Chapter 6

Question 1

What is Segmentation?

Answer 1

It seeks to find one or more factors about members of a heterogeneous market that allows for dividing the market into smaller, more homogeneous subgroups for the purpose of developing different marketing strategies to best meet the segments’ distinct needs and wants

Question 2

What is the basis for segmentation?

Answer 2

1. Not all customers are alike
2. Subgroups of customers can be identified on some basis of similarity
3. The subgroups will be smaller and more homogeneous than the overall market
4. Needs and wants of a subgroup are more efficiently and effectively addressed than would be possible within the heterogeneous full market

Question 3

What is target marketing?

Answer 3

The process of evaluating market segments and deciding which among them shows the most promise for development

Question 4

What is the criteria for selecting segments as targets?

Answer 4

• segment size and growth potential
• competitive forces related to the segment
• overall strategic fit of the segment to the company’s goals and value-adding capabilities

Question 5

What are the different market coverage strategies?

Answer 5

1. Undifferentiated target marketing (very broad)
2. Differentiated target marketing
3. Concentrated target marketing
4. Customized target marketing (very narrow)

Question 6

What is positioning?

Answer 6

When the firm turns its attention to creating, communicating, delivering, and exchanging offerings that have value to the target markets.

Positioning the product so that the customer can understand its ability to fulfill their needs and wants.

Question 7

What is points of parity?

Answer 7

Associations that are not necessarily unique to the brand but may be shared by other brands i.e. where you can at least match the competitors claimed best. While POPs may usually not be the reason to choose a brand, their absence can certainly be a reason to drop a brand.

Question 8

What is Points of Difference?

Answer 8

Associations that are not necessarily unique to the brand but may be shared by other brands i.e. where you can at least match the competitors claimed best. While POPs may usually not be the reason to choose a brand, their absence can certainly be a reason to drop a brand.

Question 9

What is Perceptual Mapping?

Answer 9

It displays paired attributed in order to compare consumer perceptions of each competitor’s delivery against this attributes.

Question 10

What are CRM Programs?

Answer 10

A comprehensive business model for increasing revenues and profits by focusing on customers.

Question 11

What is the downside to CRM programs?

Answer 11

1. It seems to be mainly focused on retention of existing customers rather than on the acquisition of new ones
2. Legal aspects (e.g.: privacy) and ethical issues should be considered during its implementation
3. It may lead organizations to discriminate group of customers.

Question 12

What is a data warehouse?

Answer 12

Affords the opportunity to combine large amounts of information and then use data mining techniques to learn more about current and potential customers.

Question 13

What is data mining?

Answer 13

A sophisticated analytical approach to using the massive amounts of data accumulated through CRM systems to develop segments and micro – segments of customers for purposes of either market research or development of market segmentation and target marketing strategies.

Question 14

The three steps in target marketing are…

Answer 14

1. Analyze market segments
2. Develop profiles of each potential target market
3. Select a target marketing approach

Question 15

Objectives of CRM

Answer 15

1. Customer acquisition
2. Customer retention
3. Customer profitability

Question 16

Categorizing a customer based on Customer Lifetime Value

Answer 16

Investment in CRM yields more successful long term relationships with customers, and that these relationships pay handsomely in terms of cost savings, revenue growth, profits, referrals, and other important business success factors. You can calculate an estimate of the projected financial returns from a customer over the long run. This provides a useful strategic tool for deciding which customers deserve what levels of investment of various resources.