Chapter 2: MP #1 Flashcards

1
Q

5 sources of Heterogeneity

A

Individual differences
Life experiences
Functional needs
Self-identity/image
Marketing activities

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2
Q

Individual differences

A

a person’s stable and consistent way of responding to the environment in a specific domain

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3
Q

life experiences

A

events and experiences unique to the person’s life that have a lasting impact on the value/preferences

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4
Q

functional needs

A

personal decisions weightings across functional attributes based on personal circumstances

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5
Q

self-identity

A

customers actively seek products that they believe will support/promote their desired self-image

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6
Q

marketing activities

A

firms’ attempts to build linkages between their brands and prototypical identities/meanings

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7
Q

latent heterogeneity

A

potential differences in desires that are unobserved and have not become manifest in customer purchase preferences/behaviour

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8
Q

factor analysis

A

data reduction technique that can be used to identify a small number of latent “factors” that explain the major variation in a large number of observed variables

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9
Q

When to use factor analysis?

A
  • to condense large pool of potential needs/wants/preferences into a short set of similar characteristics
  • to reduce high correlation among predictors
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10
Q

Cluster analysis

A

data-driven partitioning technique that can identify and classify a large set of heterogeneous consumers/companies into a small number of homogenous subjects

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11
Q

When to use cluster analysis

A

demystify heterogeneity to understand similar preferences
discover how customers naturally differ and cater to unique needs of chosen target customer sements

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12
Q

Steps of Cluster Analysis

A
  1. Segment
  2. Target
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13
Q

Six criteria a target segment should meet:

A
  1. based on customer needs
  2. different than other segments
  3. firm can execute targeting with resource constraints
  4. sustainable
  5. identifiable
  6. financially valuable
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14
Q

What do you use to help visualize target segments?

A

GE matrix

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