# CHAPTER 9

SEGMENTING, POSITIONING, AND FORECASTING MARKETS
Test Item Table by Major Section of the Chapter and Level of Learning
Level of Learning Major Section of the Chapter Zappos.com (pp.225-226) Why Segment Markets? (pp.226-230) Steps in Segmenting and Targeting Markets (pp.230-243) 6,7,8,9,10,11,12,13,55,56, 57,59,61 77,81,90,94,101,106,108, 109,124,125,126,127 Level 1: Knowledge (Knows Basic Terms & Facts) Level 2: Comprehension (Understands Concepts & Principles) 1,2,3,4,5 18,19,20,23,24,27,28,29,30,31, 33,35,38,39,42,43,60,207,208,209 , 210,211 62,63,64,65,66,67,68,69,70,71,72, 73,76,78,82,83,91,95,96,102,103, 107,111,112,113,114,115,119,120, 128,129,130,131,132,136,137,138 , 139,140,141,212,213,215,217,218 , 219,220,221 142,143,144,145,146,150,152,153 , 159,162,163,164,173,174,175,176 , 222,223 184,185,186,187,189,201,203, 224,225 Level 3: Application (Applies Principles)

14,15,16,17,21,22,25,26,32,34, 36,37,40,41,44,45,46,47,48,49, 50,51,52,53,54,58 74,75,79,80,84,85,86,87,88,89, 92,93,97,98,99,100,104,105,110, 116,117,118,121,122,123,133, 134,135,147,148,149,151,214, 216

Positioning the Product (pp.243-245) Sales Forecasting Techniques (pp.245-247)

154,155,156,160,161,167, 168,170,171,172

157,158,165,166,169,177,178

179,180,181,182,183,188, 191,192,196,197,198,200, 202

190,193,194,195,199,226

Video Case: Nokia (pp.249-251)

205

204,206

Note: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

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CHAPTER 9
SEGMENTING, POSITIONING, AND FORECASTING MARKETS
Test Item Table by Learning Objective and Level of Learning
Level of Learning Learning Objective Level 1: Knowledge (Knows Basic Terms and Facts) 6,7,8,9,10,11,12,13,55, 56,57,59,61 Level 2: Comprehension (Understands Concepts & Principles) 1,2,3,4,5,18,19,20,23,24,27, 28,29,30,31,32,33,35,38,39, 42,43,60,207,208,209,210,21 1 62,63,64,65,212 Level 3: Application (Applies Principles) 14,15,16,17,21,22,25,26,34, 36,37,40,41,44,45,46,47,48, 49,50,51,52,53,54,58,206

Explain what market segmentation is and when to use it. Identify the five steps involved in segmenting and targeting markets. Recognize the factors used to segment consumer and organizational markets. Develop a market-product grid to identify a target market and recommend resulting actions. Explain how marketing managers position products in the marketplace. Describe three approaches to developing a sales forecast for an organization.

77,81,90,94,101,106,108, 109

66,67,68,69,70,71,72,73,76, 78,82,83,91,95,96,102,103, 107,111,112,113,114,115, 119,120,205,213,215,217,218 130,131,132,136,137,138,139 , 140,141,142,143,144,145,146 , 150,152,153,219,220,221 159,162,163,164,173,174, 175,176,222,223

74,75,79,80,84,85,86,87,88, 89,92,93,97,98,99,100,104, 105,110,116,117,118,121, 122,123,204,214,216 134,135,147,148,149,151

124,125,126,127

154,155,156,160,161,167 , 168,170,171,172 179,180,181,182,183, 188,191,192,196,197, 198,200,202

157,158,165,166,169,177, 178

184,185,186,187,189,201,203 , 224,225

190,193,194,195,199,204, 226

Note: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

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CHAPTER 9
SEGMENTING, POSITIONING, AND FORECASTING MARKETS
MULTIPLE CHOICE QUESTIONS 9-1 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

