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

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

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

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

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

e. In economist's terms. a. e. the organization’s marketing program). d. b. b. controllable environmental factors. c. government regulations. top-level management. . self-regulatory industry standards government regulations the organization's actions strategic objectives tactical goals Answer: c Page: 187. 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. a. 9-17 MARKET SEGMENTATION CONCEPTUAL The process of segmenting a market and targeting specific segments is the link between various buyers' needs and: a.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. self-regulatory industry standards government regulations top-level management market needs controllable environmental factors Answer: d Page: 187. c. d. b. d. 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. Answer: c Page: 187. it relates supply (__________) to demand (the customer needs). e. the organization's marketing program. self-regulatory industry standards. 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. 9-18 MARKET SEGMENTATION CONCEPTUAL Market segmentation is only a means to an end.

9-19 MARKET SEGMENTATION CONCEPTUAL Market segmentation is only a means to an end. link market needs to an organization's marketing program. create innovation. CONCEPTUAL Answer: e Page: 187 Other Location: web Rationale: Market segmentation is used to link market needs to marketing programs. d. c. increase sales and profitability. In economist's terms. e. market segmentation relates supply (the organization's actions) to demand (__________). e. 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. are legal. and to increase sales and profitability. to relate supply to demand. differentiate shareholders. 522 . are socially responsible. b. c. do all of the above. b. relate supply to demand in economic terms. to develop marketing actions related to the 4Ps. profits and/or other organizational goals. tactical goals government regulations customer needs strategic objectives product positions. increase overall sales. Answer: c Page: 187. a. d. 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. develop specific marketing actions related to the 4 Ps. 9-21 MARKET SEGMENTATION Marketers use market segmentation to: a. d. 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. b. e. c.

synergy. sales forecasting. c. b. total anticipated revenue for each product to market segments. e. and outdoor enthusiasts. DEFINITION Answer: d Page: 188 Other Location: web Rationale: Key term definition—market-product grid . 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. c. 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. the segments of a market to products offered or potential marketing actions by the firm. c. b. d. This strategy is an example of: a. d. the segments of a market to relative market share compared to closest competitor. Customatix targets those who wish to design their own shoes. biking. e. mass customization.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. Answer: c Page: 188 Rationale: Vans targets the rising wave of skateboard. e. d. snowboard. a. MSA and NAICS. b. estimated expenses for products sold to various market segments. market segmentation. total anticipated profit for each product to segments.

9-27 ONE PRODUCT. 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. b. 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.9-25 MARKET-PRODUCT GRID One advantage of a market-product grid is that it can be used to: a. discontinue manufacturing any products that are not in the mature stage of their product life cycle. b. and return on investment. and manufacturing expenses. e. a firm should not attempt to segment its market. terminate as many employees as possible to save money. engineering. c. b. it avoids __________. e. act as its own distributor. profit. e. profit. d. d. c. 524 . relate the product life cycle to consumer demand. CONCEPTUAL make optimal decisions under conditions of uncertainty. When its increases in expenses more than offset the potentially increased revenues from segmentation. which often results extremely high research. d. select representative samples of consumers for marketing research studies. 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. screen many new product ideas in order to select the one with best long-run market potential. relate likely sales of products to prospective market segments. c. it should: a. reduce production costs. 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. When expenses are greater than the potentially increased sales from segmentation. which will lower quality. 9-26 MARKET SEGMENTATION CONCEPTUAL A business firm would segment its market when this strategy increases its sales revenue. a. and return on investment. not attempt to segment its market.

