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Lesson 24 market segmentation

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    Lesson 24 market segmentation Lesson 24 market segmentation Document Transcript

    • Marketing Management Unit 2 Scanning Marketing Opportunities Chapter 8 - Market Segmentation Lesson 24 - Bases for Segmenting And Market TargetingBases for segmenting and market targetingIntroduction:When we divide any class or any subject, it is done on certain grounds. The base is created afterconsidering the various fields and the characteristics of the students, merit, and so on. Similarlymarket segmentation is done on certain consistency that exists within the group. So in this lesson weare going to study the basis, a marketer uses to segment the consumer market.ANALYZING CONSUMER DEMANDDETERMINING DEMAND PATTERNSA. Demand patterns indicate the uniformity or diversity of consumer needs and desires for particularcategories of goods and services. A firm would face one of three demand patterns, as mentionedbelow, and shown in the figure.1. Homogeneous demand is when consumers have relatively uniform needs and desires for a good orservice category.2. With clustered demand, consumer needs and desires for a good or service category can be classi-fied into two or more clusters, each with different purchase criteria.3. With diffused demand, consumer needs and desires are so diverse that clear clusters cannot beidentified. A firm’s marketing tasks are more difficult because product differentiation is more costlyand harder to communicate.16.101G © Copy Right : Rai University 203
    • Marketing ManagementESTABLISHING POSSIBLE BASES FOR SEGMENTINGIt is widely thought in marketing that than segmentation is an art, not a science. The key task is to findthe variable, or variables that split the market into actionable segmentsThere are two types of segmentation variables:(1) Needs (2) ProfilersThe basic criteria for segmenting a market are customer needs. To find the needs of customers ina market, it is necessary to undertake market research. Profilers are the descriptive, measurablecustomer characteristics (such as location, age, nationality, gender, income) that can be used toinform a segmentation exercise.The most common profilers used in customer segmentation include the following:Profiler ExamplesA Demographic Age, sex, family size Income, occupation, education Religion, race, nationalityB Geographic Region of the country Urban or ruralC Behavioral Product usage - e.g. light, medium, heavy users Brand loyalty: none, medium, high Type of user (e.g. with meals, special occasions)D Psycho graphic Social class Lifestyle type Personality typeNow, I will explain these bases for segmentation to you, one by one.A Market segmentation - demographic segmentationDemographic segmentation consists of dividing the market into groups based on variables such asage; gender family size, income, occupation, education, religion, race and nationality.As you might expect, demographic segmentation variables are amongst the most popular bases forsegmenting customer groups.This is partly because customer wants are closely linked to variables such as income and age. Also,for practical reasons, there is often much more data available to help with the demographic segmen-tation process. The main demographic segmentation variables are summarized below:Age: Consumer needs and wants change with age although they may still wish to consumer thesame types of product. So Marketers design, package and promote products differently to meet thewants of different age groups. Good examples include the marketing of toothpaste (contrast thebranding of toothpaste for children and adults) and toys (with many age-based segments).Life-cycle stage A consumer stage in the life cycle is also an important variable. We can talk of thefollowing products to talk of the life-cycle concept: Infants: Baby foods like Cerelac and Farex204 © Copy Right : Rai University 16.101G
    • Marketing ManagementYoung child: Leo toys, Barbie dolls (Again these can be segmented by gender basis for small girlsand boys)Adolescent: Trendy products and services like Jeans, T-shirts, and Coffee shopsYoung Adults: Mobikes, music systems, mobile phonesOld people: Investment instruments, health packages for oldWhen you talk of segmentation based on life cycle, you need to specify exact age groups like for ayoung child, you might specify the segment as 3-12 years, old people as 55 years and above and soon.Gender: Gender segmentation is widely used in consumer marketing. The best examples includeclothing, hairdressing, magazines and toiletries and cosmetics. You have footwear exclusively formales, females and kids. For example, you have ‘Action’ School shoes exclusively for school-goingchildren. You can talk of soft perfumes for women and deodorants for men. Kinetic scooters aretargeted more at women. You have magazines dedicated to women like