Chapter 9 IDENTIFYING MARKET SEGMENTS AND TARGETS Test Item Table

Major Section of the Chapter Level 1: Definition (Knows Basic Terms & Facts) Sneakers Marketing Wars: Heelys, Air Pumps, and Three Billion Trillion Choices (pp. 185-186) Why Segment Markets? (pp. 186-191) Steps in Segmenting and Targeting Markets (pp. 191-201) Level of Learning Level 2: Conceptual (Understands Concepts & Principles) 1, 2 Level 3: Application (Applies Principles)

3, 4, 6, 7, 23, 24, 35, 39, 41, 43

5, 8, 9, 16, 17, 18, 19, 20, 21, 22, 25, 26, 27, 29, 30, 32, 42, 44, 45, 148, 149, 150, 151, 152 49, 50, 51, 52, 53, 54, 56, 106, 112, 113, 114, 115, 118, 119, 120, 132, 153, 155, 156, 158, 159, 160, 161, 162 138, 142, 163, 164

10, 11, 12, 13, 14, 15, 28, 31, 33, 34, 36, 37, 38, 40

46, 47, 55, 63, 64, 71, 74, 75, 76, 84, 90, 92, 94, 95, 96, 97, 99, 100, 108, 129, 131

Positioning the Product (pp. 201-202) Video Case: Nokia (pp. 203-205)

133, 134, 137, 139, 140, 141

48, 57, 58, 59, 60, 61, 62, 65, 66, 67, 68, 69, 70, 72, 73, 77, 78, 79, 80, 81, 82, 83, 85, 86, 87, 88, 89, 91, 93, 98, 101, 102, 103, 104, 105, 107, 109, 110, 111, 116, 117, 121, 122, 123, 124, 125, 126, 127, 128, 130, 154, 157 135, 136, 143

144, 145, 146, 147

Note: Bold numbers indicate short essay questions.

CHAPTER 9 IDENTIFYING MARKET SEGMENTS AND TARGETS MULTIPLE CHOICE QUESTIONS
9-1 CHAPTER OPENING EXAMPLE: SNEAKERS CONCEPTUAL

Heely Sports Ltd. used __________ in its search for a market for the latest sneaker craze. a. b. c. d. e. market segmentation financial analysis geographic segmentation organizational marketing sales forecasting

Answer: a Page: 186 Rationale: All sneaker manufacturers search for new market segments of consumers and ways to differentiate their products from the competition. 9-2 CHAPTER OPENING EXAMPLE: SNEAKERS Which of the following statements about U.S. trends for sneakers is true? a. b. c. d. e. Teenagers are 31 percent of total sales and are willing to spend more for sneakers than older consumers. The average price paid for a pair of sneakers is over $100 and expected to increase. Baby boomers are the largest market for sneakers. Most sneakers bought for use in some sport are bought for tennis. In the sneakers market, the growth potential for women is lower, but women will pay a higher average price for a pair. CONCEPTUAL

Answer: a Page: 186 Rationale: Over 60 percent of sneakers purchased in 2000 cost less than $50 per pair. Teenagers are the largest market for sneakers and are willing to pay more for them. Most sneakers that are bought for use in some sport are bought for running. Women are buying more and more sneakers, but men on average buy more and are willing to pay more than women. 9-3 MARKET SEGMENTATION DEFINITION

Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action is called: a. b. c. d. e. consumer differentiation. psychographics. market segmentation. market delineation. aggregation marketing.

Answer: c Page: 187 Rationale: Key term definition—market segmentation

9-4 MARKET SEGMENTATION

DEFINITION

Market segmentation involves aggregating prospective buyers into groups that have common needs and will: a. b. c. d. e. pay attention to marketing messages. respond similarly to a marketing action. be responsive to marketing research. use the same payment methods. go shopping on a regular basis.

Answer: b Page: 187 Other Location: web Rationale: Key term definition—market segmentation 9-5 MARKET SEGMENTATION To be identified as a market segment, its members must: a. b. c. d. e. represent a large share of the entire market and have critical buying power. have common needs and respond similarly to market actions. have different needs and have potential for future growth. have different needs and respond similarly to market actions. have potential for future growth and have potential for increased profit or ROI. CONCEPTUAL

Answer: b Page: 187 Rationale: An organization develops its segments by aggregating prospective buyers on the basis of common needs and similar response to a marketing action. 9-6 MARKET SEGMENTATION DEFINITION

__________ involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marking action. a. b. c. d. e. Diversification Divestment Market segmentation Market augmentation Repositioning

Answer: c Page: 187 Rationale: Key term definition—market segmentation.

516

organizational buyers. e. b. c. product differentiation. c. d. market differentiation. c. e. such as product features or advertising.9-7 MARKET SEGMENTS DEFINITION The phrase “relatively homogeneous groups of prospective buyers” is most descriptive of: a. d. Answer: a Page: 187 Rationale: Key term definition—market segments 9-8 MARKET SEGMENTS CONCEPTUAL Each __________ consists of people who are relatively similar to each other in terms of their consumption behavior. b. a. market penetration. dual distribution. qualified prospects. 9-9 PRODUCT DIFFERENTIATION CONCEPTUAL A firm strategy of using different marketing mix activities. d. b. demographic clusters. market segments. full coverage marketing. to help consumers perceive a product as being different and better than competing products is called: a. ultimate consumers. e. consisting of people who are relatively similar to each other in terms of their consumption behavior. market segment demographic cluster organizational buyer ultimate consumer qualified prospect Answer: a Page: 187 Rationale: A market segment is a relatively homogeneous group of prospective buyers. Answer: c Page: 187 Other Location: web Rationale: Key term definition—product differentiation .

the first fluoride toothpaste. including Fresh Ink. Nature's Sketchbook. Maxine. a. e. and Tree of Life cards—all made by Hallmark for sale in its stores. minty flavor to appeal to adults. to help consumers perceive a product as being different and better than competing products. product sampling product extrapolation product differentiation usage segmentation psychographic segmentation Answer: c Page: 187 Rationale: Product differentiation is a strategy of using different marketing mix activities. Shoebox. Hallmark uses a __________ strategy to reach several different market segments. to help consumers perceive a product as being different and better than competing products.9-10 PRODUCT DIFFERENTIATION APPLICATION When Procter & Gamble introduced Crest toothpaste. d. What is this marketing strategy called? a. Mahogany. c. such as product features (in this case the toothpaste flavor) or advertising. e. Some time later the same basic formula was given a fresh. c. product sampling product extrapolation product differentiation usage segmentation behavioral segmentation Answer: c Page: 187 Rationale: Product differentiation is a strategy of using different marketing mix activities. b. 9-11 PRODUCT DIFFERENTIATION APPLICATION At a Hallmark store you can find several different brands of greeting cards. such as product features (in this case the brand of card) or advertising. d. 518 . it was intended for use by children and was therefore given a child-appealing bubblegum flavor. b.

market sectioning. Answer: c Page: 187 Rationale: Product differentiation is a strategy of using different marketing mix activities. This has been useful in coping with local Chinese governments and developing a distinctly different Chinese strategy. and Alka-Seltzer Heartburn Relief. To succeed in China. c. Each Alka-Seltzer product is targeted to a slightly different market segment. e. such as product features or advertising (in this case. .S. product positioning.9-12 PRODUCT DIFFERENTIATION APPLICATION Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach. The maker of AlkaSeltzer is using: a. product segmentation. such as product features (in this case the various types of Alka-Seltzer) or advertising. market sectioning. a friendly chicken character) to help consumers perceive a product as being different and better than competing products. In opened its 500th restaurant in China in 2001 and is more popular than McDonald's in that country. which includes Chicky. Chicky. to help consumers perceive a product as being different and better than competing products. d. product segmentation. One of the reasons is that when the company entered the Chinese market. market segmentation. e. c. b. and Canada. b. a friendly chicken character that has a strong appeal for children. product differentiation. Alka-Seltzer Morning Relief (for morning headaches and fatigue. d. product base development. it recruited its managers from Taiwan and the Chinese communities in the U. 9-13 PRODUCT DIFFERENTIATION APPLICATION KFC is a popular fast-food restaurant in the U. product differentiation. product base development. Answer: c Page: 187 Rationale: Product differentiation is a strategy of using different marketing mix activities. Today you can buy Original Alka-Seltzer. Extra Strength Alka-Seltzer. KFC used: a.S.

many comparable alternatives are available to the consumer. in order to compete in the wristwatch market. The Rolex brand tends to be perceived as an expensive status symbol. and are often available only in fine jewelry stores or specialty shops. By using distinctly different pricing and distribution strategies. both the Timex and the Rolex wristwatches will satisfy the consumer's need to know the time of day. b. a customer gets fresh rice with soy or sweet chili sauce with his or her chicken. some Rolex wristwatches carry a price tag of several thousand dollars. and in Thailand. b. The image of the Timex is very different from that of Rolex. KFC uses: a. market segmentation. market sectioning. In this example. For most products. However. competition is extreme. 520 . create cognitive dissonance in consumers who are considering the purchase of a wristwatch. develop similar products.9-14 PRODUCT DIFFERENTIATION APPLICATION KFC has modified its product to satisfy different market segments. Rolex watches are distributed more selectively. e. such as product features (in this case the type of starchy food offered) or advertising. build customer loyalty through direct competition. e. d. each marketer has attempted to create a distinct product image in the mind of the consumer. and inexpensive. to help consumers perceive a product as being different and better than competing products. and department stores in all sizes of communities. compete for the same segment. In Holland the mashed potatoes are replaced with a potato-and-onion croquette. product positioning. product differentiation. c. consumers view Timex watches as being dependable. relatively accurate. d. product base development. the marketers of Timex and Rolex watches have attempted to: a. use a product differentiation strategy. Answer: c Page: 187 Rationale: Product differentiation is a strategy of using different marketing mix activities. Timex watches can be purchased in drug stores. In general. 9-15 PRODUCT DIFFERENTIATION APPLICATION Some Timex wristwatches can be purchased for less than $30. c. discount stores. Answer: c Page: 187 Rationale: In today's market place.

a. b. self-regulatory industry standards government regulations top-level management market needs controllable environmental factors Answer: d Page: 187. it relates supply (__________) to demand (the customer needs). c. Figure 9-1 Rationale: Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to marketing action (in this case. self-regulatory industry standards government regulations the organization's actions strategic objectives tactical goals Answer: c Page: 187. . b. c. government regulations. a. Figure 9-1 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to the organization’s marketing program. 9-18 MARKET SEGMENTATION CONCEPTUAL Market segmentation is only a means to an end. b. the organization's marketing program. d. self-regulatory industry standards. Answer: c Page: 187.9-16 MARKET SEGMENTATION CONCEPTUAL The process of segmenting a market and selecting specific segments as targets is the link between __________ and the organization's marketing program. e. d. top-level management. the organization’s marketing program). e. In economist's terms. d. 9-17 MARKET SEGMENTATION CONCEPTUAL The process of segmenting a market and targeting specific segments is the link between various buyers' needs and: a. controllable environmental factors. c. e. Figure 9-1 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to the organization’s marketing program.

