MKT 702 Study Guide - Midterm Guide: Target Costing, Vending Machine, Mass Customization

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Midterm 2 review
Chapter 8 pg.242
A market segment consists of a group of customers who share a similar set of needs and wants.
Effective Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Actionable
A flexible market offering consists of two parts: a naked solution containing the product and service
elements that all segment members value, and discretionary options that some segment members value.
Homogeneous preferences exist when all consumers have roughly the same preferences
Consumers in diffused preferences vary greatly in their preferences.
Clustered preferences result when natural market segments emerge from groups of consumers with
shared preferences
Two Main Market Segments
Consumer markets
Business markets
Forms of Market Segmentation
1. Mass Marketing
Rarely seen today
o Competitiveness of the market
o Need to specifically address consumer needs
2. Segment Marketing
Most common form of segmentation
3. Niche Marketing
Concentrate on a smaller area to be successful
4. Individualized Marketing
Through the use of sophisticated tracking and statistical models, behaviour is predicted
Individual offers are developed
5. Local Marketing
Market Segmentation - Key to success: Balance + satisfy customer needs = profitability
Customerization combines operationally driven mass customization with customized marketing in a way
that empowers consumers to design the product and service offering of their choice.
Segmenting Consumer Markets
Geographic
Demographic
o Age and life cycle
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o Life stage
o Gender
o Income
o Generation
o Social class
Psychographic
Behavioural
Age cohort: a group of consumers of the same approximate age who have similar experiences
Perceived Age: You’re Only as Old as You Feel
Chronological Age: Actual number of years lived
Gerontographics: segmentation approach that divides the mature market by level of physical well-being
and social conditions (U.S. data)
Acculturation - Process of movement and adaptation to one country’s cultural environment by a person
from another country
Five phases of adjustment:
Honeymoon
Culture shock
Superficial adjustment
Stress and depression
Integration
Loyalty Status
Hard-core
Split loyals
Shifting loyals
Switchers
Segmenting for Business Markets
Demographic
Operating variable
Purchasing approaches
Situational factors
Personal characteristics
Steps in Segmentation Process
Need-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Market mix strategy
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Megamarketing is the strategic coordination of economic, psychological, political, and public relations
skills, to gain the cooperation of a number of parties in order to enter or operate in a given market.
1. In _____ marketing, the seller engages in the production, distribution, and promotion of one
product for all buyers.
a. mass
2. A _____ is a more narrowly defined customer group seeking a distinctive mix of benefits.
a. niche
3. _____ marketing reflects a growing trend called grassroots marketing.
a. Local
4. _____ combines operationally driven mass customization with customized marketing in a way
that empowers consumers to design the product and service offering of their choice.
a. Customerization
5. _____ segmentation calls for dividing the market into groups based on age, family, size, family
life cycle, gender, income, etc.
a. Demographic
6. In _____ segmentation, buyers are divided into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product.
a. behavioral
7. A _____ is a set of segments sharing some exploitable similarity.
a. supersegment
8. In _____ specialization a firm selects a number of segments, each objectively attractive and
appropriate.
a. selective
9. With ________ the firms makes a certain product that it sells to several different market
segments.
a. product specialization
10. A company uses _____ invasion plans to enter one segment at a time.
a. segment-by-segment
11. Some companies claim that mass marketing is dying and are turning to micromarketing.
a. True
12. A target market consists of a group of customers who share a similar set of needs and wants.
a. False
13. Homogeneous preferences show a market with distinct preference clusters called natural
market segments.
a. False
14. The ultimate level of segmentation leads to "segments of one."
a. True
15. Psychographics is the science of using psychology and demographics to better understand
consumers.
a. True
16. The VALS technique bases segments on consumer motivation and consumer resources.
a. True
17. In differentiated marketing, the firm operates in several market segments and designs the same
product for each segment.
a. False (different product for each segment.)
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