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. creates greater economies of scale (cost savings) in manufacturing costs. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women.9-28 ONE PRODUCT. 9-29 ONE PRODUCT. c. MULTIPLE MARKET SEGMENTS CONCEPTUAL When compared to a multiple-products-multiple-market segments strategy. is a more effective way of meeting organizational objectives. walking shoes. d. e. running shoes. b. and hard bristle and a short or normal length head. 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. engineering. d. which are available in a soft. d. e. is much more profitable. 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. e. and manufacturing expenses. a one-product-andmultiple-market-segment strategy: a. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. b. 9-30 ONE PRODUCT. which often entails higher research. has significantly higher distribution costs. 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). Reach Toothbrush makes several versions of its toothbrush. and Weeboks. medium. Reebok shoes makes tennis shoes. c. it avoids the extra cost of developing and producing additional versions of the product. is a much more effective means of meeting consumers' individual needs. as is the case with Johnson's Baby Oil. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a single product with multiple market segments? a. Kellogg's and Post both make bran cereals with raisins. . b. c.

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

9-34 MULTIPLE PRODUCTS. Answer: e Page: 190 Rationale: This is an example of multiple products (greeting cards at different price points) offered to multiple segments. price discrimination. c. decreases the cost of the physical plant. e.50. Many firms are now offering different product or services to highend or low-end segments. doesn't reduce quality or increase price.99 line of greeting cards. one product and multiple market segments. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. Synergy. b. 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. conforms to all union regulations. Answer: a Page: 190 Rationale: Text term definition—mass customization . each targeted at a different type of user. 9-35 MASS CUSTOMIZATION DEFINITION __________ is tailoring goods or services to the tastes of individual customers on a high-volume scale. are an example of multiple products aimed at multiple markets. a. e. d. b. mass customization. e. adds to the manufacturer's sales revenues and profits. Answer: e Page: 190 Rationale: Manufacturing multiple products for multiple market segments is worthwhile under the conditions described if sales revenue and profits increase. d. One product and multiple market segments. multiple products and multiple segments. stabilizes the sales revenues and profits. Mass customization.9-33 MULTIPLE PRODUCTS. c. Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it serves customers' needs better. This is an example of: a. c. b. d. or you can buy a card that's not quite as nice but just as sentimental from the store's new $. Price discrimination. and: a. reduces the number of employees required. Multiple products in multiple segments.

At first glance none look any different from your basic oldfashioned shoe store.000 tracks from record labels that include BMG and Sony Music Group. mixing and matching design components such as style. e. mass customization. textures and a style of sole. multiple products in multiple segments. one product and multiple market segments. e. Answer: a Page: 190 Rationale: Mass customization is tailoring goods or services ( the CD art. and leather type of the shoes) to the tastes of individual customers on a high volume scale. 528 . b. c. Customers can choose up to 70 minutes of music for around $1 per song. Then they can choose an art design and a title for each CD and have a disc shipped for $2. The retailer sells 10. and contents) to the tastes of individual customers on a high volume scale.9-36 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. market augmentation. d. repositioning. 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 200.800 in men's. About 100 display shoes provide style guidelines. market melding. synergy. color. Customers browse the store. color. how the 80/20 rule is implemented. d. Answer: a Page: 190 Rationale: Mass customization is tailoring goods or services (the style. but the only shoes on hand are display models.000 variations in women's shoes and 7. mass customization. There's no inventory for sale. b. Custom Foot guarantees your shoes will be ready within three weeks. c. you select materials. Once you choose a shoe style. This is an example of: a. colors. and customers go home empty-handed—at least initially. title. and leather type. This is an example of: a.50. price discrimination.

a. 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. a customer does not have the ability to specify an unlimited number of features. using a system that eliminates the need to try on countless pairs of eyeglasses to find the right one. b." said William Santana Li. This is an example of: a. From this quote. It is very similar to mass customization. repositioning. how the 80/20 rule is implemented. "Think of Model E as the Dell of the auto industry. 9-39 BUILD-TO-ORDER DEFINITION __________ is manufacturing a product only when there is an order from a customer. but because of production issues. c. d. c. and direct delivery. d. repositioning. 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. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. d. president and CEO of Model E. b. e.9-38 MASS CUSTOMIZATION APPLICATION Paris Miki enables customers to help design their own eyeglasses. e. b. built-to-order (BTO). target marketing. launch. e. mass aggregation. a one-product-one-market-segment strategy. perceptual mapping. . synergy. mass customization. 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. c. you should recognize that Model E relies on: a.

