chapter 6

Question 1

What is the target market selection process? (5 steps)

Answer 1

1. Identify appropriate stradegy
2. Determine which segmentation variables to use
3. Develop market segment profiles
4. Evaluate relevant market segments
5. Select specific target markets

Question 2

What are the 3 targeting strategies?

Answer 2

• Undifferentiated (entire market)
• Concentrated (single market segments)
• Differentiated (two or more segments)

Question 3

Homogeneous market v.s. Heterogeneous market

Answer 3

Large proportion of customers have similar needs for a product v.s. customers have diverse needs for a product

Question 4

What is market segmentation?

Answer 4

Process of dividing a total market into groups of people with relatively similar product needs

Question 5

What are segmentation variables?

Answer 5

Characteristics of individuals, groups, or organizations used to divide a market into segments

Question 6

What are the 4 segmentation variable groups?

Answer 6

1. Demographic (age, gender, income, occupation, race, etc.)
2. Geographic (region, city size, climate, etc.)
3. Psychographic (personality attributes, motives, lifestyles)
4. Behavioristic (volume usage, benefit expectations, brand loyalty, etc.)

Question 7

What is market density?

Answer 7

Number of potential customers within an area

Question 8

What is micromarketing?

Answer 8

Way of segmenting a market that focuses specific marketing efforts on tiny geographic markets (ex. communities + neighborhoods)

Question 9

What are the variables for segmenting business markets?

Answer 9

1. Geographic location
2. Type of organization
3. Customer size
4. Product use

Question 10

What is market potential?

Answer 10

Total amount of a product that customers will purchase within a specified period

(specific level of industry-wide marketing activity)

Question 11

What is company sales potential?

Answer 11

Maximum percentage of a market that a firm within an industry can expect to get for a product

Question 12

What are the 2 approaches that measure company sales potential?

Answer 12

1. Breakdown approach - based on general economic forecast for a specific period
2. Buildup approach - estimate of how much product a buyer in a specific area will purchase (X) number of potential buyers (+) total of all areas considered

Question 13

What are the factors that affect costs?

Answer 13

• Distinctive product features
• Attractive package design
• Generous product warranties
• Extensive advertising
• Attractive promotional offers
• Competitive prices
• High-quality personal service

Question 14

What is a sales forecast?

Answer 14

Amount of a product a company expects to sell during a specific period

Question 15

What are the 5 forecasting technique categories?

Answer 15

1. Executive judgment
2. Surveys
3. Time series analysis
4. Regression analysis
5. Market tests

Question 16

What is executive judgment? (forecasting technique)

Answer 16

method based on intuition of one or more executives

Question 17

What are the 4 survey forecasting techniques?

Answer 17

1. Customer forecasting survey - survey of customers about types/quantities of products
2. Sales force forecasting survey - survey of firms sales force about predicted sales in specific areas
3. Expert forecasting survey - forecasts prepared by experts outside the firm (economists, advertising executives, etc.)
4. Delphi technique - procedure when experts create initial forecasts, submit them to company, then refine the forecasts

Question 18

What is time series analysis, and what are the 4 types? (forecasting technique)

Answer 18

method that uses historical sales data to find patterns in firms sales

1. Trend analysis
2. Cycle analysis
3. Seasonal analysis
4. Random factor analysis

Question 19

What is regression analysis? (forecasting technique)

Answer 19

method of predicting sales based on finding relationship between past sales and one or more independent variables