Chapter 4

Question 1

Process of narrowing down to target markets

Answer 1

The Generic market here is the general transportation market.

The Broad Product Market is the motorcycle market.

The Segments of this market are possible types of motorcycle riders.

Question 2

Criteria to use in selecting the target markets might include:

Answer 2

1. Market size
2. Expected growth of each market
3. Competition that exists in the market for each segment
4. Cost of reaching each segment
5. Compatibility with your company’s resources and objectives

Question 3

four bases of segmentation which can be used to segment U.S. consumer markets:

Answer 3

1. Geographic
2. Demographic
3. Psychographic
4. Behavioral

Question 4

80/20 Rule

Answer 4

is an idea that states that 80 percent of a company’s sales are obtained from 20 percent of it’s customers. This is a very useful tool that seems to relate to many types of product and services businesses. Best Buy changed its total marketing strategy after studying this concept.

Question 5

According to Engel’s Laws (created by a German statistician), three generalizations give marketers a view into common consumer behaviors. As household income increases:

Answer 5

1. A smaller percentage of expenditures is spent on food.
2. The percentage spent on housing, household operations, and clothing remains constant.
3. The percentage spent on other items, such as recreation, travel and education increases.

Question 6

Clustering

Answer 6

refers to the practice of seeking groups of customers that share common traits or behaviors that are important for marketers in that these specific characteristics or behaviors are indicators of a good match for the firm’s products.

Question 7

Customer Databases

Answer 7

are created by many companies in order to capture important demographic and behavioral data that helps them create a profile of the “perfect customer” for their products. By merging other outside databases with a company’s own, potential new customers can be identified.

Question 8

CRM

Answer 8

is an outcome of today’s focus on the customer as the driver of any business organization. Customer Relationship Management is the process of identifying existing and potential customers, attempting to understand them on every level possible, and developing long term relationships with each of them through superior customer experiences with their organization. Many companies, large and small, have committed individuals or even entire departments to the mission of building effective CRM marketing programs.

Question 9

Positioning

Answer 9

seeks to place a product in a certain position in the minds of prospective customers. The goal of this concept is to attach specific features and benefits to a company and product which differentiate it from the competitors in the market.

Question 10

The perceptual map can identify three important things:

Answer 10

1. What are the most important features/benefits a customer looks for in a product?
2. Who are the current competitors in the market and how are they perceived?
3. Does the information on the map indicate an area of potential growth for a company (i.e. no competition) or a need for a marketer to reposition its product (too much competition)?