Femina.Income: You might have noticed that income is another popular basis for segmentation. Many com-panies target affluent consumers with luxury goods and convenience services. Good examples in-clude Mercedes, Pizza Hut Pizzas, Ebony and Parker pen. By contrast, many companies focus onmarketing products that appeal directly to consumers with relatively low incomes. You can haveexamples including Nirma, and Reliance phones besides others.Can you think of more examples for the income criterion?Social class: Many Marketers believe that a consumer “perceived” social class influences theirpreferences for cars, clothes, home furnishings, leisure activities and other products & services.There is a clear link here with income-based segmentation.B Market segmentation - geographic segmentationGeographic segmentation tries to divide markets into different geographical units. These units in-clude, Regions: e.g. in India, you can talk of North India, West India, as regions or zones and Delhi,Mumbai, Chennai as metropolitan cities and Jaipur, Lucknow and Baroda as smaller cities. Coun-tries: perhaps categorized by size, development or membership of geographic regionCity / Town size:e.g. population within ranges or above a certain level Population density: e.g. urban, suburban, rural,and semi-rural Climate: e.g. Northern, SouthernGeographic segmentation is an important process - particularly for multi-national and global busi-nesses and brands. Many such companies have regional and national marketing programmes thatalter their products, advertising and promotion to meet the individual needs of geographic units.C Market segmentation - behavioral segmentationBehavioral segmentation divides customers into groups based on the way they respond to, use orknow of a product. Behavioral segments can group consumers in terms of:Occasions: When a product is consumed or purchased. For example, cereals have traditionally beenmarketed as a breakfast-related product. Kelloggs have always encouraged consumers to eat break-fast cereals on the “occasion” of getting up. More recently, they have tried to extend the consump-tion of cereals by promoting the product as an ideal, anytime snack food.In India, lots of home shopping takes place on the occasion of ‘Divali’. TV sets sales goes up duringworld cup cricket.16.101G © Copy Right : Rai University 205
    • Marketing ManagementYou might have seen that Archies, Hallmark and other greeting card companies makes occasions outof relatively unknown days.What such examples can you think of?Usage: Some markets can be segmented into light, medium and heavy user groupsLoyalty: Loyal consumers - those who buy one brand all or most of the time - are valuable custom-ers. Many companies try to segment their markets into those where loyal customers can be foundand retained compared with segments where customers rarely display any product loyalty. Theholiday market is an excellent example of this. The “mass-market” overseas tour operators such asSOTC, Thomson, JMC and First Choice have very low levels of customer loyalty - which means thatcustomers need to be recruited again every year. Compare this with specialist, niche operators suchas those specializing for Bangkok and Singapore only; you can have customers who have traveledwith the brand in each of the last 15-20 years.Benefits Sought: You may note that this is a different and an important form of behavioral segmen-tation. Benefit segmentation requires Marketers to understand and find the main benefits customerslook for in a product. An excellent example is the toothpaste market where research has found fourmain “benefit segments” - economic; medicinal, cosmetic and taste.D Market segmentation – Psycho graphic segmentationLifestyle: Marketers are increasingly interested in the effect of consumer “lifestyles” on demand.Unfortunately, there are many different lifestyle categorization systems, many of them designed byadvertising and marketing agencies as a way of winning new marketing clients and campaigns!A. Lifestyles are the ways in which people live and spend time and money.B. You can target final consumers by segmenting by social class and stage in the family cycle.C. A heavy-usage segment is a consumer group that accounts for a large proportion of an item’s sales relative to the segment’s size.D. Benefit segmentation groups consumers into markets on the basis of different benefits sought from a product.What examples can you think of when you talk of psycho graphic segmentation?I will give some example here: Citibank International Gold card is for the ‘affluent’ people who travel abroad frequently Five Star Hotels are for the foreigners, top business and corporate class to whom comfort and convenience are the parameters of ‘value’ Black and White TV still sells in upcountry areas, small hotels and small shops to lower middle classWhen you talk of lifestyle, you also talk of AIO.A- Activities: Work, hobbies, shopping styleI- Interests: In food, fashion, recreationO- Opinions: About themselves, others, social issuesBASES OF SEGMENTING ORGANIZATIONAL CONSUMERS OR INDUSTRIALMARKETSAs the consumer markets are segmented, organizational or industrial markets may also be seg-mented on the bases of various criteria, some of which are as mentioned below:206 © Copy Right : Rai University 16.101G
