To develop psychographic segments, the marketer must understand consumers' willingness to pay, which is most closely related to which of the following concepts?

• A. The total revenue earned by firms in a market
• B. The minimum price at which a producer is willing to sell a good
• C. The equilibrium price determined by market supply and demand
• D. The maximum price a consumer is willing to pay for a good or service

Answer: (D)

Verified step by step guidance

1. Understand that psychographic segmentation involves dividing consumers based on psychological traits, values, attitudes, interests, or willingness to pay.
2. Recognize that willingness to pay refers to the maximum price a consumer is willing to pay for a good or service, reflecting their valuation of the product.
3. Differentiate willingness to pay from other economic concepts such as total revenue (which is price times quantity sold), minimum producer price (the lowest price a seller accepts), and equilibrium price (where supply equals demand).
4. Identify that the concept most closely related to willingness to pay is the maximum price a consumer is willing to pay for a good or service, as it directly measures consumer valuation.
5. Conclude that understanding consumers' maximum willingness to pay helps marketers develop psychographic segments by targeting groups based on their valuation and preferences.