d. the ability to be exposed to more informative advertising messages. 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. c. lower prices. b. easier access to product through improved distribution. b. DEFINITION Answer: a Page: 190 Rationale: Key term definition—synergy 530 . a. b. and so on. 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. d. c. more tax revenues for government. improved quality on existing products. larger rebates at the point of sale. performing organizational functions more efficiently. d. but the ultimate criterion is that customers should be better off as a result of increased synergies. e. higher trade-in values for older model cars.9-41 SYNERGY DEFINITION Marketing strategies provide the organization with __________. 9-43 SYNERGY Synergy is the increased customer value achieved through: a. e. e. the increased customer value achieved through performing organizational functions more efficiently. a. the increased customer value achieved through performing organizational functions more efficiently. 9-42 SYNERGY CONCEPTUAL The ultimate criterion in segmenting markets is that__________ as a result of increased synergy.

c. Figure 9-3 Rationale: The process of segmenting and targeting markets involves five key steps: (1) form prospective buyers into segments. d. (3) develop a marketproduct grid and estimate size of markets. 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.9-44 MARKETING NEWSNET CONCEPTUAL To create a _________ strategy. b. d. estimate size of the overall market. create product groupings. 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). This website would particularly appeal to people who exercise regularly and are very aware of what shoe styles fit comfortably on their feet. develop a market-product grid DEFINITION Answer: b Page: 191.com allows customers to visit its website and design a sneaker to their own personal specifications. e. c. 9-46 SEGMENTING AND TARGETING MARKETS The first step in segmenting and targeting markets is to: a. b. (4) select target markets. (2) form products to be sold into groups. This would be descriptive of which type of market segmentation variable? a. b. c. e. and (5) take marketing actions to reach target markets.com allows customers to visit its website and design a sneaker to their own personal specifications. 9-45 MARKETING NEWSNET CONCEPTUAL Cmax. a. cmax. tailoring goods or services to the tastes of individuals on a high-volume scale. . recognize a need. e. form prospective buyers into groups. d.

(2) form products to be sold into groups. (4) select target markets. b. 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. makes it easiest to reach the segment. the limited benefit to consumers in the segment. b. c. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. 9-49 CRITERIA FOR FORMING SEGMENTS The best segmentation approach is the one that: a. recognizes different needs of buyers among different segments. and the high cost of running a duplicate salad bar. 532 . is simplest and least costly in assigning potential buyers to segments. maximizes the opportunity for future profit and return on investment. Restaurants might consider people with these "allergies" as a separate segment. e. d. d. Figure 9-3 Rationale: The process of segmenting and targeting markets involves five key steps: (1) form prospective buyers into segments. b. 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. c. and (5) take marketing actions to reach target markets. 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. CONCEPTUAL Answer: e Page: 192 Rationale: One of the best criteria to use in forming segments is the opportunity for increased profits and ROI. (3) develop a marketproduct grid and estimate size of markets. c. usually mild. to preservatives used in salad bars. What should a marketer do once he or she has selected a target market? a. e. recognizes similarities of needs of potential buyers within a segment. 9-48 CRITERIA FOR FORMING SEGMENTS APPLICATION Between two and three percent of the population have some degree of allergic reaction.9-47 SEGMENTING AND TARGETING MARKETS DEFINITION There are five steps involved in segmenting and targeting a market. e. d.