The Zappos specific market segmentation strategy is to a. sell a huge selection of shoes to people who will buy them online. b. sell a wide selection of leather shoes and boots to retailers. c. sell all types of shoes, accessories, and clothing to department stores. d. use organizational segmentation to sell accessories to consumers. e. sell children’s shoes to online retailers. Answer: a Page: 225 LO: 1 LL: 2 AACSB: 3 Rationale: Hsieh, Lin, and founder Nick Swinmurn have given Zappos a clear, specific market segmentation strategy: Sell a huge selection of shoes to people who will buy them online. 9-2 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos.com is true? a. Zappos.com only sells a small selection of designer, high-end shoes. b. Using only the Zappos.com website it is impossible to discover how to contact the company. c. Zappos.com uses the latest in whiz-bang technology. d. Zappos.com uses ads on the site to finance it. e. The Zappos.com home page is fast as lightning. Answer: e Page: 225 LO: 1 LL: 2 AACSB: 3 Rationale: The Zappos.com home page is “fast as lightning.” In fact, in late 2006 it was fastest of the top 50 Internet retailers to load on your computer: 0.879 seconds. 9-3 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos is true? a. Zappos sells primarily sneakers. b. Zappos staff tries to spend most of its time on stuff that will improve customer-service levels. c. Baby boomers are the largest market Zappos products. d. The Zappos website is somewhat difficult to use when searching for a specific shoe size. e. The Zappos call center is closed only on Sundays from 7 a.m.-noon. Answer: b Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: Asked about the details of the Zappos website, Tony Hsieh almost yawns and says, “We try to spend most of our time on stuff that will improve customer-service levels.”

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9-4

CHAPTER OPENING EXAMPLE: ZAPPOS.COM

COMPREHENSION

Which of the following statements about Zappos is true? a. Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—Las Vegas. b. Customer service employees don’t use scripts and don’t try to keep calls short. c. Every new employee in Las Vegas spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. d. Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day. e. All of the above are true. Answer: e Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: This focus on customer service for the Zappos niche of online customers is something the company lives, breathes, and implements. Examples include all of the choices offered in the question. 9-5 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos is true? a. Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—New York. b. Customer service employees use scripts and try to keep calls short. c. Every new employee in New York spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. d. Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day. e. All of the above are true. Answer: d Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: This focus on customer service for the Zappos niche of online customers is something the company lives, breathes, and implements. Some examples include: (1) Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—Las Vegas. (2) Customer service employees don’t use scripts and don’t try to keep calls short. (3) Every new employee in Las Vegas spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. (4) Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day.

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consumer differentiation. e. e. be responsive to marketing research. d. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-8 MARKET SEGMENTATION Other Location: web KNOWLEDGE Market segmentation involves aggregating prospective buyers into groups that will respond similarly to a marketing action and a. market delineation. use the same payment methods. respond similarly to a marketing action. pay attention to marketing messages. c. c. go shopping on a regular basis. use the same payment methods. be responsive to marketing research. market segmentation. d. c. have common needs. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 120 . aggregation marketing. will pay attention to marketing messages. b. b. e. psychographics. b. go shopping on a regular basis. Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-7 MARKET SEGMENTATION KNOWLEDGE Market segmentation involves aggregating prospective buyers into groups that have common needs and will a. d.9-6 MARKET SEGMENTATION KNOWLEDGE Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action is called a.

Market segmentation d.9-9 MARKET SEGMENTATION KNOWLEDGE __________ involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marking action. qualified prospect Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments AACSB: 3 121 . c. have potential for future growth and have potential for increased profit or ROI. Market augmentation e. e. b. b. a. Repositioning Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-10 MARKET SEGMENTATION Other Location: SG KNOWLEDGE To be identified as a market segment. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-11 MARKET SEGMENTS KNOWLEDGE The phrase “relatively homogeneous collections of prospective buyers” is most descriptive of a. represent a large share of the entire market and have critical buying power. demographic cluster c. have different needs and respond similarly to market actions. organizational buyers. Market differentiation c. have different needs and have potential for future growth. ultimate consumer e. d. market segment b. a. organizational buyer d. its members must a. Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments 9-12 MARKET SEGMENTS AACSB: 3 KNOWLEDGE Each __________ consists of people who are relatively similar to each other in terms of their consumption behavior. qualified prospects. c. ultimate consumers. market segments. demographic clusters. Market diversification b. have common needs and respond similarly to market actions. d. e.

