Chapter 5

Question 1

How does an insurance company meet customers needs?

Answer 1

identify unmet needs in existing markets and growth markets that arent’ being reached.

Question 2

Define market segmentation

Answer 2

Companies divide large, diverse markets into smaller submarkets and identify groups of buyers who have the same needs and will likely respind similarly to marketing actions.

Question 3

What questions are answered during marketing actions?

Answer 3

1. what consumer needs are not being met

2 what benefits are consumers seeking

Question 4

what is the purpose of market segments?

Answer 4

smaller groupings of customers whom share similar needs and preferences.

Question 5

what is a single-variable segmentation?

Answer 5

uses only one characteristic such as income lev el, to segment a market

Question 6

What are multivariable segmentations?

Answer 6

segmenting a market by a combination of variable, which may include income level, years of education, age or gender.

Question 7

What are some keys to effective marketing segmentation?

Answer 7

1. the company is able is identity customers who actually match the segment definitions, particularly when using behaviouristic criteria
2. customers in segments have similar products needs and preferences or purchase products in similar wayd.
3. the company is able to distinguisj the needs and behaviours of customers in the segments from thoe of customers in other segements
4. The potential sales, costs, and profits for the segement are large enough to measure and compare with those for other potential market segments
5. the profit profit porential for the segment is high enough to offset the expense a company

Question 8

Define consumer market

Answer 8

a market that consist of individuals who buy products or services for personal or family use.

Question 9

Define organizational markets

Answer 9

markets that consist of individuals or formal organizations that purchase and services for business purposes or for their constituents, such as employees or association memebers.

Question 10

How do marketers obtain information about a person’s interrest and personal data?

Answer 10

1. tracking their online action through web analytics
2. purchasing consumer data from data aggregators
3. conducting market research using focus groups and surverys
4. tracking customer interactions through call center calls or customer correspondences
5. reviewing purchase history records.

Question 11

what is the purpose of a company shifting thorugh all this information? ir what are the characteristics they are looking for in this customer segements?

Answer 11

characteristics relevant to customer needs and behaviours and measurable or observable.

Question 12

What are two risks associated with any form of segmentation?

Answer 12

1. risk of drawing generalities (sterotypes) based on information that may not be true or accurate since it was based on limited knowledge. and 2. the risk of over segmenting a market or not segmenting a market enough to reach potential customers

Question 13

What are the primary categories of consumer market segmentation?

Answer 13

1. geographic,
2. demographic
   3 geodemograpghic
3. psychographic
4. behavioristic
5. benefit segmentation.

Question 14

What is geographic segmentation?

Answer 14

this divides markets into segments based on regions,.
Needs based on area.
Differences in population and growth rate gives areas more or less market potential

Question 15

What are the 3 advantages of Geographical segmentation?

Answer 15

1. inexpensive
   2 easy to preform
2. Easy for local sales force to relate to customers in their same geographic are

Question 16

What are the disadvantages of geographic segmentation?

Answer 16

1. geographic differences do not greatly influence customer needs and desires
   2 may not adequately subdivide the markets to allow marketer to target viable potential customers.

Question 17

Define demographic segmentation

Answer 17

segmentation based on the personal characteristics of poeple in the market such as age, income ,and life cycle stage, gender, marital status, house hold size, education, occupation, nationality and social class.

Question 18

Which type of demographic segmentation are more useful in segmenting insurance markets?

Answer 18

exacples of age and life cycle stage affect insurance product types.

Question 19

What are some advantages of demographic segmentation?

Answer 19

Relatively easy to identigy and measure

information about many demographics is inexpensive and easy to obtain from government, public and private sources.

Question 20

What are some disadvantages of demographic segmentation?

Answer 20

May not adequately segment the market

May not capture the differing needs of market members

Question 21

Define geodemographic segmentation

Answer 21

Combination of geographic and demographic characteristis which takes people who live in the same areas and further differentiates them according to demographic characteristics, such as income, or age.

Question 22

What is a system developed by a variety of classification systems to help companies cluster neighborhoods and hourseholds for marketing purposes?