“Reaching a segment requires a simple but effective marketing action. simplicity and cost of assigning potential buyers to segments. 9-52 FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. If no such action exists. he told her. d. 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. potential for increased profit and ROI. combine them into fewer segments. c. a marketer should __________ to reduce the number of marketing actions. e. b. don’t segment. If the needs of the various segments aren’t very different. d. b. If increased sales don’t offset extra costs. 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. feasibility of marketing actions to reach the segment. Reaching a segment requires a simple but effective marketing action. e. not for segmenting it. 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. a. it is best to combine segments and reduce the number of marketing actions. If increased revenues don't offset extra costs. c. 9-51 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL When Mikki asked her father for his advice about marketing software for the disabled. . similarity of needs of potential buyers within a segment. don't segment. c. d. If no such action exists. different needs of buyers among different segments. e.9-50 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL A different market segment usually requires a different marketing action that in turn means greater costs.” Mikki's father is expressing concern about the: a. b. A different segment usually requires a different marketing action that means greater costs.

ignore any and all similarities Answer: d Page: 192 Rationale: A marketing manager must be able to put a market segmentation plan into effect. 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. not for segmenting it. diversify their interests c. 9-54 FORMING SEGMENTS CONCEPTUAL A marketing manager must be able to put a market segmentation plan into effect. a. maximize internal considerations b. a. This means being able to recognize the characteristics of potential buyers and then assigning them to a segment without encountering excessive costs. 534 . e. c. d.9-53 FORMING SEGMENTS Which of the following is NOT a criterion used in forming market segments? a. 9-55 CONSUMER SEGMENTATION VARIABLES DEFINITION Two general categories used to segment consumer markets are __________ and buying situations. e. assign them to a segment e. b. 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. c. d. optimize their different needs d. b. This means being able to recognize the characteristics of potential buyers and __________ without encountering excessive costs.

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

b. 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. The market segment for Modern Maturity magazine was defined by: a. psychographic characteristics. buyer situations. 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. 536 . b. demographic characteristics. c. This consumer behavior requires Universal Concerts to segment its Canadian market according to: a. usage patterns.9-59 SEGMENTATION BY REGION APPLICATION Universal Concerts is planning on bringing a series of concerts to Canada next year. demographic characteristics. regional demographic lifestyle geographic psychographic Answer: b Page: 192 Rationale: Household size is a demographic variable. Answer: d Page: 192 Other Location: web Rationale: Age is a commonly used demographic segmentation variable. 9-61 SEGMENTATION BY DEMOGRAPHICS APPLICATION When the Benihana Frozen Foods Corporation began to offer its Famous Restaurant Classics meals in single serving packages. d. geographic and psychographic characteristics. There are different music preferences in east and west Canada. demographic and geographic characteristics. a. d. usage rates. Answer: a Page: 192 Rationale: Psychographic includes consumer activities and interests—country music. d. usage rate and demographic characteristics. e. c. c. it was relying on a __________ segmentation variable to define a market based on serving size. lifestyle and demographic characteristics. e. b. e.

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

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

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

d. geographic. c. d. c. d. The shoes arrived at shoe stores in a metallic silver briefcase instead of a shoebox. demographic. and household size. Nike is targeting a market it identifies as “keepers. psychographic variables. Psychographic characteristics like personality (gregarious. d. Field & Stream. age. consumer behavior. psychographic. APPLICATION Answer: e Page: 192 Rationale: Lifestyle is a psychographic variable. Alternatives c. 9-71 SEGMENTATION BY PSYCHOGRAPHICS Consumer activities. interests. keep them under their bed and when friends come over. c. a. for example. compulsive) and lifestyle (consumer activities. show them the shoes. demographics psychographics usage benefits sought behavior Answer: b Page: 192 Other Locations: web Rationale: Alternative a refers to gender. e. 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. interests. b. attitudes. and Health all use a ____________________ segmentation strategy. e. sociocultural. 9-70 SEGMENTATION BY PSYCHOGRAPHICS APPLICATION Nike recently debuted the Air Jordan XVII with a price tag of $200. Golf Digest. demographic variables. introverted. compulsive) and lifestyle (consumer activities. introverted. interests.” people who buy the shoes. psychological variables. opinions) describe this segmentation variable Nike is using. e. 540 .9-69 SEGMENTATION BY PSYCHOGRAPHICS Magazines like Fitness. b. race. and opinions are considered: a. age. opinions). These magazines are designed to appeal to people who enjoy certain lifestyles. and e describe buying situation variables. DEFINITION Answer: d Page: 192 Rationale: Psychographic characteristics include personality (gregarious. b.