c. b. a.9-19 MARKET SEGMENTATION CONCEPTUAL Market segmentation is only a means to an end. create innovation. are socially responsible. c. e. e. d. are legal. e. profits and/or other organizational goals. to relate supply to demand. Figure 9-1 Rationale: Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to marketing action on the part of the organization. and to increase sales and profitability. 9-21 MARKET SEGMENTATION Marketers use market segmentation to: a. c. do all of the above. 522 . increase sales and profitability. d. Answer: c Page: 187. b. CONCEPTUAL Answer: e Page: 187 Other Location: web Rationale: Market segmentation is used to link market needs to marketing programs. Answer: a Page: 187 Rationale: A basic test of the usefulness of the segmentation process is whether it leads to tangible marketing actions to increase sales and profitability. b. d. relate supply to demand in economic terms. 9-20 MARKET SEGMENTATION CONCEPTUAL A basic test of the usefulness of the segmentation process is whether it leads to tangible marketing actions that: a. differentiate shareholders. increase overall sales. to develop marketing actions related to the 4Ps. In economist's terms. develop specific marketing actions related to the 4 Ps. link market needs to an organization's marketing program. tactical goals government regulations customer needs strategic objectives product positions. market segmentation relates supply (the organization's actions) to demand (__________).

snowboard. DEFINITION Answer: d Page: 188 Other Location: web Rationale: Key term definition—market-product grid . Answer: c Page: 188 Rationale: Vans targets the rising wave of skateboard. and outdoor enthusiasts. a. c. total anticipated profit for each product to segments. 9-23 MARKET-PRODUCT GRID DEFINITION A __________ is a framework to relate the segments of a market to products offered or potential marketing actions by the firm. estimated expenses for products sold to various market segments. e. c. d. d. market segmentation. biking. d. sales forecasting. MSA and NAICS. e. the segments of a market to relative market share compared to closest competitor. b. b. This strategy is an example of: a. the segments of a market to products offered or potential marketing actions by the firm. e.9-22 MARKETING NEWSNET CONCEPTUAL Small athletic shoe manufacturers such as Vans and Customatix have targeted niche markets and made shoes designed to satisfy needs of different customers. mass customization. synergy. c. total anticipated revenue for each product to market segments. Customatix targets those who wish to design their own shoes. b. growth-share matrix payoff table market-product grid product differentiation table cross tabulation Answer: c Page: 188 Rationale: Key term definition—market-product grid 9-24 MARKET-PRODUCT GRID A market-product grid is a framework to relate: a.

9-27 ONE PRODUCT. d. When its increases in expenses more than offset the potentially increased revenues from segmentation. c. CONCEPTUAL make optimal decisions under conditions of uncertainty. and manufacturing expenses. b. profit. act as its own distributor. the extra cost of developing and producing additional versions of the product creating a service gap indirect distribution and logistics problems strategic planning amortization costs Answer: a Page: 190 Other Location: web Rationale: The incremental costs of taking a product to new product segments are rarely as large as those for developing an entirely new product. d. 524 . relate likely sales of products to prospective market segments. e. c. Answer: d Page: 189 Rationale: A business firm goes to the trouble and expense of segmenting its market when it expects that this will increase its sales. which often results extremely high research. not attempt to segment its market. e. c. e. reduce production costs. b. a firm should not attempt to segment its market. 9-26 MARKET SEGMENTATION CONCEPTUAL A business firm would segment its market when this strategy increases its sales revenue. Answer: c Page: 188 Rationale: A market-product grid is a framework to relate the segments of a market to the products offered or potential marketing actions by the firm. screen many new product ideas in order to select the one with best long-run market potential. it should: a. profit. d. relate the product life cycle to consumer demand. b. it avoids __________. discontinue manufacturing any products that are not in the mature stage of their product life cycle. terminate as many employees as possible to save money. and return on investment. and return on investment. a. MULTIPLE MARKET SEGMENTS CONCEPTUAL When a firm produces only a single product or service and attempts to sell it to two or more market segments.9-25 MARKET-PRODUCT GRID One advantage of a market-product grid is that it can be used to: a. which will lower quality. engineering. When expenses are greater than the potentially increased sales from segmentation. select representative samples of consumers for marketing research studies.

e. and manufacturing expenses. and hard bristle and a short or normal length head. e. c. MULTIPLE MARKET SEGMENTS CONCEPTUAL What is the most likely way for consumers to benefit because a firm uses a strategy of one product for multiple market segments? a. walking shoes. 9-29 ONE PRODUCT. b. . is much more profitable. a one-product-andmultiple-market-segment strategy: a. d. is a much more effective means of meeting consumers' individual needs. has significantly higher distribution costs. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a single product with multiple market segments? a. d. medium. which are available in a soft.9-28 ONE PRODUCT. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. d. Answer: c Page: 190 Rationale: When a firm produces only a single product or service and attempts to sell it to two or more market segments. Answer: c Page: 190 Rationale: A one product and multiple market segment strategy simply involves producing a single product and selling it to two or more market segments. Reebok shoes makes tennis shoes. increased satisfaction of consumer wants and needs increased number of choices lower retail prices because of lower production costs improved service lower retail prices because of lower marketing costs Answer: c Page: 190 Rationale: Producing a single product and selling it to multiple market segments gives important production economies of scale that may be passed on to consumers as lower prices (alternative c). running shoes. as is the case with Johnson's Baby Oil. Kellogg's and Post both make bran cereals with raisins. and Weeboks. b. c. b. Reach Toothbrush makes several versions of its toothbrush. 9-30 ONE PRODUCT. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. c. engineering. creates greater economies of scale (cost savings) in manufacturing costs. is a more effective way of meeting organizational objectives. MULTIPLE MARKET SEGMENTS CONCEPTUAL When compared to a multiple-products-multiple-market segments strategy. which often entails higher research. e. it avoids the extra cost of developing and producing additional versions of the product.

b. It appeals to an older market because it is reminiscent of TV dramas of previous decades. c. It is a show that is appropriate to watch with young children without having to worry about being embarrassed. A new movie used several different advertisements. One set of previews showed the action scenes in order to attract one audience. and another line of cake mixes for people with microwave ovens. MULTIPLE MARKET SEGMENTS CONCEPTUAL Which of the following is an example of a multiple products and multiple markets strategy? a. d. Answer: c Page: 189 Rationale: A multiple products and multiple markets strategy has a number of distinct products each targeted to a different type of user. This WB television show is an example of: a. synergy. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. mass customization. one product with multiple market segments.S. Betty Crocker carries one line of cake mixes for people with conventional ovens. e. and the other set showed romantic scenes to attract another audience. Only alternative c does not involve only one product. d. none of the above. College Football Magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. Answer: a Page: 190 Rationale: Television shows are single products frequently directed to two or more distinct market segments. 9-32 MULTIPLE PRODUCTS. MULTIPLE MARKET SEGMENTS APPLICATION Seventh Heaven is a television show that is designed to have a broad appeal to a wide number of groups. e. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. It is a show that teaches the importance of moral values by showing teens on the show learning to cope with real-life problems without being too moralistic. 526 . b.9-31 ONE PRODUCT. c. multiple products with multiple market segments.

b. Synergy. b. This is an example of: a. d. Answer: e Page: 190 Rationale: This is an example of multiple products (greeting cards at different price points) offered to multiple segments. e. decreases the cost of the physical plant. one product and multiple market segments. Mass customization. 9-34 MULTIPLE PRODUCTS. Answer: a Page: 190 Rationale: Text term definition—mass customization . Many firms are now offering different product or services to highend or low-end segments. c. are an example of multiple products aimed at multiple markets.9-33 MULTIPLE PRODUCTS. mass customization. adds to the manufacturer's sales revenues and profits. and: a. d. price discrimination. Price discrimination.50.99 line of greeting cards. reduces the number of employees required. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. stabilizes the sales revenues and profits. doesn't reduce quality or increase price. 9-35 MASS CUSTOMIZATION DEFINITION __________ is tailoring goods or services to the tastes of individual customers on a high-volume scale. Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it serves customers' needs better. c. e. a. b. d. Answer: e Page: 190 Rationale: Manufacturing multiple products for multiple market segments is worthwhile under the conditions described if sales revenue and profits increase. Multiple products in multiple segments. multiple products and multiple segments. e. synergy. MULTIPLE MARKET SEGMENTS APPLICATION You can go to your nearest Hallmark card store and buy a birthday greeting card for a friend and pay $4. One product and multiple market segments. each targeted at a different type of user. c. conforms to all union regulations. or you can buy a card that's not quite as nice but just as sentimental from the store's new $.

There's no inventory for sale. mass customization. multiple products in multiple segments. This is an example of: a. e. Customers can choose up to 70 minutes of music for around $1 per song. repositioning. 528 . Custom Foot guarantees your shoes will be ready within three weeks. c. d. synergy. The retailer sells 10. e.50. mixing and matching design components such as style. Customers browse the store.9-36 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. and contents) to the tastes of individual customers on a high volume scale. price discrimination. d. you select materials. title. b.000 variations in women's shoes and 7. This is an example of: a. but the only shoes on hand are display models. About 100 display shoes provide style guidelines. and leather type. textures and a style of sole. 9-37 MASS CUSTOMIZATION APPLICATION Yahoo's shopping portal recently began to offer people who visited the site the ability to buy songs from Imix's collection of more than 200. color. At first glance none look any different from your basic oldfashioned shoe store.800 in men's. color. b. and customers go home empty-handed—at least initially. Once you choose a shoe style. c. colors.000 tracks from record labels that include BMG and Sony Music Group. mass customization. Then they can choose an art design and a title for each CD and have a disc shipped for $2. market melding. Answer: a Page: 190 Rationale: Mass customization is tailoring goods or services ( the CD art. one product and multiple market segments. Answer: a Page: 190 Rationale: Mass customization is tailoring goods or services (the style. and leather type of the shoes) to the tastes of individual customers on a high volume scale. market augmentation. how the 80/20 rule is implemented.

