episode 06 exercise answer 01

Part 1: Solution

As you may recall from your studies, through segmentation, firms divide the total market into manageable slices. Firms do so in a number of ways, but regardless of the primary segmentation characteristic, the point of this exercise is to divide the potential market into distinct groups that are similar (homogeneous) within the groups and dissimilar (heterogeneous) across the different groups. Marketers typically segment markets on the following bases:

Demographics: numbers that describe the population according to several categories, such as gender, income, education level, family structure, race and ethnicity, geography, or population density in urban, suburban, or rural areas. Age is another important demographic category that CanGo uses to distinguish Baby Boomer (born 1946-1964), Gen-X (born 1965-1976), and Gen-Y (born after 1976) consumers.
Psychographics: differentiating factors such as activities, interests, and opinions. CanGo could use these factors to subdivide the huge Boomer segment, e.g., Boomers who enjoy computer games.
Usage (behavioral characteristics): the occasion and conditions under which consumers use a product. For example, CanGo could distinguish Boomer computer gamers who prefer to use Macintosh computers from those who use IBM-compatible PCs.
Benefits: the benefits a consumer may gain from using a particular product. For instance, CanGo could segment Boomers who go to computer games for relaxing fun, rather than those seeking pulse-raising excitement.

In the exercises below, consider the strategy described and decide which type of segmentation it employs.

Let's see how well you answered the questions.

	1.	CanGo distinguishes consumers who are hip risk-takers from those who are more averse to risk.
		Your Answer:
		Correct Answer: Psychographic
		This would be an example of psychographic segmentation as it reflects the activities, interests, and opinions of people.

	2.	CanGo distinguishes consumers who are frequent online game-players from those who are occasional players.
		Your Answer:
		Correct Answer: Usage
		This is an example of usage segmentation as it reflects how consumers would use a product.

	3.	CanGo considers segmenting the market according to gender.
		Your Answer:
		Correct Answer: Demographic
		This is an example of demographic segmentation, dividing consumer groups according to a descriptive population characteristic.

	4.	CanGo considers segmenting the online gaming market according to those who are looking for social interaction (who want to interact with a wider gaming community) and "loners" who are interested in ways to entertain and challenge themselves.
		Your Answer:
		Correct Answer: Benefits
		Benefit segmentation reflects what benefit a customer is looking to gain from using a product. In this case, customers looking for social interaction would choose CanGo's synchronous gaming line and are more likely to use community offerings such as online chats.

	5.	CanGo decides to segment its market according to those who buy classic CDs (building their collections) and those buying newly issued CDs (looking for the latest hits).
		Your Answer:
		Correct Answer: Usage
		This type of segmentation differentiates between the use to which the CDs are put (library building vs. novelty).

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