    • Marketing ManagementSmall, medium and large A, B and C type depending on the volume of business generated(Typically, Pareto’s rule may apply and 80% of business may come from 20% of customers who maybe your ‘A’ category customers) Location of the industrial customersBLENDING DEMOGRAPHIC AND LIFESTYLE FACTORSA. Market segments should be described in demographic and lifestyle terms. A more valuable analysis takes place when a variety of factors are reviewed.There are two broad classification systems:1. VALS (Values and Lifestyles). See Figure below for the VALS network, which segments con- sumers based on self-orientation and resources into these categories:a. Actualizers.b. Fulfilleds.c. Believers.d. Achievers.e. Strivers.f. Experiencers.g. Makers.h. Strugglers.2. Social Style model. See Figure below for this approach, which divides organizational personnel into these categories:a. Analytics.b. Expressive.c. Drivers.d. Amiable.16.101G © Copy Right : Rai University 207
    • Marketing ManagementArticle: How to Segment MarketsPerhaps the most important analytical process of marketing is segmentation. By segmenting themarket, one obtains a very clear understanding of customers and ultimately provides a basis for clearand precise targeting and positioning. But segmentation is also very difficult and, especially withoutcustomer data, is what I would admit as an art form in marketing.You can become quite confused about segmentation by reading the popular press, most marketingtextbooks, and tons of Internet companies because the term has been used to signify many things.Typically, you’ll find the term segmentation applied to demographics and lifestyles in consumer mar-kets and size, industry, and geography in business markets. On the internet, people use age, gender,etc. for segmentation (or worse yet, confuse segmentation with terms like one-to-one marketing asthough people are so unique and share little commonality).It’s all very confusing, but there is a way to make this clearer and the answer lies in the work ofRussell Haley (Journal of Marketing, July 1968) who first used the term “benefit segmenta-tion.” Also known as Needs-Based segmentation, benefit segmentation is essentially the idea thatcustomers should be segmented on the basis of their needs. Simply put, customers in different benefitsegments have different needs.In previous tutorials, we explained the idea of benefits and tradeoffs so you can use these terms tocrystallize the idea of segments having different needs. The different segments allocate their100 points differently across the various benefits. This allocation results in the needs of differ-ent segments clustering around different benefits.Here is Haley’s original segmentation of the toothpaste market. Notice how the segments seek adifferent cluster of benefits. Again, the segments tradeoff the possible benefits differently.You could easily imagine that the market for consumers buying on the internet is similarly broken upinto four or 5 segments with names like “Music Aficionados”, “One-Stop Shoppers”, “Techno-MediaTypes” etc. In fact, recent studies have shown that Internet users break into 6 categories, including“E-bivalent Newbies”, “Clicks and Mortar”, etc.Two key ideas to note from this chart. First, the labels given to each segment are arbitrary. Theyare called the segmentation bases and are simply used to label a group of customers who care abouta different cluster of benefits.208 © Copy Right : Rai University 16.101G
    • Marketing ManagementSecond, along the left column you will also see segment descriptors, or things that describe thecustomers in each segment. These descriptors may correlate with the basis of the segmentation (andif a descriptor is very highly correlated it could be used as a basis for segmentation). In the aboveexample, we can see that maybe life style is highly correlated with the segmentation basis so thiscould also serve as a good label for the segments.SegmentationBefore getting into how one can think about the various ways to practically segment a market, let’sfirst consider some key issues and questions:First: Why should you segment by benefits, rather than the descriptors? There are threeways to answer this:1. It’s the only way to have a clear message in the market.2. It’s the only way to deliver what the customer wants.3. Marketing academics have not been successful at segmenting the markets differently and still finding meaningfully different segments.Does this mean that descriptors are not used in marketing? No, they absolutely are used, butfor a different purpose.To see this, consider