Answer 22

Nielsen PRIZM, which is a customer segmentation system that categorizes US households according to 66 demographically and behaviorally distinct types.
they provide info about attitudes that affect peeps decision making.

Question 23

What are some advantages of geodemographic segmentation?

Answer 23

1. segments can be refined to beyond the more basic demographic segemnt
2. may improve customer perception of the company; targeted segments feel that the comapny understands their unique needs.

Question 24

What are some disadvantages of geodemographic segmentation?

Answer 24

takes more time to develop segments than other segment types, so a company must commit to following this approach over time as peoples lives change and they fit into different segments.

Question 25

define Psychographic Segmentation

Answer 25

divides consumer markets based on lifestyle and the outward display of individual psychological characteristics such as attitudes, beliefs, opinions, values, and interests.

Question 26

Psychographic research calssifies US adults +18 into one of 8 consumer groups. These groups are motivated to purchase goods and services according to their what

Answer 26

1. primary motivation (ideals, acheivements, self-expression) and 2. they level of resources (material, emotional, psychological, personable, intellectual, motivational).

Question 27

What is a personas?

Answer 27

profile labels that represent a segment of a martket. Marketers use personas to better understand the interrest, activities and opinions of a customer segment and design a marketing mix for that person.

Question 28

What can be determined by a company when creating a persona that matches the target markets needs, attitudes and other characteristics?

Answer 28

1. products that satify needs 2. message it should communicate to and the prodcuts should highlight the target market 3. communication tools it should be using to reach the target 4. districution channels it should be using.

Question 29

What is an advantage of psychographic segmentation?

Answer 29

Give much deeper understanding of consumers than demographic or geographic segmentation information

Question 30

What is a disadvantage of psychographic segmentation?

Answer 30

More difficult to measure the value of psychographic factors than geographic or demographic factors.

Question 31

Define Behavioristic segmentation

Answer 31

Devides markets according to consumers' behavior toward a product or company.

Question 32

What do buyer characteristics are looked at when marketers use bahavioristic segmentations?

Answer 32

1. usage rates: Light, M, H 2. status: nonuser, ex user, 3. loyalty 4. readiness for purchase 5. preferred method of purchase 6. risk tolerance

Question 33

What are some advantages of bahavioristic segmentation?

Answer 33

1. for existing customers, the company has some information about hx. 2. past behaviour is often a good predictor for future bahaviour 3. general information about behavior patterns of customer groups if available from a variety of commercial sources, but privacy laws may prevent some info sharing

Question 34

What are some disadvantages of behavioristic segmentation

Answer 34

1. May cost more to obtain information 2. difficult for insurers to accurately gauge customer behavior and use it effectively segment systems. 3. difficult to collect behavioristic information for insurance products,

Question 35

Define Benefit Segmentation

Answer 35

a way to segment markets by the benefits customers seek sfrom a product or service. In benefit segmentations, the variables used to segment consumers into groups are the consumers product needs.

Question 36

How would a life insurance product act as a benefit/statisfy a need?

Answer 36

1. tax/estate planning 2. survivorship planning 3. retirement planning 4. business continuity 5. College education funding.

Question 37

What are some advantages to Benefit segmentation?

Answer 37

1. had the potential to boost product sales by marketing the same products to various groups 2. effective way to market products with unique features 3. customer-focused

Question 38

What are some disadvantages of benefit segmentation?

Answer 38

1. overuse may discourage exploration of new opportunities and product innovations. 2. messaging about benefits can b e confusing if an insurers tries to address to many benefits in one message 3. can be difficult to differentiate from competitors that offer similar products.

Question 39

Define Firmographics

Answer 39

these are all the characteristics that marketers use to segemnet the organizational market. Insurance companies segment organizational markets into smaller divisions based on the geographic, demographic, and behavioral characteristics of potential buyers.

Question 40

What are the divided sub-catergories of geographic segmentation in organizational markets?

Answer 40

1. country 2. region 3. state or province 4. city 5. postal code 6. legal boundaries

Question 41

What is segmentation by inductry?

