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AP Business with Personal Finance: Marketing to Customers (Drill 8)

Drill 8 ·

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About This Drill

AP Business with Personal Finance: Marketing to Customers (Drill 8) is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.

This drill covers market segmentation and target-market selection; it uses an invented company and original figures.

Passage

Halden & Crowe Books is an independent bookstore deciding which customer group to focus its marketing on next year. The owners compiled a snapshot of four customer segments in their area, showing the number of households in each, the average amount each household spends at the store per year, and a fit score (1 to 100) estimating how well each segment matches the store's strengths in literary fiction and author events.

Customer segment snapshot

SegmentHouseholdsAvg annual spendFit score
Students4,200$3845
Young families3,100$7260
Retirees2,600$9580
Educators1,800$11090

Questions in This Drill

  1. Which segment has the largest number of households?
  2. Dividing customers into groups such as students, families, and retirees so the store can target its marketing is an example of what marketing concept?
  3. What is the annual revenue potential of the Young families segment (households x average annual spend)?
  4. Why might the Educators segment be the most attractive target if the owners care most about strategic fit and spending per household, despite being the smallest by household count?
  5. Suppose the owners instead prioritize the segment with the highest total annual revenue potential, regardless of fit. Which segment should they target?