Chapter 5 Flashcards
Learning Objective 5-1
Define what markets are and explain how they are generally classified.
a group of individuals and/or organizations that have a desire or needs for products in a product class and have the ability, willingness, and authority to purchase those products.
consumer market
Purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make profits or serve an organizational need
business market
Individuals or groups that purchase a specific kind of product for resale, direct use in producing other products, or use in general daily operations
Learning Objective 5-2
List the five steps of the target market selection process.
Step 1: Identify the Appropriate Targeting Strategy
Step 2: Determine Which Segmentation Variables to Use
Step 3: Develop Market Segment Profiles
Step 4: Evaluate Relevant Market Segments
Step 5: Select Specific Target Markets
Learning Objective 5-3
Compare three targeting strategies.
- Undifferentiated Targeting Strategy
- Concentrated Targeting Strategy through Market Segmentation
- Differentiated Targeting Strategy through Market Segmentation
undifferentiated targeting strategy
A strategy in which an organization designs a single marketing mix and directs it at the entire market for a particular product
homogeneous market
A market in which a large proportion of customers have similar needs for a product
heterogeneous market
A market made up of individuals or organizations with diverse needs for products in a specific product class
Market segmentation
The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs
market segment
Individuals, groups, or organizations sharing one or more similar characteristics that cause them to have similar product needs
concentrated targeting strategy
A market segmentation strategy in which an organization targets a single market segment using one marketing mix
differentiated targeting strategy
A strategy in which an organization targets two or more segments by developing a marketing mix for each segment
Segmentation variables
Characteristics of individuals, groups, or organizations used to divide a market into segments
Learning Objective 5-4
Identify the major segmentation variables.
Consumer:
- Demographic Variables
- Geographic Variables
- Psychographic Variables
- Behavioristic Variables
Business:
- Geographic Location
- Type of Organization
- Customer Size
- Product Use
Market density
The number of potential customers within a unit of land area
Geodemographic segmentation
A method of market segmentation that clusters people in zip code areas and smaller neighborhood units based on lifestyle and demographic information
Micromarketing
An approach to market segmentation in which organizations focus precise marketing efforts on very small geographic markets
Benefit segmentation
The division of a market according to benefits that consumers want from the product
Learning Objective 5-5
Explain what market segment profiles are and how they are used.
A market segment profile describes the similarities among potential customers within a segment and explains the differences among people and organizations in different segments. Marketers use market segment profiles to assess the degree to which their products fit potential customers’ product needs.
Learning Objective 5-6
Describe how to evaluate market segments.
- Sales Estimates
- Competitive Assessment
- Cost Estimates
Market potential
The total amount of a product that customers will purchase within a specified period at a specific level of industry-wide marketing activity
Company sales potential
The maximum percentage of a market that an individual firm within an industry can expect to obtain for a specific product
breakdown approach
Measuring company sales potential based on a general economic forecast for a specific period and the market potential derived from it
buildup approach
Measuring company sales potential by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period, multiplying the estimate by the number of potential buyers, and adding the totals of all the geographic areas considered
Learning Objective 5-7
Identify the factors that influence the selection of specific market segments for use as target markets.
the firm’s management must investigate whether the organization has sufficient financial resources, managerial skills, employee expertise, and facilities to compete effectively in the selected segments. The firm must also consider the possibility that the requirements of some market segments are at odds with the firm’s overall objectives, and that possible legal problems, conflicts with interest groups, and technological advancements will render certain segments unattractive. Finally, marketers must consider long-term versus short-term growth.
Learning Objective 5-8
Discuss sales forecasting methods.
- Executive Judgment
- Surveys
- Time Series Analysis
- Regression Analysis
- Market Tests
- Using Multiple Forecasting Methods
sales forecast
The amount of a product a company expects to sell during a specific period at a specified level of marketing activities
Executive judgment
A sales forecasting method based on the intuition of one or more executives
customer forecasting survey
A survey of customers regarding the types and quantities of products they intend to buy during a specific period
sales force forecasting survey
A survey of a firm’s sales force regarding anticipated sales in their territories for a specified period
expert forecasting survey
Sales forecasts prepared by experts outside the firm, such as economists, management consultants, advertising executives, or college professors
Delphi technique
A procedure in which experts create initial forecasts, submit them to the company for averaging, and then refine the forecasts
time series analysis
A forecasting method that uses historical sales data to discover patterns in the firm’s sales over time and generally involves trend, cycle, seasonal, and random factor analyses
Trend analysis
An analysis that focuses on aggregate sales data over a period of many years to determine general trends in annual sales
cycle analysis
An analysis of sales figures for a three- to five-year period to ascertain whether sales fluctuate in a consistent, periodic manner
seasonal analysis
An analysis of daily, weekly, or monthly sales figures to evaluate the degree to which seasonal factors influence sales
random factor analysis
An analysis attempting to attribute erratic sales variations to random, nonrecurrent events
regression analysis
A method of predicting sales based on finding a relationship between past sales and one or more independent variables, such as population or income
market test
Making a product available to buyers in one or more test areas and measuring purchases and consumer responses to marketing efforts