This is an example of: a. synergy. c. From this quote. president and CEO of Model E. mass customization. perceptual mapping. Answer: e Page: 190 Rationale: The comparison of the Model E to Dell is the phrase that should remove any doubt from students' minds about what kind of business this is. 9-39 BUILD-TO-ORDER DEFINITION __________ is manufacturing a product only when there is an order from a customer. b. but because of production issues. launch. mass aggregation. Mass customization Synergy Build-to-order Price discrimination Multiple products in multiple segments Answer: c Page: 190 Rationale: Text term definition—build-to-order 9-40 BUILD-TO-ORDER APPLICATION Model E is a new type of car manufacturer that relies on the Internet to build new car designs for an individual from prototypes to marketable vehicles much faster than ever before possible. d. repositioning. and direct delivery. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. e. "Think of Model E as the Dell of the auto industry.9-38 MASS CUSTOMIZATION APPLICATION Paris Miki enables customers to help design their own eyeglasses." said William Santana Li. e. a. c. built-to-order (BTO). d. e. b. d. a customer does not have the ability to specify an unlimited number of features. you should recognize that Model E relies on: a. using a system that eliminates the need to try on countless pairs of eyeglasses to find the right one. Answer: a Page: 190 Rationale: Mass customization is tailoring goods or services (their eyeglasses) to the tastes of individual customers on a high volume scale. target marketing. repositioning. . c. b. how the 80/20 rule is implemented. a one-product-one-market-segment strategy. It is very similar to mass customization.

the ability to be exposed to more informative advertising messages. higher trade-in values for older model cars. more tax revenues for government. lower prices. larger rebates at the point of sale. e. d.9-41 SYNERGY DEFINITION Marketing strategies provide the organization with __________. easier access to product through improved distribution. d. DEFINITION Answer: a Page: 190 Rationale: Key term definition—synergy 530 . e. a. and so on. b. b. improved quality on existing products. b. the increased customer value achieved through performing organizational functions more efficiently. c. c. investors should make more money executives should get larger salaries products should be made more cheaply customers should be better off the government should collect more taxes Answer: d Page: 190 Other Location: web Rationale: The synergy called “increased customer value” can take the form of more products. 9-43 SYNERGY Synergy is the increased customer value achieved through: a. but the ultimate criterion is that customers should be better off as a result of increased synergies. 9-42 SYNERGY CONCEPTUAL The ultimate criterion in segmenting markets is that__________ as a result of increased synergy. e. utopianization innovation dichotomy transmogrification synergy Answer: e Page: 190 Rationale: The key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and achieving organizational synergy. c. a. performing organizational functions more efficiently. the increased customer value achieved through performing organizational functions more efficiently. d.

e. recognize a need.com allows customers to visit its website and design a sneaker to their own personal specifications. Figure 9-3 Rationale: The process of segmenting and targeting markets involves five key steps: (1) form prospective buyers into segments. tailoring goods or services to the tastes of individuals on a high-volume scale. e. 9-45 MARKETING NEWSNET CONCEPTUAL Cmax.9-44 MARKETING NEWSNET CONCEPTUAL To create a _________ strategy. c. . and (5) take marketing actions to reach target markets. (4) select target markets. b. 9-46 SEGMENTING AND TARGETING MARKETS The first step in segmenting and targeting markets is to: a. develop a market-product grid DEFINITION Answer: b Page: 191. c.com allows customers to visit its website and design a sneaker to their own personal specifications. d. b. (3) develop a marketproduct grid and estimate size of markets. e. d. This would be descriptive of which type of market segmentation variable? a. product sampling product extrapolation mass customization usage segmentation psychographic segmentation Answer: c Page: 191 Rationale: Today’s Internet ordering and flexible manufacturing and marketing processes have made mass customization possible. psychographic demographic socioeconomic usage behavior Answer: a Page: 192 Other Location: web Rationale: Psychographic segmentation is used to divide people according to activities (exercise) and interests (comfort and technology). create product groupings. cmax. a. d. estimate size of the overall market. c. This website would particularly appeal to people who exercise regularly and are very aware of what shoe styles fit comfortably on their feet. b. (2) form products to be sold into groups. form prospective buyers into groups.

9-49 CRITERIA FOR FORMING SEGMENTS The best segmentation approach is the one that: a. recognizes similarities of needs of potential buyers within a segment. d. c. c. (4) select target markets. to preservatives used in salad bars. d. b. 9-48 CRITERIA FOR FORMING SEGMENTS APPLICATION Between two and three percent of the population have some degree of allergic reaction. usually mild. e. the limited benefit to consumers in the segment. e. 532 . create product groupings develop a market-product grid estimate size of market take marketing actions to reach that target market form prospective buyers into market segments Answer: d Page: 192. b. recognizes different needs of buyers among different segments. c. d. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. Figure 9-3 Rationale: The process of segmenting and targeting markets involves five key steps: (1) form prospective buyers into segments. instrumentality of sufficient marketing objectives to ignore that segment different needs of buyers among different segments similarity of needs of potential buyers within a segment simplicity and cost of assigning potential buyers to segments potential for increased profit and ROI Answer: e Page: 192 Rationale: The segment would probably not be profitable—given the size of the market. and the high cost of running a duplicate salad bar. CONCEPTUAL Answer: e Page: 192 Rationale: One of the best criteria to use in forming segments is the opportunity for increased profits and ROI. makes it easiest to reach the segment. and (5) take marketing actions to reach target markets. What should a marketer do once he or she has selected a target market? a. b. (3) develop a marketproduct grid and estimate size of markets. e. maximizes the opportunity for future profit and return on investment. is simplest and least costly in assigning potential buyers to segments. (2) form products to be sold into groups. Restaurants might consider people with these "allergies" as a separate segment.9-47 SEGMENTING AND TARGETING MARKETS DEFINITION There are five steps involved in segmenting and targeting a market. This multiple product and multiple market segment strategy would have the greatest difficulty meeting which of the following criteria used to form market segments? a.

If increased sales don’t offset extra costs. e.” Mikki's father is expressing concern about the: a. combine them into fewer segments. If no such action exists. e. potential for increased profit and ROI. simplicity and cost of assigning potential buyers to segments. d.9-50 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL A different market segment usually requires a different marketing action that in turn means greater costs. “Reaching a segment requires a simple but effective marketing action. Reaching a segment requires a simple but effective marketing action. d. potential for increased profit similarity of needs of potential buyers within a segment competitive position potential of a marketing action to reach a segment simplicity and cost of assigning potential buyers to segments CONCEPTUAL Answer: c Page: 192 Rationale: Competitive position is a reason for selecting a market. increase the advertising budget try direct mail instead of broadcast advertising cancel current activities combine segments discontinue offering the good or service Answer: d Page: 192 Rationale: There should be a difference of needs of buyers among segments. b. Answer: a Page: 192 Rationale: One of the five criteria to use in forming segments is the potential of a marketing action to reach a segment. don't segment. If the needs of the various segments aren’t very different. 9-51 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL When Mikki asked her father for his advice about marketing software for the disabled. e. it is best to combine segments and reduce the number of marketing actions. c. A different segment usually requires a different marketing action that means greater costs. . a marketer should __________ to reduce the number of marketing actions. not for segmenting it. d. c. b. different needs of buyers among different segments. a. he told her. If increased revenues don't offset extra costs. similarity of needs of potential buyers within a segment. feasibility of marketing actions to reach the segment. 9-52 FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. If no such action exists. b. don’t segment. c.

d. 9-55 CONSUMER SEGMENTATION VARIABLES DEFINITION Two general categories used to segment consumer markets are __________ and buying situations. a. 534 . diversify their interests c. b. This means being able to recognize the characteristics of potential buyers and then assigning them to a segment without encountering excessive costs. a. e. potential for increased profit similarity of needs of potential buyers within a segment difference of needs of buyers among segments cost of reaching the segment simplicity and cost of assigning potential buyers to segments CONCEPTUAL Answer: d Page: 192 Rationale: Cost of reaching the segment is a reason for selecting a market. ignore any and all similarities Answer: d Page: 192 Rationale: A marketing manager must be able to put a market segmentation plan into effect. This means being able to recognize the characteristics of potential buyers and __________ without encountering excessive costs. maximize internal considerations b. b. 9-54 FORMING SEGMENTS CONCEPTUAL A marketing manager must be able to put a market segmentation plan into effect. e.9-53 FORMING SEGMENTS Which of the following is NOT a criterion used in forming market segments? a. not for segmenting it. c. c. d. assign them to a segment e. demand frequency demand volume demand characteristics customer characteristics customer lifestyles Answer: d Page: 192 Rationale: Two kinds of variables are generally used to segment consumer markets: (1) customer characteristics and (2) buying situations. optimize their different needs d.

d. In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. psychographics and demographics. age behavior socioeconomic geographic perceptual Answer: d Page: 247 Other Location: web Rationale: The key phrase is North Carolina barbecue sauce. e. which would mean that the easiest market to target would be North Carolinians. GE built a downsized microwave oven to hang under kitchen cabinets. c.. . psychographic variables and buying power. She wants to target local people who like the special blend of flavors found only in North Carolina mustard-based barbecue sauce. 9-58 SEGMENTATION BY REGION APPLICATION Doris Lewis owns Lewis Edibles.B. Answer: a Page: 192 Rationale: KFC has discovered that to be successful in globalization it must be willing to adapt to the taste preferences of different regions. buying products and customer characteristics. c. A gourmet grocer advertises its services on a small-audience classical music station even though there is a much larger-audience rock station in the area. d. Sauce. customer characteristics and buying situations. c. e. e. b. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. b. 9-57 SEGMENTATION BY REGION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a. Answer: d Page: 192 Rationale: Two kinds of variables are generally used to segment consumer markets: (1) customer characteristics and (2) buying situations.Q.9-56 CONSUMER SEGMENTATION VARIABLES CONCEPTUAL Variables used to segment markets can be divided into two general categories. Inc. a. The easiest method for segmenting her market is to use __________ segmentation variables. d. a company that makes Tongue Tinglin' B. b. demographics and buying situation. They are: a.

