CPP Customer Segmentation Techniques 2 — Questions and Answers
Question 1: Which segmentation approach divides customers based on their actual purchasing behavior, usage rates, and brand loyalty?
- Psychographic segmentation
- Demographic segmentation
- Behavioral segmentation (Correct answer)
- Geographic segmentation
Correct answer: Behavioral segmentation
Behavioral segmentation groups customers by observable actions such as purchase frequency, usage rate, loyalty status, and benefits sought.
Question 2: A company identifies a group of customers who are highly price-sensitive and switch brands based on promotions. This best represents which segment type?
- Value seekers (Correct answer)
- Loyalists
- Convenience buyers
- Premium seekers
Correct answer: Value seekers
Value seekers are price-sensitive customers who actively comparison shop and respond strongly to discounts and promotions.
Question 3: In RFM analysis used for customer segmentation, what does the 'F' stand for?
- Frequency (Correct answer)
- Fidelity
- Funnel
- Financial value
Correct answer: Frequency
In RFM analysis, F stands for Frequency—how often a customer makes a purchase within a defined period.
Question 4: Which segmentation method would best help a B2B pricing manager identify which industries derive the most value from their product?
- Firmographic segmentation (Correct answer)
- Psychographic segmentation
- Geodemographic segmentation
- Behavioral cohort analysis
Correct answer: Firmographic segmentation
Firmographic segmentation classifies B2B customers by industry, company size, revenue, and other organizational characteristics to identify value drivers.
Question 5: A pricing analyst wants to set different prices for customers based on their maximum willingness to pay. Which segmentation basis is most directly relevant?
- Geographic location
- Economic value to customer (EVC) (Correct answer)
- Purchase channel preference
- Brand awareness level
Correct answer: Economic value to customer (EVC)
Economic Value to Customer (EVC) measures the monetary benefit a customer receives from a product, directly informing willingness-to-pay-based segmentation.
Question 6: What is a primary risk of over-segmenting a market for pricing purposes?
- Increased price sensitivity across all segments
- Operational complexity that outweighs revenue gains (Correct answer)
- Reduced ability to use value-based pricing
- Elimination of premium segment opportunities
Correct answer: Operational complexity that outweighs revenue gains
Excessive segmentation increases administrative costs and operational complexity, which can erode the profitability gains that segmentation is intended to create.
Question 7: When using needs-based segmentation, what is the primary variable used to group customers?
- Annual household income
- The specific problem or benefit the customer seeks to address (Correct answer)
- The customer's geographic region
- The customer's lifetime purchase value
Correct answer: The specific problem or benefit the customer seeks to address
Needs-based segmentation groups customers by the specific jobs-to-be-done, pain points, or benefits they seek, enabling more targeted value propositions.
CPP Customer Segmentation Techniques 2
Which segmentation approach divides customers based on their actual purchasing behavior, usage rates, and brand loyalty?