Question

1.The Sharper Image sells high-tech items through its catalogs and specialty stores. The items are designed to appeal to consumers who are adventurous and active and have a flair for self-expression. Based on this, The Sharper Image should use demographic variables as their primary means of market segmentation.

True

False

2.The Prospect Theory Curve shows that as firms produce more units of a product, they become better at making it more efficiently, so cost per unit decreases.

True

False

3.One of the basic principles behind segmentation is that subgroups of customers can be identified on some basis of similarity.

True

False

4.A market research study utilizes a ‘random sampling’ approach. This means that every individual who is a member of the target market has an unknown chance of being selected to be part of the sample group for the study.

True

False

5.The main idea of the “Service Profit Chain” framework is that in order to be profitable, retailers must reduce their employee training costs as much as possible.

True

False

Answer 1

1

False

In this particular case the company should use psychographic variable instead of demographic variable as their primary means of market segmentation.

2

False

Prospect theory relates to consumer choice due to the perception of loss and gain across a reference point. It has nothing to do with the firm’s production and costing.

3

True

Segmentation of customer helps companies create subgroup and identify them based on their similarity.

4

False

Random sampling does not refer to the selection chances of the target audiences. It rather focuses on selection of target audiences randomly. By this process every target audience has a 0.5 chance of being selected for study.

5

False

Service profit chain focuses on idea that if the customers are provided good service, the loyalty of the customers will increase. This means that the employees need to be trained properly and cost cutting in employee training will not help.