The market segment for Modern Maturity magazine was defined by: a. usage rate and demographic characteristics. 9-60 SEGMENTATION BY DEMOGRAPHICS APPLICATION Modern Maturity magazine is a publication that is sent to all AARP members who by organization definition have to be at least 50-years-old to join. b. Answer: d Page: 192 Other Location: web Rationale: Age is a commonly used demographic segmentation variable. b. c. e. d. a. d. demographic characteristics.9-59 SEGMENTATION BY REGION APPLICATION Universal Concerts is planning on bringing a series of concerts to Canada next year. c. There are different music preferences in east and west Canada. 536 . demographic and geographic characteristics. buyer situations. demographic characteristics. d. In order for its concerts to be a success it needs to know that Western Canadians like country music and that a country music event in Eastern Canada is much more likely to have empty seats. b. e. 9-61 SEGMENTATION BY DEMOGRAPHICS APPLICATION When the Benihana Frozen Foods Corporation began to offer its Famous Restaurant Classics meals in single serving packages. lifestyle and demographic characteristics. Answer: a Page: 192 Rationale: Psychographic includes consumer activities and interests—country music. e. geographic and psychographic characteristics. psychographic characteristics. it was relying on a __________ segmentation variable to define a market based on serving size. This consumer behavior requires Universal Concerts to segment its Canadian market according to: a. regional demographic lifestyle geographic psychographic Answer: b Page: 192 Rationale: Household size is a demographic variable. usage rates. usage patterns. c.

race. c. 9-63 SEGMENTATION BY DEMOGRAPHICS Which of the following is a demographic variable? a. such as gender. age. Whether the prospect is a homeowner indicates the use of which type of consumer segmentation variable? a. personality gender usage state needs MSA DEFINITION Answer: b Page: 192 Rationale: Demographics are observable differences among people. 9-64 SEGMENTATION BY DEMOGRAPHICS All of the following are consumer demographic variables EXCEPT: a. DEFINITION Answer: c Page: 192 Rationale: Alternative c is a segmentation variable for organizational. c. not consumer markets. household size. race. household size. gender. d. age. c. and so on. . NAIC code. e. usage behavior demographic buying situation psychographic Answer: c Page: 192 Rationale: Residence tenure is a demographic variable.9-62 SEGMENTATION BY DEMOGRAPHICS APPLICATION When a telemarketer calls to sell a consumer vinyl siding for his or her home. d. e. e. d. the first question the telemarketer asks is if the person answering the phone is a homeowner. b. b. b.

it appears the State of Alabama Board of Tourism has segmented the market using __________ variables. 9-66 SEGMENTATION BY DEMOGRAPHICS APPLICATION Which of the following statements demonstrates the formation of a segment based on household size? a. GE downsized its microwave oven.9-65 SEGMENTATION BY DEMOGRAPHICS APPLICATION The State of Alabama Board of Tourism ran a series of ads showing traditional families enjoying various attractions in the state. regional demographic socioeconomic geographic psychographic Answer: b Page: 192 Rationale: Demographics are observable differences among people. A gourmet grocer advertises its services on a small-audience classical music station even though there is a much larger-audience rock station in the area. c. e. and so on. d. household size. b. race. age. GE built a downsized microwave oven to hang under kitchen cabinets. c. 538 . such as gender. b. Because smaller households have smaller kitchens. Answer: b Page: 192 Rationale: Household size is a demographic customer characteristic. and restyled it to hang under cabinets. Since the apparent target of these is traditional families. Campbell's makes spicier nacho cheese sauce for its distributors in Texas than it does in Maine. a. e. d. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays.

9-67 SEGMENTATION BY DEMOGRAPHICS APPLICATION At a Hallmark store you can find several different product lines of greeting cards. a. 9-68 SEGMENTATION BY DEMOGRAPHICS. e. who want to be able to pack up and leave at a moment's notice. PSYCHOGRAPHICS APPLICATION Ford Motor Company uses the slogan “No Boundaries” for its ad campaigns for Ford SUVs. but because the campaign is trying to appeal to people who don't like the restrictions of a sedan. It invites people who want ultimate people-carrying and gear-storing capabilities “to be outfitted with the most far-reaching sports utility vehicle on earth. usage rate demographic. d. b. b. a. . psychographic Answer: e Page: 192 Rationale: Household size is a demographic variable. including Fresh Ink. This is an example of __________ segmentation. c. The Mahogany line is designed to appeal to African-Americans. it would be using __________ segmentation. demographic psychographic. such as gender.” If the SUV campaign were simply geared to household size. Maxine. c. lifestyle geographic. usage rate demographic. Shoebox. race. Nature's Sketchbook. household size. and so on. The attitude that sedans are inadequate and that freedom and independence are desirable reflect psychographic segmentation variables. age. regional demographic lifestyle geographic psychographic Answer: b Page: 192 Rationale: Demographics are observable differences among people. socioeconomic. Mahogany. d. and Tree of Life cards—all made by Hallmark for sale in its stores and intended to appeal to different target markets. it is relying on __________ segmentation. e. and who enjoy freedom and independence.

interests. and Health all use a ____________________ segmentation strategy. Psychographic characteristics like personality (gregarious. b. interests. geographic. compulsive) and lifestyle (consumer activities. keep them under their bed and when friends come over. Golf Digest. opinions). attitudes. c. Selling to the market segment called “keepers” probably means that Nike is using which of the following types of customer characteristic variables to segment this market? a. e. These magazines are designed to appeal to people who enjoy certain lifestyles. d. psychographic. b. and opinions are considered: a. d. 9-70 SEGMENTATION BY PSYCHOGRAPHICS APPLICATION Nike recently debuted the Air Jordan XVII with a price tag of $200.9-69 SEGMENTATION BY PSYCHOGRAPHICS Magazines like Fitness. and e describe buying situation variables. demographic variables. Nike is targeting a market it identifies as “keepers. for example. demographic. Alternatives c. and household size. d. Field & Stream. DEFINITION Answer: d Page: 192 Rationale: Psychographic characteristics include personality (gregarious. consumer behavior. 9-71 SEGMENTATION BY PSYCHOGRAPHICS Consumer activities. c. e. a. psychological variables.” people who buy the shoes. interests. age. demographics psychographics usage benefits sought behavior Answer: b Page: 192 Other Locations: web Rationale: Alternative a refers to gender. d. c. opinions) describe this segmentation variable Nike is using. age. race. e. sociocultural. The shoes arrived at shoe stores in a metallic silver briefcase instead of a shoebox. introverted. APPLICATION Answer: e Page: 192 Rationale: Lifestyle is a psychographic variable. show them the shoes. b. psychographic variables. introverted. 540 . compulsive) and lifestyle (consumer activities.

e. The Shoebox line sells for $. The MBA and MS degrees are targeted to people who already have a bachelor’s degree and are examples of __________ segmentation. demographics. the MBA. Mahogany. including Fresh Ink. c. Answer: a Page: 192 Rationale: Customer characteristics used in segmenting consumer markets include geographic. Maxine.S. and each is intended to appeal to different target markets. and Tree of Life cards—all cards made by Hallmark for sale in its stores and intended to appeal to different target markets.9-72 SEGMENTATION BY SOCIOECONOMIC APPLICATION At a Hallmark store you can find several different product lines of greeting cards. c. buying situation. . the MS-Integrated Marketing Communication. e. e. psychographic behavior buying situation socioeconomic geographic Answer: d Page: 192 Rationale: Socioeconomic variables include income.99. and psychographic characteristics. 9-74 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION Several customer characteristics used in segmenting consumer markets are based on those from the 2000 U. d. d. The Shoebox line is designed to appeal to people on limited budgets and is an example of __________ segmentation. Shoebox. time of purchase. Nature's Sketchbook. b. c. education and occupation. b. 9-73 SEGMENTATION BY SOCIOECONOMIC APPLICATION At the Daniels College of Business many different degrees are offered such as the Bachelor of Science. Census and include: a. psychographic behavior buying situation socioeconomic geographic Answer: d Page: 192 Rationale: Socioeconomic variables include income. which is a significantly lower price than some of the other Hallmark brands sell for. socioeconomic variables. the MS-Marketing Strategy. type of retail store used. a. education and occupation. psychographics. d. a. usage rate. b.

b. Census and include: a. geographic variables. usage rate. The benefit would be the ability to show the shoes and hopefully to have something that no one else did. 542 . d. socioeconomic variables.S. Selling to the market segment called “keepers” probably means that Nike is using which of the following types of buying situation variables to segment this market? a. c. e. buying situation. c. Answer: b Page: 192 Rationale: Customer characteristics used in segmenting consumer markets include geographic. show them the shoes. b. socioeconomic variables. 9-77 SEGMENTATION BY BENEFITS SOUGHT APPLICATION Nike recently debuted the Air Jordan XVII with a price tag of $200. The shoes arrived at shoe stores in a metallic silver briefcase instead of a shoebox. c.S. 9-76 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION Several customer characteristics used in segmenting consumer markets are based on those from the 2000 U. Nike is targeting a market it identifies as “keepers. demographics. e. time of purchase. d.9-75 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION Several customer characteristics used in segmenting consumer markets are based on those from the 2000 U. demographics. and psychographic characteristics. b. and e describe customer characteristics. b. and psychographic characteristics. Census and include: a. c. d. buying situation usage rate demographics time of purchase type of retail store used Answer: c Page: 192 Rationale: Customer characteristics used in segmenting consumer markets include geographic. type of retail store used. demographics psychographics geographic benefits sought socioeconomic Answer: d Page: 193 Rationale: Alternatives a. e. keep them under their bed and when friends come over.” people who buy the shoes.

b. 9-79 SEGMENTATION BY BENEFITS SOUGHT APPLICATION The slogan for General Foods International Coffee is “It Stirs the Soul. Nyquil uses a segmentation strategy based on __________ variables. you should realize the product is using a __________ segmentation strategy. b. e. c. you know that Select Comfort uses __________ segmentation. c.” Based on that trademarked slogan. General Foods was trying to get consumers to think about how drinking a cup of rich-flavored coffee is indulgent.9-78 SEGMENTATION BY BENEFITS SOUGHT APPLICATION The headline of the ad for the Sleep Number bed by Select Comfort read. sneezing.” From this information. “5 Reasons Why You'll Sleep Better on a Sleep Number Bed. d. aching. . d. 9-80 SEGMENTATION BY BENEFITS SOUGHT APPLICATION Nyquil advertises that it alleviates “the nighttime. Customers and prospects for the Sleep Number bed are seeking the benefit of a better night's sleep. e. b. a. geographic socioeconomic benefits sought product knowledge demographic Answer: c Page: 193 Rationale: Benefits sought is a situational characteristic. geographic socioeconomic benefits sought product knowledge demographic Answer: c Page: 193 Other Location: web Rationale: Nyquil is appealing to people who suffer from colds and who would really like to sleep and feel better. d. sniffling. c. e. fever” and helps you get the rest you need to get better. benefits sought psychographic demographic socioeconomic behavior Answer: a Page: 193 Other Location: web Rationale: Benefits sought includes product features and customer needs. a. stuffy head. coughing. a.