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

demographics. demographics psychographics geographic benefits sought socioeconomic Answer: d Page: 193 Rationale: Alternatives a.S. b. 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. Nike is targeting a market it identifies as “keepers. e. c. 9-76 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION Several customer characteristics used in segmenting consumer markets are based on those from the 2000 U. keep them under their bed and when friends come over. c. d. 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. 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. socioeconomic variables. b. demographics. e. type of retail store used. e. Answer: b Page: 192 Rationale: Customer characteristics used in segmenting consumer markets include geographic. Census and include: a. b. d.S. 542 . geographic variables. socioeconomic variables. c.” people who buy the shoes. and psychographic characteristics. Census and include: a. The benefit would be the ability to show the shoes and hopefully to have something that no one else did. usage rate. and psychographic characteristics.9-75 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION Several customer characteristics used in segmenting consumer markets are based on those from the 2000 U. and e describe customer characteristics. show them the shoes. c. d. time of purchase. b. buying situation.

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

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

is consumed by men 18 to 30 years of age. . It is breakfast. and it changed the thrust of its marketing message to reflect the more productive target market. 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. c. e. inventory. Pepperidge Farm's ads advise consumers of this bread that this new product. e. 9-84 SEGMENTATION BY USAGE DEFINITION The quantity consumed or patronage (store visits) during a specific period is called: a.” Which segmentation variable is being used in this example? a.S. c. d. usage rate. d. d. see it as a side dish.9-83 SEGMENTATION BY USAGE APPLICATION Pepperidge Farm has developed a new thick-sliced French Toast Swirl bread. turnover. 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. What segmentation variable has it focused on with the newer approach? a. “doesn't go with breakfast. Then the company discovered that most beer in the U. trial. b." and ads showed elegant women in long white dresses sipping beer from crystal goblets. 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. 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. The company realizes most people who eat toast for breakfast. consumption rate. e. b. b. In this case. c.

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

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

geographic psychographic benefits sought behavior usage Answer: e Page: 194 Other Locations: web Rationale: According to the 80/20 rule. a New York sales promotion agency. b. eighty percent of a firm's sales are obtained from twenty percent of its customers. augmenting its market. 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. c. d. b. segmenting its market based on the 80/20 rule. c.9-91 80/20 RULE APPLICATION Todd Harris and Associates. c. 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. d. it would be: a. While the percentages are merely meant as a guideline. e. This is an example of what classic concept? a. 9-92 80/20 RULE DEFINITION The 80/20 rule is most closely related to which consumer segmentation variable? a. 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. 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. segmenting its market based on family size. 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. 548 . segmenting its market according to consumer needs. e. segmenting its market according to consumer interest. e.

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

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

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

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

it would not be readily accessible by marketing programs. not for selecting one. What is the fifth criterion? a. This market would use the rehabilitation services that the company now provides. The five criteria to use in actually selecting the target segments are: (1) market size. this market would: a. 556 . and (2) those used in picking the target segments. e. e. b. be accurately described by all of the above. and compatibility with the organization's objectives and resources. competitive position of the firm with respect to the market. have no expected growth. 9-115 SELECTING TARGET SEGMENTS CONCEPTUAL Five general criteria are often used to pick target segments. d. not be compatible with the company's current resources.9-114 SELECTING TARGET SEGMENTS CONCEPTUAL Which of the following is NOT a criterion used for selecting a target segment? a. Because it would be so small. 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. c. expected growth of the market. In terms of the criteria used for selecting a target segment. d. c. be very 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. (4) cost of reaching the segment. 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. e. (2) expected growth. be readily accessible to the firm's marketing programs. Answer: c Page: 197 Rationale: The market would grow as people continue skiing—although it may be slow growth. (5) compatibility with the organization’s objectives and resources. b. (3) competitive position. b. They include the size of the market. d.