the following very simple example and how benefits are powerful and descrip-tors are useful. Here we have two fictitious segments in the cereal market and two demographics(young and old) and a product line (in colored bold) for each segment. Notice how clean this is interms of a message (i.e., the benefits) for each segment. Note also how the descriptors are useful forthe specific products names.Now, instead think about segmenting this market based on age (a typical way people might segmentthis market). What you would have is:But what message will you have here; that is, what are the benefits the old and young want? Youwouldn’t know!Think this is not relevant to your business market? Here’s another real world example.16.101G © Copy Right : Rai University 209
    • Marketing ManagementTypically firms that sell chips for cell phones (this are called DSPs) segment the market like this:But what benefits are big and small firms looking for. It turns out that this market can be segmented(at the level of the application) as follows:The point of these two examples is that by segmenting on the basis of age or size of firm you wouldmiss the fact (in the cereal example) that there are segments of both young and old people who wantsweet and sugary cereals. We should note that age segmentation is rampant on the web and, as aresult, the messages that Internet companies have are muddled.In the case of the DSP chips, segmenting by size of firm would miss the idea that within a given firmthere might be both applications that are innovative (needing performance, support and upgradability)AND “quick and easy” (needing low price and turnkey solutions). Plus, by segmenting on size of firmyou don’t know what benefits to position your product on! That’s the reason so many B-to-B compa-nies have bland and amiguous positions in the market.SegmentationSo what are the bases for segmentation? While it is difficult to determine what will segment amarket into different segments based on different benefit tradeoffs, there are some useful ways ofthinking about how this might be done. In any event, however, this is typically a reiterative process(i.e., trying one way, then another).One way to start the process is to look at the various benefits and think about whetherthere are groups of customers who would care about different clusters of these benefits.In my experience, this may lead you to following bases for beginning to think about segment-ing a market.Usage - often how customers use a product can result in their making tradeoffs across differentbenefits. For example, light users and heavy users of a product often care about different benefits.Application - customers who apply a product in a mission critical way often care about differentbenefits (for business buyers this could be a way central to their business, but a cook may use aproduct that is central to a recipe as well).Prior experience with the product category - often denoted as experts and novices, these differ-ent types of prior experience usually highly correlate with different needs.Often in consumer markets, prior brand loyalty, buying situation (work vs. entertainment), or some-210 © Copy Right : Rai University 16.101G
    • Marketing Managementtimes lifestyle (as in the case of may cars) can be the basis of segmentation.Without good data to help you, the best you can do is to begin trying to segment the market usingsome a priori idea (such as using usage, prior experience, etc.), and then checking it to see if thesegments really care about different benefits. If not, try again using different segmentation bases,and reiterate. You might look for combinations of bases as well.You will know that you have a good segmentation if it meets the criteria that the customersin the different segments make tradeoffs differently. A good segmentation will also meet othercriteria, such as The segments are measurable - that is, you can identify the size of the segment The segments are reachable - that is, you can reach the segment by media (often this can be ascertained by looking at the segment descriptors)You might confuse that segmentation means segment “targeting”. This is not so. Segmentingmarkets is simply the analytical process of breaking the market into distinct segments. Targeting is adecision to go after a particular segment, and this decision can only be made after you consider anumber of other factors, including competitive response, and customer perceptionsCreativityIf you are the marketing manager of a luxury watch company, how would you segment the Indianmarket keeping in mind the segmentation variables.TARGETING THE MARKETIDENTIFYING POTENTIAL MARKET SEGMENT : A firm develops consumer profiles afterestablishing bases of segmentation.These profiles identify potential market segments by ag-gregating consumers with similar characteristics and needs, and separating them from con-sumers with different characteristics and needs.You can understand from the following sec-tions how a variety of firms could identify potential market segments and develop consumerprofiles.CHOOSING A TARGET MARKET APPROACHYou can see below a description and contrast of the three alternative approaches for choosing atarget market.16.101G © Copy Right : Rai University 211
