Target Marketing and Segmentation
Demographics
grouping people in terms of personal characteristics which include age, gender, income, marital status, ethnic background, education and occupation
Market Segmentation
The process of classifying customers into categories based on certain characteristics that caused them to have similar needs and wants
Psychographics
grouping people with similar lifestyles, attitudes, interests and opinions
Target Market
A specific group of consumers, with similar characteristics, that an organization selects as the focus of its market plan
Ride Snowboard Company was founded in 1992 and is now based in Seattle, Washington. The company estimates that snowboard enthusiasts typically spend about $600 annually on gear even though they only get on the slopes about 50 days a year. However, Ride products are available in markets where the typical customer can average 30 days on the slopes using their equipment, so Ride ensures that they have store outlets near ski resorts such as Colorado, Vermont, and Utah. What type of segmentation variable does Ride utilize when selecting locations for its retail outlets?
Geographic
If a company segments its market on the basis of their reasons for purchasing a particular product, the primary segmentation variable in use is
Psychographic (motives)
Geographics
Segmentation of the market based on where people live and purchase goods and services
Segmentation variables are usually grouped into three categories:
demographic, geographic, and psychographic,
Marketers use a variety of characteristics to segment markets they are interested in pursuing. When segmenting consumer markets, demographic variables are normally used. All of the following are demographic characteristics used by marketers to segment markets except: A: hometown B: age range C: gender D: education level
A: Hometown
________ segmentation divides customers into groups according to similarities in benefits sought or product usage patterns. A) Behavioral B) Income C) Geographic D) Gender E) Educational
Correct answer: A Explanation: Behavioral segmentation divides customers into groups according to similarities in benefits sought or product usage patterns.
Demographic segmentation is best described as using characteristics of ________ to segment the market. A) human populations B) geography C) economics D) political stability E) government regulations
Correct answer: A Explanation: Demographics are the statistical characteristics of human populations such as age or income that are used to identify markets.
Segmenting markets means that a company is ________. A) dividing the market into meaningful smaller markets based upon common characteristics B) selecting the markets to attack in the marketplace C) selecting a corporate position to communicate to potential customers D) identifying and calculating the churn rate in different markets E) identifying the customers who have frequently purchased competitor's products or services
Correct answer: A Explanation: Market segmentation divides a market into meaningful smaller markets or submarkets based on common characteristics.
Age is a commonly used method of segmentation. Age alone, however, may be dangerous because ________. A) grouping older customers into one group is an approach that fails to consider the vast differences in other important variables B) chronological age and psychological age are the same C) older consumers exhibit very little differences from person to person on things such as income, mobility, and work status D) this approach ignores chronological age E) this approach presumes irregularity of consumer needs and wants by age
Correct answer: A Explanation: Marketers must take care to understand that age alone often is not sufficient for successful segmentation. Older consumers exhibit great differences from person to person on such things as income, mobility, and work status. In fact, marketing managers have come to realize that lumping older consumers into one group is not an effective segmentation approach because of the vast differences in other important variables.
An approach to segmenting consumer markets is ________ segmentation, which relies on consumer variables such as personality and AIOs (activities, interests, and opinions) to segment a market. A) occupational B) psychographic C) geographic D) educational E) gender
Correct answer: B Explanation: An approach to segmenting consumer markets is psychographic segmentation, which relies on consumer variables such as personality and AIOs (activities, interests, and opinions) to segment a market. Psychographic segmentation is sometimes also referred to as segmentation by lifestyle or values.
One of the basic principles behind segmentation is that subgroups of customers can be identified on some basis of similarity.
Correct answer: true Explanation: One of the principles behind segmentation is that subgroups of customers can be identified on some basis of similarity. It is important to note that the basic logic and principles behind segmentation are sound, regardless of the basis on which a market is segmented.
Kelly's Kids is a home-based business that sells high-quality children's clothing at premium prices using in-home parties. These in-home parties typically cater to families with small children and middle- to upper-middle-class income. Kelly's Kids is using ____ variables to segment its market.
Demographic
TimeWarner Cable uses a segmentation strategy for its cable TV packages based on market characteristics such as age, gender, or income. Which of the following segmentation variables is TimeWarner using?
Demographic
With its Venus razor, Gillette was the first marketer to offer a triple blade razor specifically designed for women. This is an example of market segmentation using ____ variables.
Demographic
Family life cycle is a psychological dimension used for segmenting markets.
False
Colgate-Palmolive markets three types of toothpaste: toothpaste with fluoride to strengthen tooth enamel, toothpaste with whitening properties, and toothpaste for sensitive gums. This is an example of _____________________.
Segmentation
Demographic segmentation is one of the most popular segmentation approaches because ________. A) it takes into account the climate of different regions. B) the needs and wants of customers remain constant based on demographic differences C) it uses easily identifiable characteristics of human populations such as lifestyle D) it is relatively easy to measure the variables used in this approach to segmentation E) the demand for all kinds of products is determined by where a person lives
Correct answer: D Explanation: Demographic segmentation is one of the most popular segmentation approaches because customer needs and wants tend to vary with some degree of regularity based on demographic differences and because of the relative ease of measurement of the variables.