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. . Nike decided to concentrate on affluent teens rather than members of high school basketball teams. e. d. e. The less the competition. developing a market-product grid and estimating size of markets. (3) competitive position. The five criteria to use in actually selecting the target segments are: (1) market size. forming prospective buyers into segments. and (2) those used in picking the target segments. the more attractive the segment is. (4) cost of reaching the segment. (5) compatibility with the organization’s objectives and resources. Competitive position is a criterion for selecting a target market. d. (2) expected growth. taking marketing actions to reach target markets. selecting target market segments to reach. c. This is an example of: a. b.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. 9-118 SELECTING TARGET SEGMENTS Which of the following is a criterion for selecting a target segment? a. forming products to be sold into groups. c. b. Answer: a Page: 197 Rationale: A decision to concentrate on affluent teenagers is the selection of a target market segment.

c.9-119 SELECTING TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. b. (3) competitive position. (2) expected growth. d. The five criteria to use in actually selecting the target segments are: (1) market size. e. 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. 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. 558 . and (2) those used in picking the target segments. Although the size of market in the segment may be small now. e. b. Similarity of needs is a criterion for segmenting a market. 9-120 SELECTING TARGET SEGMENTS Which of the following is NOT a criterion for selecting a market segment? a. (5) compatibility with the organization’s objectives and resources. perhaps it is growing significantly or is expected to grow in the future. and (2) those used in picking the target segments. d. 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. c. (4) cost of reaching the segment. (5) compatibility with the organization’s objectives and resources. (2) expected growth. (4) cost of reaching the segment. not for selecting one. (3) competitive position.

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

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

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

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

d. b. opportunities for efficiency in terms of research and development and production. Product synergies are opportunities for efficiency in terms of research and development and production. vital to success in selecting target market segments. relative positioning. 9-133 PRODUCT POSITIONING DEFINITION The place an offering occupies in consumers' minds on important attributes relative to competitive offerings is called: a. e. one example is focusing on a single consumer segment. selective perception. one example is focusing on a single product. d. b. c. Answer: e Page: 200 Rationale: Marketing synergies are opportunities for efficiency in terms of a market segment. product positioning. competitive positioning. 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 . e.9-132 MARKET-PRODUCT SYNERGIES Market-product synergies are: a. c. d. and department stores geographic segmentation. described by all of the above statements. e. CONCEPTUAL opportunities for efficiency in terms of market segments. vital to success in making marketing decisions. b. c. Both of these synergies are vital to success in both selecting target market segments and making marketing decisions. grocery. Answer: d Page: 201 Rationale: Key term definition—product positioning 9-134 PRODUCT POSITIONING What does the term product positioning refer to? a. product perception.

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

9-138 PERCEPTUAL MAP A perceptual map is most like a: a. independent rating organizations such as Consumer Reports. consumers. pyramid design. b. 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. consumers. The map is based on perceptions of: a. c. d. e. d. 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. c. payoff table. growth matrix. database. two-dimensional graph. 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. e. e. b. . d. competitors. competitors. three-dimensional cube. and the firm itself. b. consumer map of likes and dislikes. intermediaries. consumer preference matrix. perceptual map. c.