lifestyle. vegetables. psychographics. b. Participants bring casseroles. d. Despite the shrinking pool of business-class travelers. “Make every dish forgettable. life stage. and desserts and all share the food. so that very few business people are authorized to fly first class. British Airways (BA) has grown market share for its transatlantic business class by offering greater comfort. a. c. It is easy to forget to take the bowl that you brought to the dinner home with you. They are able to rest during the flight and to work more effectively upon arrival. Other airlines are rushing to compete because BA has captured market share in this profitable segment at their expense. c. benefits sought.9-81 SEGMENTATION BY BENEFITS SOUGHT APPLICATION Many families today hold potluck meals during holidays or special events. e. industry sector.” 9-82 SEGMENTATION BY BENEFITS SOUGHT APPLICATION Many companies have cut travel budgets. d. Reynolds has recognized how to use _________ variables to segment its market. user status benefits sought demographics family size geographic Answer: b Page: 193 Rationale: Understanding what benefits are important to different customers is often a useful way to segment markets because it can lead directly to specific marketing actions. breads. Answer: d Page: 193 Rationale: British Airways is offering customers important benefits in time. attractive and inexpensive disposable dishes for transporting food. Promotions to frequent fliers stress that passengers can sleep in fully reclining seats and arrive refreshed to carry out a full day's schedule. The slogan Reynolds uses with this new product says it all. BA's strategy is an example of segmenting the market by: a. b. Reynolds responded to this problem by creating Pot Lux cookware. 544 . e.

c." and ads showed elegant women in long white dresses sipping beer from crystal goblets. see it as a side dish. e. In this case.” Which segmentation variable is being used in this example? a. d. trial. b. consumption rate. c. usage rate. b. and it changed the thrust of its marketing message to reflect the more productive target market. 9-84 SEGMENTATION BY USAGE DEFINITION The quantity consumed or patronage (store visits) during a specific period is called: a. Answer: c Page: 193 Rationale: Key term definition—usage rate 9-85 SEGMENTATION BY USAGE APPLICATION Miller beer once called itself "the champagne of bottled beer. Then the company discovered that most beer in the U. is consumed by men 18 to 30 years of age. “doesn't go with breakfast. d. What segmentation variable has it focused on with the newer approach? a. turnover. Pepperidge Farm's ads advise consumers of this bread that this new product. b. usage benefits sought demographics family size geographic Answer: a Page: 193 Rationale: Pepperidge Farm is trying to change light users into medium users and medium users into heavy users. c. inventory. It is breakfast. benefits sought usage product awareness buyer intentions buying condition Answer: b Page: 193 Rationale: The quantity consumed or patronage (store visits) during a specific period is called usage rate. the quantity of beer consumed caused Miller to change its marketing message to appeal to the men 18 to 30 years of age—the heavier users.9-83 SEGMENTATION BY USAGE APPLICATION Pepperidge Farm has developed a new thick-sliced French Toast Swirl bread. . The company realizes most people who eat toast for breakfast. d. e. e.S.

A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. Its market share has been steadily declining as consumers began associating it with something their grandfather ate. d. Post was trying to convince people who had never tried the cereal to try. b. usage demographic behavior lifestyle life stage Answer: a Page: 193 Rationale: Usage rate refers to the quantity consumed. Post recently launched a campaign to increase consumption of the cereal by inviting consumers to try the crunchy cereal on top of their yogurt. 9-87 SEGMENTATION BY USAGE APPLICATION Post Grape-Nuts cereal has been marketed since early in the 20th century. the restaurant appears to have insufficient usage (patronage. e. and more potential usage for breakfast on weekends. Answer: d Page: 193 Rationale: The quantity consumed or patronage (store visits) during a specific period is called the usage rate. c. Post is using which segmentation variable to define its target market? a. during weekdays). e. 546 . c. their salad. A gourmet grocer advertises its services on a small-audience classical music station even though there is a much larger-audience Top 40 station in the area. GE built a downsized microwave oven to hang under kitchen cabinets. d. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners.9-86 SEGMENTATION BY USAGE APPLICATION Which of the following statements demonstrates the formation of a segment based on usage? a. b. which Post is trying to increase by suggesting other product uses. In this case. or their bowl of soup as a delicious addition. Campbell's soup makes spicier nacho cheese sauce for its distributors in Texas than it does in Maine. and people who were familiar with the product to use it a variety of different ways.

family size. b. eighty percent of a firm's expenditures are tax deductible and twenty percent are not. c. d. which suggests: a. b. demographics. In this case. then he or she gets a free gallon of milk. usage. and twenty percent will not.9-88 SEGMENTATION BY USAGE APPLICATION A national car rental firm targets 50 percent of its advertising to salespeople who travel more than 1. This is an example of segmentation by: a. demographics. Answer: a Page: 193 Rationale: The quantity consumed or patronage—store visits—during a specific period is the usage rate. d. family size. Its market is segmented by: a. e. psychographics. Every time a customer purchases a gallon of this brand and gives the clerk his or her Golden Gallon card. and twenty percent should be reserved for emergency demand. usage. When the customer has accumulated enough marks. the card is punched. DEFINITION Answer: c Page: 194 Other Location: web Rationale: Key term definition—80/20 rule . Answer: a Page: 193 Rationale: The quantity consumed or patronage—store visits—during a specific period is the usage rate. eighty percent of a firm's sales are obtained from twenty percent of its customers. In this case. "more than 1. benefits offered.000 miles per week. e. eighty percent of a firm's products will ultimately be sold at the original markup price. benefits offered. 9-89 SEGMENTATION BY USAGE APPLICATION Golden Gallon convenience stores sell Golden Gallon brand milk. b. psychographics.000 miles per week" is a measure of usage rate. d. c. eighty percent of a firm's inventory should be readily available. 9-90 80/20 RULE The 80/20 rule is a concept. the heavier users are those that get the Golden Gallon card punched enough to obtain a free gallon of milk. c. e. eighty percent of a firm's first time users will become brand loyal and twenty percent of the firm's first time users will use the product only once.

While the percentages are merely meant as a guideline. e. c. a New York sales promotion agency. d. the law of inverse proportions the 80/20 rule the survival of the fittest the law of eminent domain the primogeniture rule Answer: b Page: 194 Rationale: The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers. c. This is an example of what classic concept? a. segmenting its market based on family size. segmenting its market according to consumer interest.9-91 80/20 RULE APPLICATION Todd Harris and Associates. e. Answer: b Page: 194 Rationale: Research has shown that approximately 80 percent of an organization's sales are accounted for by 20 percent of its customers. 548 . 9-92 80/20 RULE DEFINITION The 80/20 rule is most closely related to which consumer segmentation variable? a. it would be: a. segmenting its market according to consumer needs. geographic psychographic benefits sought behavior usage Answer: e Page: 194 Other Locations: web Rationale: According to the 80/20 rule. b. segmenting its market based on the 80/20 rule. b. c. augmenting its market. d. 9-93 80/20 RULE APPLICATION If the owners of a bakery want to increase sales of its baked goods by directing its marketing efforts towards the relatively small number of consumers who are responsible for the majority of the baked goods sold. the rule is accurate in that there are heavy users of some products and services and a relatively small proportion of the buying public is responsible for a majority of the sales of those products. eighty percent of a firm's sales are obtained from twenty percent of its customers. e. discovered from analysis of its files that one-fifth of its clients accounted for more than three-quarters of its fees and commissions. d. b.

c. service. psychographics. nonuser). geographic. d. quality. DEFINITION Answer: b Page: 194 Rationale: Buying situations include benefits sought (product features. c. quality. light user. b. e. . psychographics. a. socioeconomic. b. service. b. d. convenience marketing quality marketing frequency marketing quantity marketing benefit marketing Answer: c Page: 193 Rationale: Text term definition—frequency marketing 9-95 SEGMENTATION BY BUYING SITUATION One buying situation used in segmenting consumer markets is: a.9-94 FREQUENCY MARKETING DEFINITION Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly—a technique sometimes called__________. geographic. e. warranty) and usage (heavy user. demographics. DEFINITION Answer: b Page: 194 Rationale: Buying situations include benefits sought (product features. nonuser). demographics. 9-96 SEGMENTATION BY BUYING SITUATION One buying situation used in segmenting consumer markets is: a. d. benefits sought. warranty) and usage (heavy user. c. usage rate. e. light user. socioeconomic.

c. cold leads nonqualified prospects remote chances undefined prospects nonprospects Answer: e Page: 194 Rationale: Among nonusers of a product. prospects. leads. e. undefined prospects. d. people who might become users are prospects and people who are never likely to become users are nonprospects. Answer: d Page: 194 Rationale: Among nonusers of a product. and are never likely to become users. nonprospects. people who might become users are prospects and people who are never likely to become users are nonprospects. e. and most likely never will. d. b. nonqualified prospects. Answer: c Page: 194 Rationale: Consumers who use a product category but not a particular brand are viewed as prospects. 9-99 PROSPECTS DEFINITION People who use the type of good or service your firm sells although they do NOT use your firm's product now are called: a. leads. are called: a.9-97 NONPROSPECTS DEFINITION People who do NOT use a firm's product or service. non-prospects. c. 550 . c. 9-98 NONPROSPECTS APPLICATION The 11 percent of adult Americans who don't go to fast-food restaurants in a typical month. ultimate consumers. e. disenfranchised prospects. d. b. b. undefined prospects. are __________. a.

get around gatekeepers and reach buyers. d. the location segmentation variable.9-100 ORGANIZATIONAL MARKET SEGMENTATION DEFINITION Variables such as location.000 a month for its storage service. Imagine that the agency decided the singer would not perform at venues located in communities that had less than 100. Which organizational segmentation variable might Evergreen use to segment its market? a. 9-101 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Evergreen Air Center in Marana. NAICS codes and benefits sought number of locations and benefits sought location and demographics NAICS sectors and number of locations number of employees and population density Answer: a Page: 195 Rationale: The NAICS sectors would reveal other companies that fly commercial planes that might be interested in Evergreen's services. the companies storing their planes at the facility want the planes preserved—a benefit sought. c. segment an organizational market. and benefits sought. 9-102 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION William Morris talent agency represents country singer Trace Adkins in negotiations with various venues in which he could perform. a. number of employees (related to usage). e. d. and number of employees are examples of ways to: a. c.000 people. d. Arizona. This would be segmenting the market by __________ variables. Airlines pay from $750 to $5. promote buyer loyalty. e. nature of good psychographic location usage buying condition Answer: c Page: 195 Rationale: Population density is closely related to MSA classifications. b. the North American Industry Classification System (NAICS) code. b. b. forecast sales to a consumer market. is the world's biggest parking lot for unwanted commercial aircraft. Answer: c Page: 195 Rationale: There are a number of variables that might be used to segment organizational markets including location. dry air where the operation is located serves as a cheap and effective airplane preservative. The warm. segment a consumer market. e. . c. NAICS code. Also.

9-103 ORGANIZATIONAL MARKET SEGMENTATION

APPLICATION

Australia-based Renewable Energy Ltd. sells a device that converts manure into energy. One of the $10 million devices is capable of generating energy equal to $2 million of natural gas per year. The company believes its target market is businesses that use a lot of energy like its first customer, a fertilizer manufacturer, and that are located in rural areas. It will use which of the following strategies to segment its market: a. b. c. d. e. benefits sought and geographic. number of employees and benefits sought. purchase location and purchase type. NAICS codes and location. benefits sought and NAICS codes.