Answer 41

this focuses on the type of business activity that an organization engages in, such as technology, manufacturing, agriculture, financial services, government, or entertainment.

Question 42

How does one catergorizes demographic cahracteristics of organizational markets

Answer 42

1. indutry 2. or type of organization (corporation, partnership, sole proprietorship, for-profit, not-for profit) 3. Size of organization/group 4. type of group (single-employer, multiple-employer, debtor-creditor, affinity

Question 43

What are the categories of bahavioralistic characteristics in an organizational market?

Answer 43

1. benefits sought 2. patterns of usage 3. products of preference.

Question 44

What is segmentation by legal form?

Answer 44

companies select one of 3 legal forms: corporation, partnership or sole proprietorship. Business can also be sub divided to for profit or not-profit. Each type of business has distinct needs for financial services... segmented by legal form

Question 45

Define segmentation by size of group

Answer 45

Insurance companies often divide into 1. small group (<100 members) 2. Medium group (101-499 members) 3. Larger group (500+) * As size increases, so foes the benefits to these buyers needs. Comapnies usually offer more standardized benefits to smaller groups.

Question 46

Define segmentation by type of group

Answer 46

4 primary groups make up the organizational market for financial products and services. 1. single-employer group - 2. multiple-employer groups 3. Debtor-creditor groups 4. affinity groups -

Question 47

define multiple-employer groups

Answer 47

1. two or more employers at same industry 2. two or more labour unions 3. one or more employers and one or more labour unions

Question 48

Define affinity groups

Answer 48

formed when individuals with common needs interrests, and characteristics communicate regularly with eachother. civic groups, professional associations, and social organiztiona

Question 49

True or False. Like consumer markets, organizational markets can be segmented based on their purchase behavior which includes usage rates, risk tolerances, ad buyer readiness?

Answer 49

true.

Question 50

What is the advantage of target marketing?

Answer 50

a comapny evaluates opportunities, determines a target marketing strategy and then selects one or more segments, called target markets that they pursue.

Question 51

Why do Marketers evaluate potential markets ?

Answer 51

To determine whic of them would offer greatest 1) size and growth potential, 2) attractiveness and 3) compatibility with company goals.

Question 52

What is market attractiveness?

Answer 52

aggressive competition within a market can limit ability to promote and price products. Companies should only enter segments they have or can ghain a competitive advantage or offer superior value.

Question 53

What are the 3 primary types of target marketing strategies?

Answer 53

1. undifferentiated marketing 2. differentiated marketing 3. concentrated marketing

Question 54

define undifferentiated marketing?

Answer 54

A strategy that targets the entire market and designs a single marketing mix. Used by companies that offer only one product or service to entire market

Question 55

Define differentiated marketing

Answer 55

A strategy that targets a single market segment. Used by companies with several versions of a product to different market segments.

Question 56

Define concentrated marketing

Answer 56

A strategy that targets a single market segment. Used by companies that develop expertise in and understnading of one segment of a total market.

Question 57

The particular target marketing stategy a company adopts depends on what 4 major factors?

Answer 57

1.  company resources 2. product form or desgin variability 3. market variability 4. stage in the products life cycle.

Question 58

Who from an insurance comapany targets organizational market segments?

Answer 58

employer groups and small businesses

Question 59

In the United States, multiple-employer groups can take 1 or what 3 forms?

Answer 59

1. negotiated trusteeship (Taft-Hartley Group). results from a collective-bargaining agreement between one or more unions and employers of union members. 2. voluntary trade association: association of individuals employers that work in similar industries and have common business interest. 3. multiple-employer welfare agreement (MEWA) formed when small employers band together to offer group insurance and other benefits to their employees.

Question 60

What are some basic insurance needs that are shared among small businesses?

Answer 60

1. protecting business agaisnt potential loss if key person dies. 2. preventing liquidation of the business d/t estate tax burden when KP dies 3. .preserving a disabled owners' interrest in a business by facilitating funding for a buyout 4. improving the credit rating and general financial stability of a business with creditor protection 5. providing a source of emergency funds 6. providing a variety of health, life, disability, and retirement benefits to employees to keep key employees