Advertisements with messages like "Orange juice—It's not just for breakfast anymore!" or "Soup can be a delicious way to start a cold winter's day" are using ________ segmentation. A) benefits sought B) lifestyle C) psychographic D) usage patterns E) geographic
Correct answer: D Explanation: Segmentation by usage patterns includes usage occasions, usage rate, and user status. Occasions means specifically when the product is used. Many of consumer purchases are driven by an occasion, and marketers are very savvy at playing to consumers' desires to use occasions as a reason to buy.
Approaches to geographic segmentation include all of these EXCEPT ________. A) region B) density of population C) size of population D) gender of population E) climate
Correct answer: D Explanation: Within the United States, some of the popular approaches to geographic segmentation include: by region, by density population, by size of population, by growth of population, and by climate.
The region, the density of the population, and the size of the population are various approaches to use in ________. A) positioning B) differentiation C) democratic segmentation D) population parameter estimation E) geographic segmentation
Correct answer: E Explanation: Within the United States, some of the popular approaches to geographic segmentation include: by region, by density population, by size of population, by growth of population, and by climate.
One of the most straightforward and popular methods of segmentation is demographic.
Correct answer: true Explanation: Demographic segmentation is one of the most popular segmentation approaches because customer needs and wants tend to vary with some degree of regularity based on demographic differences and because of the relative ease of measurement of the variables.
Family and household segmentation has become more complex due to a variety of differing family arrangements.
Correct answer: true Explanation: In years past, the concepts of family and household were fairly easy for marketers to define—a married man and woman, likely with children, and sometimes with other relatives such as a grandparent who had moved back in. Now, family and household segmentation can be more complex because of all kinds of different family arrangements.
Which of the following statements is TRUE of geographic segmentation? A) It divides consumer groups based on a variety of readily measurable descriptive factors about the group. B) In most instances, it is an insufficient criterion in and of itself. C) It does not consider climate while segmenting markets. D) It does not consider the size of population while segmenting markets. E) It is useful because the demand for all kinds of products is determined by where a person lives.
Correct answer: B Explanation: Geographic segmentation is useful but, in most instances, is an insufficient segmentation criterion in and of itself. Because people in the United States are extremely mobile and because the demand for many products is not determined by where a person lives, additional types of segmentation are needed to successfully target customers.
Target marketing is the process by which ________. A) the market is divided into cohesive groups B) a company evaluates market segments and decides which ones have the most potential for development C) a company chooses which advertising strategy to use D) the customer groups are evaluated on the basis of high or low churn to see which is the most profitable E) a company collects cookies to track everyone who visits its website
Correct answer: B Explanation: Once a segmentation approach is developed, marketing managers engage in target marketing, which involves evaluating the segments and deciding which shows the most promise for development.
_______ segmentation is sometimes referred to as segmentation by lifestyle or values. A) Occupational B) Psychographic C) Geographic D) Educational E) G ender
Correct answer: B Explanation: Psychographic segmentation is sometimes referred to as segmentation by lifestyle or values.
When a retail chain sells winter coats, it sends them to different stores at different times of the year. Which of the following approaches to geographic segmentation in the United States does this scenario exemplify? A) by region B) by climate C) by size of population D) by growth in population E) by density of population
Correct answer: B Explanation: This is an example of the geographic segmentation by climate. Target, a reputed winter apparel seller, for example, segments its target market by geographic climate. Starting in early September, Target begins marketing winter coats in its Minneapolis-area stores, an activity that won't begin until much later in Houston, where customers are still expecting several more months of 80 to 90 degrees. The chain's South Florida stores might never even stock traditional cold-weather apparel except in small quantities for travelers. Target wisely recognizes different customer needs across different climates and builds its marketing plans accordingly.
Which of the following would NOT be a good product for using gender segmentation? A) Nail polish B) Perfume C) Toothpaste D) Cigars E) Pregnancy tests
Correct answer: C Explanation: A wide variety of products are clearly marketed for the primary consumption of either men or women, but not both—think Rogaine, cigars, and athletic supporters versus pregnancy tests, lipstick, and bras, for example.
The razor is an example of a product that appeals to both men and women, but companies figured out that ________. A) the same product class cannot be used to attack different gender markets B) grooming equipment may be needed by men but certainly not by women C) there are different needs and wants for the same product category among different genders D) markets should not be segmented based on gender E) all products are clearly marketed for the primary consumption of both men and women
Correct answer: C Explanation: Gillette learned some years ago that generally, women don't like to use a man's razor, which they had to do for decades because no thought was given to differences in gender usage preference. Research in the 1980s revealed that most women viewed men's razors as too bulky, with too many bells and whistles, and not feminine in color or design.
Which of the following is one of the basic principles behind segmentation? A) All customers are alike. B) Subgroups of customers are not similar. C) Subgroups will be smaller and more homogeneous than the overall market. D) Members of a heterogeneous market cannot allow for dividing the market into subgroups. E) In an undifferentiated market, each person has unique needs and wants.
Correct answer: C Explanation: One of the basic principles behind segmentation is that the subgroups will be smaller and more homogeneous than the overall market.
Marketers use geographic segmentation when ________. A) certain geographic regions have more diverse populations B) geography determines one's likes and dislikes C) there is evidence that consumers respond differently to marketing strategies and programs based on where they live D) there is a strong demand for the products and services of the company in some geographic regions E) people in some regions are richer than people in other regions
Correct answer: C Explanation: One of the most straightforward approaches to segmentation is when evidence exists that consumers respond differently to marketing strategies and programs based on where they live. Thus, geographic segmentation divides consumer groups based on physical location.