    • Marketing ManagementUndifferentiated Marketing (Mass Marketing)A. An undifferentiated marketing approach aims at a large, broad consumer market through one basic marketing plan.B. Use of this approach has declined in recent years due to the following:1. Growth of competition.2. Stimulated demand by appealing to specific segments.3. Improved marketing research that pinpoints desires of different segments.4. A reduction in total production and marketing costs because of segmentation.C. A major objective of undifferentiated marketing is to maximize sales.D. For successful pure mass marketing, a large group of consumers must have a desire for the same product attributes or consumer demand must be so diffused that it would not be worthwhile for a firm to aim marketing plans at specific segments.1. A firm sells items through all possible outlets.2. Both total and long run profits should be considered.Concentrated MarketingA. A concentrated marketing approach aims at a narrow, specific consumer group through one specialized marketing plan catering to the needs of that segment.B. Concentrated marketing is popular for small firms for these reasons:1. Mass production, mass distribution, and mass advertising are not necessary.2. It can succeed with limited resources and abilities by concentrating efforts.C. If concentrated marketing is used, it is essential for a firm to do a better job than competitors in several areas.1. The company needs to tailor its marketing program for its segment better than competitors.2. Competitors’ strengths should be avoided and weaknesses exploited.D. The majority fallacy, appealing to a large segment that is laden with competition, should be avoided.E. A potentially profitable segment may be one ignored by other firms.F. Per unit profits can be maximized through market segmentation. Total profits are not maximized, because only one segment is sought.G. A distinct niche can be carved out for a particular brand.Differentiated Marketing (Multiple Segmentation)A. Differentiated marketing combines the best attributes of undifferentiated marketing and concen- trated marketing. It appeals to two or more distinct market segments, with a different marketing plan for each.1. Firms such as Maruti-Suzuki use differentiated marketing to attract all segments. Others, such as Hyundai, and Microsoft appeal to two or more segments, but not all segments.2. Some companies, such as Time Inc., use both undifferentiated marketing and concentrated mar- keting approaches in their multiple-segmentation strategy. They have one or more major brands for the mass market and secondary brands geared toward specific segments.B. Company resources and abilities must be able to produce and market two or more different sizes, brands, or products. Costs vary, depending on modifications needed.C. Differentiated marketing should enable the firm to achieve several objectives:212 © Copy Right : Rai University 16.101G
    • Marketing Management1. Sales maximization.2. Recognition as a specialist.3. Diversification.D. Differentiated marketing can be achieved without involvement in the majority fallacy.E. Two or more sizable and distinct consumer groups are necessary. The more clusters facing the firm, the greater the opportunity for differentiated marketing.F. Wholesalers and retailers usually find differentiated marketing to be desirable, because it enables them to reach different consumers, offers a degree of exclusivity, allows orders to be concen- trated, and encourages private labels.G. Total profits should rise as the number of segments serviced increases.H. A firm must balance revenues obtained from selling to multiple segments against the costs.I. A company must be careful to maintain product distinctiveness in each consumer segment and to guard its image.SELECTING THE TARGET MARKET (S)A. A company needs to make two decisions:1. Which segment(s) offer the greatest opportunities?a. A company should consider its objectives and strengths, competition, segment size, segment growth potential, distribution requirements, required expenditures, profit potential, company im- age, and its ability to develop and sustain a differential advantage.2. How many segments should the firm pursue?a. The firm decides whether to pursue one or more segments (or the mass market). Most likely, a firm new to an industry would start with concentrated marketing.Requirements For Successful SegmentationA. For concentrated marketing or differentiated marketing plans to succeed, the selected market segments have to meet these five criteria:1. Differences among consumers.2. Similarities within segments.3. Measurable consumer attributes and needs.4. Large size (to generate sales and cover costs).5. Reachable in an efficient manner.Limitations of SegmentationA. Segmentation can be misused if:1. Segments are too small.2. Consumers are misinterpreted.3. There are cost inefficiencies.4. There are too many brands.5. Firms become short-run, rather than long run, oriented.6. Media cannot be used.7. Segments are too disparate.8. Consumers are confused.9. The firm is locked into a declining segment.16.101G © Copy Right : Rai University 213
