47) When segmenting broad product-markets, cost considerations tend
A. To lead to more aggregating.
B. To lead to a large number of small, but very homogeneous, product-market segments.
C. To be unimportant as long as the segmenting dimensions are operational.
D. To encourage managers to disregard the criterion that a product-market segment should be substantial.
to encourage managers to disregard the criterion that a product-market segment should be substantial
To answer this question, we need to understand the concept of segmenting broad product-markets and the role of cost considerations in this process.
Segmenting broad product-markets refers to dividing the overall market into smaller, more manageable segments based on certain criteria or dimensions. This helps businesses identify and target specific customer groups with tailored marketing strategies.
Cost considerations play a crucial role in the segmenting process because they impact the feasibility and profitability of targeting specific segments. Here's how each option relates to cost considerations:
A. To lead to more aggregating: This option suggests that cost considerations lead to grouping or combining segments together. This may happen when the cost of targeting each individual segment is too high, so businesses decide to aggregate them to reduce costs.
B. To lead to a large number of small, but very homogeneous, product-market segments: This option implies that cost considerations result in creating numerous small segments that have a high degree of similarity or homogeneity. This could be driven by the need for cost-effective targeting to maximize returns.
C. To be unimportant as long as the segmenting dimensions are operational: This option suggests that cost considerations are not significant as long as the dimensions used for segmenting are functional. However, this is not accurate because cost considerations are essential in order to assess the viability and profitability of targeting specific segments.
D. To encourage managers to disregard the criterion that a product-market segment should be substantial: This option implies that cost considerations lead managers to neglect the importance of having a substantial product-market segment. However, this is incorrect because cost considerations should consider the potential return on investment, which is directly influenced by the segment's size.
Based on the explanations provided, option B seems to be the most appropriate answer. Cost considerations often lead to a large number of small, but very homogeneous, product-market segments. This allows businesses to target specific customer groups effectively and efficiently, maximizing profitability while keeping costs in check.