Answer: d Page: 195 Rationale: Renewable Energy could use NAICS codes to locate other fertilizer manufacturers and location segmentation because prospects need to be in rural areas where there is a ready supply of manure. 9-104 ORGANIZATIONAL SEGMENTATION BY LOCATION APPLICATION

When evaluating entry into the large Boston market, Seattle-based Starbucks Coffee Company found that Coffee Connection, a well-established local chain, already occupied many prime locations. Starbucks entered the market anyway because it based its decision on: a. b. c. d. e. number of employees, a geographic variable. the NAICS code, a demographic variable. population density, a location variable. nature of good, a customer characteristic variable. buying conditions, a demographic variable.

Answer: c Page: 195 Rationale: Coffee Connection was a strong competitor: well-established, locally owned, and occupying excellent locations. However, Starbucks' criteria still favored entry. Boston is a large market (population density-a location variable), with potential for growth in coffeehouses owing to many students and young professionals. Starbucks bought Coffee Connection and converted its locations to reach the segment faster and more effectively. None of the pairings in the alternatives is a correct combination except alternative c.

552

9-105 ORGANIZATIONAL MARKET SEGMENTATION

APPLICATION

Harmony Products makes fertilizers used on golf courses. Which organizational market segmentation variable would provide the greatest benefit to the organization? a. b. c. d. e. NAICS codes annual sales buying condition nature of good number of locations

Answer: a Page: 195 Rationale: Organizational market segmentation variables include location, NAICS code, number of employees, and benefits sought. In this case, Harmony could use the NAICS codes to find golf courses to sell its fertilizers to. 9-106 ORGANIZATIONAL MARKET SEGMENTATION CONCEPTUAL

Which of the following is NOT a basis used to segment organizational markets? a. b. c. d. e. location psychographic NAICS code number of employees benefits sought

Answer: b Page: 195 Rationale: Organizational market segmentation variables include location, NAICS code, number of employees, and benefits sought. Alternative b is a segmentation variable for consumer markets. 9-107 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION

Best Foods Company is considering expanding beyond the regional market segments now served by its Hellmann's mayonnaise. One criterion management wants to use to evaluate potential new geographic market segments is whether new equipment must be bought to serve each new segment. This is an example of which criterion used to pick new target market segments? a. b. c. d. e. Best Food's competitive position in the segment Best Food's created product groupings expected growth of the market segment size of the market segment compatibility with Best Food's objectives and resources

Answer: e Page: 195 Rationale: New equipment to reach a new market segment relates to the organization's resources.

9-108 PRODUCT GROUPING

DEFINITION

__________ occur(s) when products are put into meaningful categories so buyers can relate to them. a. b. c. d. e. Market-product combinations Categorical marketing 80/20 grouping Product groupings Organizational segmentation

Answer: d Page: 195 Rationale: Products are put into meaningful categories using product grouping, so buyers can relate to them. 9-109 PRODUCT GROUPING APPLICATION

Hallmark groups its products into five categories. They are flowers and gifts, cards and e-cards, Hallmark collectibles, gift wrappings, and photo albums and scrapbooks. Why does Hallmark use product groupings? a. b. c. d. e. The groupings increase the number of market-product combinations on the market-product grid into a more manageable framework for subsequent analysis. Consumers buy more in illogically organized environments. The products are grouped into meaningful categories using product grouping so buyers can relate to these products. Product groupings can be generated quantitatively to show which adhere to the 80/20 rule. All of the above are reasons why Hallmark would use product groups.

Answer: c Page: 195 Rationale: Products are put into meaningful categories using product grouping, so buyers can relate to them. 9-110 PRODUCT GROUPING APPLICATION

In developing a marketing strategy for Hallmark the company decides that what it was really selling was memory keeping, and not photo albums, scrapbooks, and related supplies. Thus, store layouts are defined to reflect this buyer experience, rather than a collection of books and related supplies. This is an example of: a. b. c. d. e. target market selection. product grouping. market-product grid development. taking marketing actions to reach target markets. market segmentation of prospects.

Answer: b Page: 195 Rationale: Products are put into meaningful categories (memory keeping) using product grouping (putting the photo albums, scrapbooks, and related supplies together in the store), so buyers can relate to them.

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its competitors engage in no product groupings. 9-112 MARKET-PRODUCT GRID CONCEPTUAL In developing a marketing strategy for your Wendy's restaurant. 9-113 SELECTING TARGET SEGMENTS Which of the following is a criterion used for selecting a target segment? a. (4) cost of reaching the segment. c. e. implementing a harvesting strategy. implementing the 80-20 rule. Answer: c Page: 196 Rationale: Estimating how many lunches (product) per day a market (commuter students) will eat at your restaurant is one of the activities in the process of developing a market-product grid and estimating the size of markets in each of the cells in the grid. b. developing a market-product grid and estimating size of markets. you determine that as many as 400 lunches per day are purchased by local college students who commute and eat at your restaurant. repositioning a product. competitors relate to them better for benchmarking purposes.9-111 PRODUCT GROUPINGS APPLICATION Hallmark grouped its scrapbook supplies. so buyers can relate to them. the commuter student-lunch cell is being estimated. CONCEPTUAL Answer: e Page: 197 Rationale: The five criteria to use in actually selecting the target segments are: (1) market size. photo albums and such into one product group because: a. e. c. b. This is part of the process for: a. forming products to be sold into groups. Answer: b Page: 195 Other Location: web Rationale: Products are put into meaningful categories (items used to record memories) using product grouping (the scrapbook supplies and photo albums). d. customers relate to them better since all of these products may be used to record memories. it is more profitable to define product groupings in terms of large market segment because it reduces manufacturing and marketing costs. (3) competitive position. d. d. In this case. it is easier to estimate the industry sales for fewer market-product combinations. e. . c. size of the market expected growth cost of reaching the segment compatibility with the organization’s objectives and resources All of the above are used for selecting a target segment. (5) compatibility with the organization’s objectives and resources. b. (2) expected growth.

and (2) those used in picking the target segments. be very small.9-114 SELECTING TARGET SEGMENTS CONCEPTUAL Which of the following is NOT a criterion used for selecting a target segment? a. it would not be readily accessible by marketing programs. What is the fifth criterion? a. d. (2) expected growth. (3) competitive position. be accurately described by all of the above. 556 . Because it would be so small. 9-116 SELECTING TARGET SEGMENTS APPLICATION A rehabilitation center wants to target women in their 20s who have received some permanent disability as the result of a skiing accident. not be compatible with the company's current resources. d. The five criteria to use in actually selecting the target segments are: (1) market size. and compatibility with the organization's objectives and resources. c. have no expected growth. (4) cost of reaching the segment. b. They include the size of the market. This market would use the rehabilitation services that the company now provides. this market would: a. Answer: c Page: 197 Rationale: The market would grow as people continue skiing—although it may be slow growth. e. e. e. expected growth of the market. In terms of the criteria used for selecting a target segment. 9-115 SELECTING TARGET SEGMENTS CONCEPTUAL Five general criteria are often used to pick target segments. b. not for selecting one. be readily accessible to the firm's marketing programs. competitive position of the firm with respect to the market. (5) compatibility with the organization’s objectives and resources. b. c. d. cost of reaching the segment time required to create awareness need to conform to government regulations how long target market members have been customers amount of publicity likely to result Answer: a Page: 197 Other Location: web Rationale: There are two different kinds of criteria present in the market segmentation process: (1) those used to divide the market into segments. c. size of the market similarities of needs of potential buyers competitive position cost of reaching the segment compatibility with the organization’s objectives Answer: b Page: 197 Rationale: Similarities of needs of buyers within a segment is a criterion for segmenting a market.

taking marketing actions to reach target markets. selecting target market segments to reach. c. e. (2) expected growth. d. developing a market-product grid and estimating size of markets. The less the competition. (4) cost of reaching the segment. forming products to be sold into groups. (5) compatibility with the organization’s objectives and resources. Answer: a Page: 197 Rationale: A decision to concentrate on affluent teenagers is the selection of a target market segment. This is an example of: a. b. Competitive position is a criterion for selecting a target market. similarity of needs of potential buyers within a segment difference of needs of sellers between segments feasibility of a marketing action to reach a segment amount of competition in the segment simplicity and cost of assigning potential buyers to segments CONCEPTUAL Answer: d Page: 197 Rationale: There are two different kinds of criteria present in the market segmentation process: (1) those used to divide the market into segments. the more attractive the segment is. b. (3) competitive position. The five criteria to use in actually selecting the target segments are: (1) market size. c. .9-117 SELECTING TARGET SEGMENTS APPLICATION In developing a marketing strategy for the newly released Nike Air Jordan XVII with a price tag of $200. Nike decided to concentrate on affluent teens rather than members of high school basketball teams. forming prospective buyers into segments. d. 9-118 SELECTING TARGET SEGMENTS Which of the following is a criterion for selecting a target segment? a. and (2) those used in picking the target segments. e.

(5) compatibility with the organization’s objectives and resources.9-119 SELECTING TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. not for selecting one. The five criteria to use in actually selecting the target segments are: (1) market size. and (2) those used in picking the target segments. (3) competitive position. Expected growth is a criterion for selecting a target market. The five criteria to use in actually selecting the target segments are: (1) market size. (2) expected growth. e. e. c. (2) expected growth. (4) cost of reaching the segment. (4) cost of reaching the segment. (5) compatibility with the organization’s objectives and resources. d. and (2) those used in picking the target segments. Although the size of market in the segment may be small now. Similarity of needs is a criterion for segmenting a market. c. similarity of needs of potential buyers expected growth competitive position cost of reaching the segment compatibility with the company's objectives CONCEPTUAL Answer: a Page: 197 Rationale: There are two different kinds of criteria present in the market segmentation process: (1) those used to divide the market into segments. b. 9-120 SELECTING TARGET SEGMENTS Which of the following is NOT a criterion for selecting a market segment? a. d. b. similarity of needs of potential buyers within a segment difference of needs of buyers between segments feasibility of a marketing action to reach a segment simplicity and cost of assigning potential buyers to segments expected growth of segment CONCEPTUAL Answer: e Page: 197 Rationale: There are two different kinds of criteria present in the market segmentation process: (1) those used to divide the market into segments. (3) competitive position. 558 . perhaps it is growing significantly or is expected to grow in the future.

taken marketing actions to reach target markets. In developing a marketing strategy to sell her product line. Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets. b.B. selected target market segments to reach. formed products to be sold into groups. taken marketing actions to reach target markets. c. she decided to package her jams and jellies with a tag that indicates the products have been hand-made.. formed prospective buyers into segments. Sauce. d. Lewis decided to join Goodness Grows in North Carolina. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce. formed products to be sold into groups. . formed products to be sold into groups. In developing a marketing strategy to sell her product line. developed a market-product grid and estimating size of markets. Inc. Answer: d Page: 197 Other Locations: web Rationale: Alternative d is the final result in the process of segmenting and targeting markets. formed prospective buyers into segments. selected target market segments to reach. b. developed a market-product grid and estimating size of markets. that advertises local products and distributes them to local supermarkets and gourmet shops. she decided to buy an ad in the local shopper's newspaper that is well-read in her region of the country. In developing a marketing strategy to sell the sauce. selected target market segments to reach. e. taken marketing actions to reach target markets. developed a market-product grid and estimating size of markets. b. Lewis has just: a. 9-122 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. a specialty food association. a company that makes Tongue Tinglin' B. e.Q. d. Johnson has just: a. formed prospective buyers into segments. 9-123 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. Johnson has just: a. c. d.9-121 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. e. c. Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets.

Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets. In developing a marketing strategy to sell her product line. but also to ultimate consumers using a website. e. e. Johnson has just: a. formed prospective buyers into segments. developed a market-product grid and estimating size of markets. she decided to develop a website so that she could sell her product all across the United States. 560 . formed products to be sold into groups. Johnson has just: a. she decided to hire an independent sales agent to sell her product on the East coast. In developing a marketing strategy to sell her product line. taken marketing actions to reach target markets. selected target market segments to reach.9-124 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. developed a market-product grid and estimating size of markets. Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets. formed products to be sold into groups. d. e. c. d. Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets. taken marketing actions to reach target markets. taken marketing actions to reach target markets. selected target market segments to reach. selected target market segments to reach. b. c. d. formed prospective buyers into segments. 9-126 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. In developing a marketing strategy to sell her product line. Johnson has just: a. b. c. she decided to sell her product not only to retailers. formed prospective buyers into segments. b. formed products to be sold into groups. 9-125 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. developed a market-product grid and estimating size of markets.

d. c. Answer: b Page: 199 Rationale: Apple’s lack of a segmentation strategy in the early 1980s has been replaced by one which Steve Jobs is using to compete in what he sees as the Age of the Digital Lifestyle. coherent product lines targeted to identifiable market segments. selected target market segments to reach. e. b. taken marketing actions to reach target markets. This strategy was successful primarily because it identified: a. she decided to use overnight shipping during the holidays so that customers would receive her products in time. b. In developing a marketing strategy to sell her product line. In 1998 Apple re-targeted the consumer and education markets. competitors. . usage rates among younger consumers. investment capital. Johnson has just: a. formed prospective buyers into segments. important corporate computer needs. delivering a powerful new PC at a lower price. developed a market-product grid and estimating size of markets. Introducing colorful iMac in five fruit flavors in 1999 enhanced appeal to these target market segments. innovative distributors. d.000 units had been sold. profits. e. making the iMac the greatest PC product launch ever. e. By the end of the year. c. introducing the iMac—the most innovative PC ever created according to many PC and business analysts. formed products to be sold into groups. 9-128 APPLE'S SEGMENTATION STRATEGY APPLICATION In 1998 Apple re-focused on the consumer and education markets. competitive advertising. d. Answer: d Page: 199 Rationale: Steve Jobs returned to Apple in 1997 and changed its segmentation strategy. 9-129 MARKETING NEWSNET DEFINITION In the early 1980s Apple Computer Company was often called "Camp Runamok" because the innovative company had no: a. b. 800. target market segments. Answer: d Page: 197 Rationale: Alternative d is the final result in the process of segmenting and targeting markets.9-127 TAKING MARKETING ACTIONS APPLICATION Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. distributors. c.

” such as iTunes. Steve Jobs believed that the personal computer entered the Age of the Digital Lifestyle.” By __________ Apple as the “digital hub” with “killer apps. b.9-130 APPLE'S REPOSITIONING STRATEGY APPLICATION In 2001. Introducing colorful iMac in five fruit flavors in 1999 enhanced appeal to these target market segments. c. and iPhoto. In 1998 Apple re-targeted the consumer and education markets. delivering a powerful new PC at a lower price. iDVD. 9-131 MARKET-PRODUCT SYNERGIES DEFINITION __________ are opportunities for efficiency in terms of market segments and research and development and production. one example is focusing on a single product. Jobs proclaimed that “the Mac can become the digital hub of this new digital lifestyle. a. Both of these minimize costs but do not take into account synergies. d. 562 . one example is focusing on a single consumer segment. bundled as iLife. e. Jobs believe consumers can take full advantage of the new digital lifestyle era. Figure 9-8 Rationale: Steve Jobs returned to Apple in 1997 and changed its segmentation strategy. which may come about by overlap in positioning several products to one or more market segments or selling one product to multiple segments. b. d. Product synergies are opportunities for efficiency in terms of research and development and production. c. repositioning distributing targeting using underestimating Answer: a Page: 201. Product perceptions Relative positionings Competitive positionings Market-product synergies Selective perceptions Answer: d Page: 200 Rationale: Marketing synergies are opportunities for efficiency in terms of a market segment. a. iMovie. e.

product positioning. d. 9-133 PRODUCT POSITIONING DEFINITION The place an offering occupies in consumers' minds on important attributes relative to competitive offerings is called: a. c. Answer: e Page: 200 Rationale: Marketing synergies are opportunities for efficiency in terms of a market segment. and department stores geographic segmentation. Answer: d Page: 201 Rationale: Key term definition—product positioning 9-134 PRODUCT POSITIONING What does the term product positioning refer to? a. vital to success in making marketing decisions. opportunities for efficiency in terms of research and development and production.9-132 MARKET-PRODUCT SYNERGIES Market-product synergies are: a. Both of these synergies are vital to success in both selecting target market segments and making marketing decisions. product perception. Product synergies are opportunities for efficiency in terms of research and development and production. competitive positioning. relative positioning. vital to success in selecting target market segments. b. c. grocery. e. d. one example is focusing on a single product. c. e. b. d. b. described by all of the above statements. a careful analysis of cross tabulations shelf locations in major chain. often within major metropolitan areas the place a product offering occupies in consumers' minds on important attributes an old and outdated concept no longer worthy of consideration in marketing planning DEFINITION Answer: d Page: 201 Rationale: Key term definition—product positioning . CONCEPTUAL opportunities for efficiency in terms of market segments. selective perception. e. one example is focusing on a single consumer segment.

c. normally in major metropolitan areas. b. d. parallel market positioning distinction positioning competitive positioning product positioning head-to-head positioning Answer: d Page: 201 Other Location: web Rationale: Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive offerings. which claimed that the Advil brand is superior because it works faster and longer than the Tylenol brand. d. lateral positioning. c. e. In this case BMW has positioned their skateboard as having important attributes (better control at high speeds and around sharp turns) relative to competitive offerings. product positioning. 9-136 PRODUCT POSITIONING APPLICATION There are a lot of skateboard manufacturers on the market. c. This technology gives the BMW Streetcarver better control at high speeds and around sharp turns than any other brand. d. with respect to the geographic areas in which they are manufactured. 9-137 PERCEPTUAL MAP DEFINITION Marketers use perceptual maps as a means to display or graph in two dimensions the location of products or brands: a. within distribution channels. as they are clustered by type of outlet. within selected retail outlets. b. indicating accessibility by consumers.9-135 PRODUCT POSITIONING APPLICATION Children's Advil pain reliever positioned itself against Children's Tylenol pain reliever by running ads. consumer positioning. but the BMW Streetcarver is the only one with stabilizers and wheel design based on BMW's automobile. This is an example of: a. e. Answer: d Page: 201 Rationale: Key term definition—perceptual map 564 . b. e. What type of positioning is BMW using with its $495 skateboard? a. in the minds of consumers. cognitive positioning. In this case Advil is positioned as faster and longer-lasting than Tylenol. Answer: a Page: 201 Rationale: Product positioning refers to the place an offering occupies in consumers’ minds on important attributes relative to competitive offerings. differentiation.

two-dimensional graph. d. c. b. . consumers. Answer: d Page: 201 Rationale: A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands and then take marketing actions. three-dimensional cube. and the firm itself. pyramid design. independent rating organizations such as Consumer Reports. c. database. CONCEPTUAL Answer: c Page: 201 Other Location: web Rationale: Key term definition—perceptual map 9-139 PERCEPTUAL MAP DEFINITION A perceptual map can be used to identify a firm's product in terms of how closely it fits the "ideal" and where it fits in relationship to competitors. growth matrix. e. consumer preference matrix. consumer map of likes and dislikes. The map is based on perceptions of: a. e. market-product grid. Answer: c Page: 201 Rationale: Key term definition—perceptual map 9-140 PERCEPTUAL MAP DEFINITION A graph displaying consumers' perceptions of product attributes across two or more dimensions is a: a. perceptual map. b. d. payoff table. d. intermediaries. consumers. competitors. competitors. e.9-138 PERCEPTUAL MAP A perceptual map is most like a: a. b. c.

DEFINITION Answer: d Page: 201. it failed and had to declare bankruptcy. which alienated its customer base. e. psychographics. d. segmentation differentiation repositioning probability inference Answer: c Page: 201 Other Location: web Rationale: SwissAir did not believe that its customers would forgive it for the cutbacks it made and. a. or their bowl of soup as a delicious addition. This is an example of a __________ strategy. d. Because it feared that a __________ strategy would not undo the damage to the brand name. 566 . c.9-141 REPOSITIONING Changing a the product's position in consumers' minds is called: a. perceptual mapping product positioning product differentiation repositioning psychographics Answer: d Page: 201. c. the company opted for a totally new name and new look. the company began operations again with the hope of attracting its previous customers back. e. e. a. product differentiation. their salad. repositioning. c. a repositioning strategy was inappropriate. b. 9-143 REPOSITIONING APPLICATION Post Grape-Nuts cereal has been marketed since early in the 20th century. b. but because of a variety of reasons. Post recently launched a campaign which invited consumers to try the crunchy cereal on top of their yogurt. After much effort. Figure 9-8 Rationale: Repositioning is changing a product's place in consumers' minds. Prior to declaring bankruptcy. more importantly because it wanted to target the same customers. 9-142 REPOSITIONING CONCEPTUAL SwissAir recently tried to expand. In this case. Its market share has been steadily declining as consumers began associating it with something their grandfather ate. expanding the use of the product from breakfast time to all day is the repositioning strategy. SwissAir engaged in several cost-cutting efforts. product positioning. Figure 9-8 Rationale: Repositioning is changing the position a product holds in the consumer’s mind. perceptual mapping. b. d.

