Question

Market segments should be easy to distinguish from each other and should respond differently from other market segments to marketing strategies. This is known as the differential response requirement for effective segmentation. True or False?

Answer 1

The statement is true, as distinct market segments that respond uniquely to marketing strategies allow for effective segmentation, often achieved through product differentiation in a monopolistic competition.

Step-by-step explanation:

True, market segments should indeed be easy to distinguish from one another and exhibit differential response to marketing strategies. This principle is crucial for effective segmentation as it ensures that a targeted marketing effort will elicit a unique response from each segment, optimizing the use of marketing resources and maximizing potential returns.

The concept of product differentiation plays a significant role in creating these distinct market segments. In an environment with differentiated products, such as the variety of styles, flavors, and locations, markets tend away from perfect competition and move towards monopolistic competition. This differentiation is often achieved through actions by firms to make consumers perceive their products as distinct from competitors. Therefore, creating unique segments that respond differently to marketing strategies is a cornerstone of effective marketing in a market-oriented economy.