, states, regions, cities, etc.; can be combined with demographic data

Question 21

behavioral segmentation

Answer 21

• user status
• usage rate
• buyer-readiness stage
• loyalty status
• occasions

Question 22

psychographic segmentation

Answer 22

grouping customers based on psychological traits, lifestyle, values (e.g. Subaru subtle messaging towards lesbians)

Question 23

business market segmentation factors

Answer 23

• demographic (“firmographic”)
• operating variables
• purchasing approaches
• situational factors
• personal characteristics

Question 24

firmographic segmentation

Answer 24

• industry
• business size
• location

Question 25

operating variable segmentation

Answer 25

• technology
• user/nonuser
• customer capabilities (do they need many or a few services)

Question 26

purchasing approach segmentation

Answer 26

• buying org type
• power structure
• nature of existing relationship
• general purchasing policies (leasing, service contract, systems buying, sealed bids, etc.)
• purchasing criteria (price, quality, service, etc.)

Question 27

situational factor segmentation

Answer 27

• urgency
• specific application
• size of order

Question 28

personal characteristics for businesses

Answer 28

• buyer-seller similarity
• attitude towards risk
• loyalty