d. e. a personalized logo. penetration rates were different for different areas of the world. b. geography. b. 9-146 VIDEO CASE: NOKIA APPLICATION By developing and introducing a communication device. 9-145 VIDEO CASE: NOKIA APPLICATION By dividing its market into categories. a thermometer. behavioral segmentation variables. downloaded game packs. which includes a built-in stopwatch. which it labels Basic. product sampling strategy. socioeconomics. Answer: c Page: 204 Rationale: Marketing synergies represent efficiency in terms of reaching a market segment such as young adults. aggregation marketing. buying situations. a personalized logo. c. market segmentation. Nokia is using: a. Since Nokia is considering both. a personal information manager and a cellular phone. Premium. d. e. since over time. . d. consumer differentiation. Market segmentation helps Nokia best service different consumers’ needs. usage segmentation. and Communicator. Answer: a Page: 204 Rationale: Although market segmentation began with geography. c. demography. Nokia is taking advantage of __________. Answer: d Page: 204 Rationale: Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action. downloaded game packs. Product synergies represent efficiency in terms of developing the device. a thermometer. b.9-144 VIDEO CASE: NOKIA APPLICATION The segmentation strategy used by first generation cellular phones was based on: a. Expression. market differentiation. Classic. a personal information manager and a cellular phone that appeals to young adults. product extrapolation strategy. market-product synergy. e. c. Fashion. lifestyles. they are taking advantage of market-product synergy. Nokia’s strategy later changes to focus on different types of customers. which includes a built-in stopwatch. a. market delineation.

downloaded game packs. a. In this case Nokia is using physical product features to differentiate their product. e. 568 . such as product features and advertising. product sampling strategy product extrapolation strategy product differentiation usage segmentation market differentiation Answer: c Page: 204 Rationale: Product differentiation involves a firm’s using different marketing mix activities. Nokia is using a __________. d. to help consumers perceive the product as being different and better than competing products. b.strategy. which includes a built-in stopwatch. a personal information manager and a cellular phone. a thermometer.9-147 VIDEO CASE: NOKIA APPLICATION By developing and introducing a communication device. c. a personalized logo.

though. Figure 9-1 9-149 PRODUCT DIFFERENTIATION CONCEPTUAL What is product differentiation? How does it relate to market segmentation? How does it potentially improve a firm's revenues? Answer: Product differentiation is a strategy that has come to have two different but related meanings. It stresses the importance of aggregating—or grouping—people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price. it can contribute to increased revenues for the firm. Thus. Segmentation links needs to actions. In a narrower sense. As long as a new product does not take a significant amount of sales away from an existing product. Page: 187. Differences may involve nonphysical features as well. product differentiation relates to competitive positioning. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. such as image or price. Such needs and benefits must be related to specific. Page: 187 . tangible marketing actions the firm can take. How does it link needs with marketing actions? Answer: Market segmentation is aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action.CHAPTER 9 IDENTIFYING MARKET SEGMENTS AND TARGETS SHORT ESSAY QUESTIONS 9-148 MARKET SEGMENTATION CONCEPTUAL Define market segmentation. as the text points out in connection with Reebok. In its broadest sense it involves a firm's using different marketing mix activities. to help consumers perceive the product as being different and better than competing products. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. such as product features and advertising.

Page: 190 570 . MULTIPLE MARKETS CONCEPTUAL Why would an organization produce multiple products or services and then attempt to sell them to two or more market segments? Answer: 1) The additional profits derived from increased sales would exceed the additional research. which often entails high research. MULTIPLE MARKETS CONCEPTUAL Why would an organization produce a single good or service and then attempt to sell it to two or more market segments? Answer: An organization would produce a single good or service and then attempt to sell it to two or more market segments to avoid the added cost of developing additional versions of the product. Page: 189 9-152 SYNERGY CONCEPTUAL Explain the segmentation trade-off: customer relationship management (CRM) versus synergies. and so on. Be sure to define CRM and synergy in your answer. engineering. Synergy is the increased customer value achieved through performing organizational functions more efficiently. engineering. Answer: CRM recognizes that every customer is unique. and desires exceptional service from the seller. improved quality of existing products.. multiple-market strategy—primarily in connection with promotion and distribution—are usually relatively low. has unique wants and needs. Page: 189 9-151 MULTIPLE PRODUCTS. The trade off is finding the ideal balance between these two concepts.9-150 SINGLE PRODUCT. easier access to product through improved distribution. The “increased customer value” can take many forms: more products. The ultimate criterion for an organization’s marketing success is that customers should be better off as a result of the increased synergies. lower prices. and/or 2) the marginal production costs could be lowered because of increased economies of scale (if existing excess capacity rather than new plant capacity were used. manufacturing. and marketing expenses. The additional marketing costs of a single-product. and manufacturing expenses.

5) Take marketing actions to reach target markets. How will the evaluation of its market segment strategy differ from that used for a retail store? Answer: There is one difference between for-profit and nonprofit criteria. Page: 192. it is much more likely to serve its clients more effectively with the new segmentation strategy. This will be the market segment it targets. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. 2) Form products to be sold into groups. Each relates to efficiency and productivity with respect to allocation of the firm's resources. Page: 192 9-154 CRITERIA FOR FORMING SEGMENTS APPLICATION A nonprofit food bank was gathering and handing out food to anyone who requested it. It now wants to only give free food to people who go hungry on a regular basis. Figure 9-3 CONCEPTUAL .9-153 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL A marketing manager should develop segments for a market that meet five principal criteria. Page: 192 9-155 SEGMENTING AND TARGETING A MARKET What are the steps needed to segment and target a market? Answer: The process of segmenting and targeting a market includes five steps. 4) Select the target market segments toward which the firm will direct its marketing actions. 1) Form prospective buyers into segments. Answer: The five criteria are: 1) potential for increased profit and ROI 2) similarity of needs of potential buyers within a segment 3) difference of needs of buyers among segments 4) feasibility of a marketing action to reach a segment 5) simplicity of cost of assigning potential buyers to segments. 3) Develop a market-product grid to relate the market segments to the firm's products and estimate the size of the market in each cell. Based on the food bank's previous policy. List these important factors in marketing planning.

Page: 192-193 9-158 CHOOSING TARGET MARKET SEGMENTS Why is it important for a firm to choose its target market segments carefully? Answer: A firm must choose its target market segments carefully because. it would be well to seek medium and heavy users including. or subdivision. Page: 192 9-157 SEGMENTATION VARIABLES APPLICATION Assume you are manager of The Outback Steak House. The psychographic dimension would include variables such as extroverted. socioeconomic and psychographic customer characteristics. including homeowners. Page: 192 CONCEPTUAL 572 . using as many segmentation variables as you can. perhaps related to occupations. and usage buying situations. if it picks too narrow a group of segments. census tract. since repeat business is the key to success in this sort of venture. and explaining why each variable is appropriate. Segmentation according to the benefits dimension could include convenience.9-156 CONSUMER SEGMENTATION VARIABLES What are the dimensions by which consumer markets can be segmented? CONCEPTUAL Answer: Major divisions are customer characteristics and buying situations. Louis. gregarious. and demographic correlations can be rather easily made with regard to those factors. On the other hand. The next dimension should be demographics. The Outback manager would seek those people who had not only the need. it may fail to reach the volume of sales and profits it needs. probably with children. young adults. perhaps. They could be defined by ZIP Code. if it selects too broad a group of segments. but also the means to dine at the restaurant. the most likely include these: The first dimension would be geographic with segmentation variables designed to describe those people within a reasonable draw area around the restaurant. and benefits sought. As for the usage dimension. under which consumer markets are segmented according to the following factors: geographic. Answer: Students might select any segmentation variables described on pages 192-193. and those fond of pleasures such as eating out. it may spread its marketing efforts so thin that the extra expenses more than cancel out the increased sales and profits. married. a franchised restaurant that has opened in St. Also important would be household income. However. demographic. those people who might dine at The Outback more than once a month. Describe how you would segment the market according to dimension. and economy relative to more expensive restaurants.

and unattractive according to others. Page: 195 9-161 CHOOSING TARGET MARKET SEGMENTS What are the criteria to be used in selecting target segments? Answer: The five criteria to be used in actually selecting the target segments are size of market. and nonusers. Page: 197 CONCEPTUAL CONCEPTUAL . As is often the case in marketing decisions. (3) number of employees. CONCEPTUAL Answer: The 80/20 rule suggests that 80 percent of a firm’s sales are obtained from 20 percent of its customers. The percentages in the 80/20 rule are not really fixed at exactly 80 percent and 20 percent but suggest that a small fraction of customers provide a large fraction of a firm’s sales. (4) benefits sought. a particular segment may appear attractive according to some criteria. competitive position. a light user. Clearly the 20 percent of customers referred to above in the description of the 80/20 rule are heavy users and are important to any company. Under this are included benefits sought and usage in terms of a heavy user.9-159 80/20 RULE Explain the 80/20 rule and explain how it is used in market segmentation. cost of reaching the segment. and compatibility with the organization's objectives and resources. Page: 193-194 9-160 WAYS TO SEGMENT ORGANIZATIONAL MARKETS What are the variables that may be used to segment organizational markets? Answer: There are 4 variables that may be used to segment organizational markets: (1)location. One of the segmentation variables is buying situation. expected growth. (2) NAICS code.

They are: 1) the important attributes for a product class 2) judgments of where existing products or brands are located on these attributes 3) the location of the firm’s own product or brand on these attributes Page: 201 574 . which costs more time and money. but spends more in production. Conversely. if product synergies are emphasized. Marketing managers responsible for developing a company’s product line must thus balance both product and marketing synergies as they try to increase the company’s profits. marketing will have to address the concerns of a wide variety of consumers. In Apple’s case. and the iPod (as of mid-2003). the eMac. Answer: A market-product grid is a figure that is developed labeling the horizontal rows as the markets and the vertical rows as the product offerings. the iBook. the PowerBook G4. The market-product combination is then shown in each cell and evaluated for use in the segmentation strategy.9-162 APPLE’S MARKET-PRODUCT GRID CONCEPTUAL Explain how Apple Computer uses a market-product grid to target its various lines of Macintosh computers at specific market segments. whereas the iMac could be positioned in the mind of both the consumer and the professional as meeting their respective needs. A consumer or small home office might be targets for all of the products except the iPod. while the products include the Power Macintosh G4. the iMac. companies obtain three types of data from consumers. Page: 199 9-163 MARKET-PRODUCT SYNERGIES CONCEPTUAL Why is it that achieving market-product synergies may be something of a balancing act? Answer: A choice to take advantage of marketing synergies can often come at the expense of production synergies because a single consumer segment will likely require a variety of products—each of which will have to be designed and manufactured. Page: 200-201 9-164 DATA NEEDED FOR PERCEPTUAL MAP CONCEPTUAL What are the three types of data needed from consumers to develop a perceptual map? Answer: In determining a brand's position and the preferences of consumers. The company saves money on marketing. the markets served are the consumer and professional markets.

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