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

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

In this case Nokia is using physical product features to differentiate their product. a personal information manager and a cellular phone. a thermometer. such as product features and advertising. e. c. a personalized logo. Nokia is using a __________. which includes a built-in stopwatch.strategy. downloaded game packs. d. to help consumers perceive the product as being different and better than competing products. 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. a. b.9-147 VIDEO CASE: NOKIA APPLICATION By developing and introducing a communication device. 568 .

such as image or price. 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. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price. as the text points out in connection with Reebok. to help consumers perceive the product as being different and better than competing products. 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. such as product features and advertising.CHAPTER 9 IDENTIFYING MARKET SEGMENTS AND TARGETS SHORT ESSAY QUESTIONS 9-148 MARKET SEGMENTATION CONCEPTUAL Define market segmentation. though. Page: 187. it can contribute to increased revenues for the firm. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. Differences may involve nonphysical features as well. 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. As long as a new product does not take a significant amount of sales away from an existing product. In its broadest sense it involves a firm's using different marketing mix activities. Segmentation links needs to actions. Such needs and benefits must be related to specific. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. tangible marketing actions the firm can take. Thus. product differentiation relates to competitive positioning. Page: 187 . In a narrower sense.

Page: 189 9-152 SYNERGY CONCEPTUAL Explain the segmentation trade-off: customer relationship management (CRM) versus synergies. which often entails high research. easier access to product through improved distribution.9-150 SINGLE PRODUCT. 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. and desires exceptional service from the seller. Page: 189 9-151 MULTIPLE PRODUCTS. and marketing expenses. The “increased customer value” can take many forms: more products. and manufacturing expenses. The ultimate criterion for an organization’s marketing success is that customers should be better off as a result of the increased synergies. The trade off is finding the ideal balance between these two concepts. 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. improved quality of existing products. and so on. lower prices. The additional marketing costs of a single-product. Answer: CRM recognizes that every customer is unique. has unique wants and needs. engineering. Page: 190 570 . multiple-market strategy—primarily in connection with promotion and distribution—are usually relatively low. 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. manufacturing. Be sure to define CRM and synergy in your answer. engineering.. Synergy is the increased customer value achieved through performing organizational functions more efficiently.

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. Figure 9-3 CONCEPTUAL . The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. Based on the food bank's previous policy. Page: 192 9-154 CRITERIA FOR FORMING SEGMENTS APPLICATION A nonprofit food bank was gathering and handing out food to anyone who requested it. 5) Take marketing actions to reach target markets. 1) Form prospective buyers into segments. List these important factors in marketing planning. Page: 192. 2) Form products to be sold into groups. it is much more likely to serve its clients more effectively with the new segmentation strategy. 4) Select the target market segments toward which the firm will direct its marketing actions. This will be the market segment it targets. Each relates to efficiency and productivity with respect to allocation of the firm's resources. 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.9-153 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL A marketing manager should develop segments for a market that meet five principal criteria. 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. 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. It now wants to only give free food to people who go hungry on a regular basis.

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

cost of reaching the segment. CONCEPTUAL Answer: The 80/20 rule suggests that 80 percent of a firm’s sales are obtained from 20 percent of its customers. a particular segment may appear attractive according to some criteria. Under this are included benefits sought and usage in terms of a heavy user. As is often the case in marketing decisions. and unattractive according to others.9-159 80/20 RULE Explain the 80/20 rule and explain how it is used in market segmentation. expected growth. a light user. 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. and compatibility with the organization's objectives and resources. 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. and nonusers. (4) benefits sought. 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. (3) number of employees. (2) NAICS code. competitive position. 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. Page: 197 CONCEPTUAL CONCEPTUAL . One of the segmentation variables is buying situation.

The market-product combination is then shown in each cell and evaluated for use in the segmentation strategy. the iMac. The company saves money on marketing. and the iPod (as of mid-2003). marketing will have to address the concerns of a wide variety of consumers. the PowerBook G4. 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. 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. whereas the iMac could be positioned in the mind of both the consumer and the professional as meeting their respective needs. In Apple’s case.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. 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. while the products include the Power Macintosh G4. 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 . but spends more in production. the eMac. the markets served are the consumer and professional markets. if product synergies are emphasized. which costs more time and money. Conversely. 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. the iBook. companies obtain three types of data from consumers. A consumer or small home office might be targets for all of the products except the iPod.

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