    • Marketing Management10. New product opportunities are sought out too slowly.DEVELOPING THE MARKETING STRATEGYPOSITIONING THE COMPANY’S OFFERING IN RELATION TO COMPETITIONA. The attributes and images of competitors are identified.B. In positioning its offering against competitors, the firm would need to present a combination of customer benefits that are not being offered by others and that are desirable by a target market.C. It may not be a good idea for a firm to go head on against a large, well-positioned competitor. Points to remember:214 © Copy Right : Rai University 16.101G
    • Marketing ManagementExercise : Multiple Choice1. When a company identifies the parts of the market it can serve best and most profitably, it ispracticing _____.a. concentrated marketingb. mass marketingc. targeted marketingd. segmenting2. Research has shown that practicing mass marketing today is limited because theworld’s massmarkets have slowly splintered into a profusion of _____.a. unidentifiable marketsb. confused marketsc. small segmentsd. international markets3. Even though several options are available at any one time, there is _____ to segment a market.a. one single best wayb. no single wayc. the most effective wayd. the least-cost way4. Your firm has decided to localize its products and services to meet local market demands. A goodapproach to use would be _____ segmentation.a. geographicb. benefitc. end used. customer5. Through talking to numerous competitors at a regional trade show, you learn that most of them usethe most popular base for segmenting markets. What is it?a. demographicb. genderc. psychographicd. behavioral6. When Positive Image, Inc. caters to clothing, cosmetics, and toiletries markets, it is probably usingthis type of segmentation.a. age and life-cycleb. genderc. behaviorald. psychographic7. As a business consultant, what type of segmentation would you suggest to marketers of automo-biles, boats, financial services, and travel?a. age and life-cycleb. genderc. incomed. behavioral16.101G © Copy Right : Rai University 215
    • Marketing Management8. Income segmentation is used to target the _____.a. affluentb. middle classc. lower income classd. all of the above9. As a business consultant, what type of segmentation would you suggest to marketers who cater topeople of certain social classes, lifestyles, and personality characteristics?a. behavioralb. genderc. psychographicd. age and life-cycle10. Shampoo marketers rate buyers as light, medium, or heavy products users. This is _____.a. user statusb. usage ratec. benefitd. behavioral11. Markets can be segmented into groups of nonusers, ex-users, potential users, first- time users,and regular users of a product. This method of segmentation is called _____.a. user statusb. usage ratec. benefitd. behavioral12. Consumers can show their allegiance to brands, stores, or companies. Marketers can use thisinformation to segment consumers by _____.a. user statusb. loyaltyc. store typed. brand preference13. Many firms are making an effort to identify smaller, better-defined target groups by using _____.a. user ratesb. loyalty segmentationc. multiple segmentation basesd. positioning14. By going after segments instead of the whole market, companies have a much better chance toreceive maximum rewards for close attention to consumer needs and to _____.a. deliver value to consumersb. increase market sharec. develop greater customer loyaltyd. offer lower prices15. When a business market segment is large or profitable enough to serve, it is termed _____.a. measurableb. accessiblec. substantiald. actionable216 © Copy Right : Rai University 16.101G
    • Marketing Management Tutorial - GApplication exercise:Vicco tumeric cream has been in the market for over two decades. Pond’s, Charmis, Afghan Snowand Hazeline were some of the brand in the market at the time when Vicco was introduced. In 1975,the brand was introduced in collapsible aluminum tubes. Consumers were used to having cosmeticsin bottles and at that time only medicines were packed in tubes. In India, for several generationsturmeric was considered to be traditional ingredient for complexion care. The brand associated “wed-ding occasions and good complexion” and projected the brand in the backdrop. This positioning of thebrand can even be seen today (after two decades). The advertisement launched in about thousandcinema halls showed a paste of sandalwood oil and turmeric used by a young and prospective bridesurrounded by lively friends. The benefits of turmeric was strongly emphasizes by the brand. Duringthe mid-seventies, Fair and lovely was launched by HLL as a fairness cream. The advertising budgetfor Vicco in the year 1996-97 was around Rs. 10 crores. Taking into consideration the present day competition in the skin-care segement, what are yourconceptual comments on the –strategy of Vicco? (Make a critical analysis). How could the branduse segmentation and positioning concepts to enhance its position in the market?You are the judge (See your understanding of the concept)Multiple-choice Questions:1. In a general sense of positioning, according to Ries and Trout, a competitor has three strategicalternatives. Which of the following is not one of the strategic alternatives? The company can strengthen its own current position in the consumer’s mind. The company can eliminate any nonproductive advertisements. The company can grab an unoccupied position. The company can deposition or reposition the competition in the customer’s mind.2. In general, a company must avoid four major positioning errors if they are going to promote theirideas. Which of the following is not one of the four major positioning errors? Average positioning Under-positioning Over-positioning Confused positioning3. All products can be differentiated to some extent. A difference will be stronger to the extent thatit satisfies each of the following criteria except which one? Must be important to buyers. Must be distinctive to buyers. Must be affordable to buyers. Must be humorous to buyers.4. A ___________ industry is one in which the companies in that industry can gain only a few, butrather large, competitive advantages. Stalemated Fragmented Volume Specialized16.101G © Copy Right : Rai University 217
    • Marketing Management5. Which of the following is not one of the ways, discussed in the text, for product differentiation? Form Ordering ease Features Performance quality6. __________________ is a measure of the product’s expected operating life under natural orstressful conditions. It is a valued attribute for certain products. Durability Conformance quality Reliability Repairability7. Which of the following would be the services differentiation characteristic that refers to how wellthe product or service is delivered to the customer? Ordering ease Installation Customer training Delivery8. _________________ refers to data, information systems, and advice services that the selleroffers to buyers as a services differentiation. Customer training Customer questioning Customer consulting Customer advising9. Better-trained personnel exhibit six characteristics. Each of the following is one of those charac-teristics except which one? Competence Camaraderie Credibility Communication10. Which of the following would not be an example of using the physical plant as a device fordifferentiating a business’s image? A restaurant uses only fresh grown vegetables. A restaurant uses fine china at their tables. A restaurant uses crystal chandeliers. A gas station uses television monitors at their gas pumps.11. Profits are negative or low in the introduction stage. Promotional expenditures are at their highestratio to sales because of each of the following except which one? [Hint] The need to inform potential customers. The need to induce product trial. The need to secure distribution in retail outlets. All of the above218 © Copy Right : Rai University 16.101G
    • Marketing Management12. In determining how to increase sales volume, the sales volume formula highlights the areas thatshould be addressed. These areas show the opportunities where a sales increase could come from.What is the sales volume formula? Number of brand users divided by usage rate per user Number of new markets times increase in advertising costs Number of brand users times usage rate per user Number of new products times advertising costs13. Managers also try to simulate sales by modifying the product’s characteristics. Which of thefollowing would not be a way to modify the product’s characteristics? Quality improvement Ordering ease Feature enhancement Style improvement14. There are five options available to a company experiencing a product decline. Which of thefollowing is not one of the declining strategies available? Farming the product Harvesting Selling off the business Increase investments to try and strengthen the market or position15. Which of the following is not one of the stages in market evolution? Emergence Growth Maturity All of the above are stagesEssay Questions:Q1). When differentiating, a difference will be stronger to the extent that the product satisfies a number of criteria. Describe the criteria and give an example of how a product could follow the criteria.Q 2). Describe ways to modify a market using the volume formula of volume equals the number of brand users times the usage rate per user.16.101G © Copy Right : Rai University 219