product differentiation d. product differentiation d. Sometime later the same basic formula was given a fresh. the first fluoride toothpaste.9-13 PRODUCT DIFFERENTIATION KNOWLEDGE Which strategy involves a firm’s using different marketing mix activities. market penetration e. product extrapolation c. product sampling b. Groups range from Collectors Clubs to the eBay Community Cookbook group. it was intended for use by children and was therefore given a child-appealing bubblegum flavor. 9-15 PRODUCT DIFFERENTIATION APPLICATION E-Bay has many different groups on its website. market differentiation c. such as product features and advertising. such as product features and advertising. 122 . a. to help consumers perceive the product as being different and better than competing products. product differentiation d. to help consumers perceive the product as being different and better than competing products. E-bay uses a __________ strategy to reach several different market segments. psychographic segmentation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. In the case of e-Bay the groups (a product feature) encourage buyers and sellers of particular items to interact. behavioral segmentation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. product sampling b. minty flavor to appeal to adults. the change of flavor (a product feature) helped consumers to perceive the product as different as and better than competing products. usage segmentation e. product extrapolation c. What is this marketing strategy called? a. to help consumers perceive the product as being different and better than competing products? a. full coverage marketing Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—product differentiation 9-14 PRODUCT DIFFERENTIATION Other Location: web APPLICATION When Procter & Gamble introduced Crest toothpaste. In the case of Crest. such as product features and advertising. usage segmentation e. dual distribution b.

d. These examples best illustrate a. to help consumers perceive the product as being different and better than competing products. e. d. Extra Strength Alka-Seltzer. a customer gets fresh rice with soy or sweet chili sauce with his or her chicken. b. b. AlkaSeltzer Morning Relief (for morning headaches and fatigue). c. Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. to help consumers perceive the product as being different and better than competing products. In Holland the mashed potatoes are replaced with a potato-and-onion croquette. 9-17 PRODUCT DIFFERENTIATION APPLICATION KFC has modified its product to satisfy different market segments. c. and Alka-Seltzer Heartburn Relief. the maker of Alka-Seltzer. market sectioning. is selling four versions with different product features to appeal to different market segments. product base development. such as product features and advertising. product differentiation. product segmentation. 123 . Bayer. such as product features and advertising. and in Thailand. product base development. product positioning. market segmentation. product differentiation. Today you can buy Original Alka-Seltzer. product segmentation. Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. market sectioning. Each Alka-Seltzer product is targeted to a slightly different market segment.9-16 PRODUCT DIFFERENTIATION APPLICATION Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach. KFC changes the product features internationally to help consumers perceive the product as being different and better than competing products. The maker of Alka-Seltzer is using a. e.

top-level management d. market sectioning c. 9-1 LO: 1 LL: 2 AACSB: 3 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to an organization’s marketing program. e. a. 9-1 LO: 1 LL: 2 AACSB: 3 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to an organization’s marketing program. government regulations c.9-18 MARKET SEGMENTATION COMPREHENSION Market segmentation stresses __________ and relating needs and benefits to specific marketing actions. Answer: e Page: 227. market needs e. government regulations. c. 124 . 9-19 MARKET SEGMENTATION COMPREHENSION The process of segmenting a market and selecting specific segments as targets is the link between __________ and the organization's marketing program. splitting people randomly between markets e. Fig. controllable environmental factors Answer: d Page: 227. self-regulatory industry standards b. the organization's marketing program. Second. grouping people randomly in a market b. product based market development Answer: c Page: 226 .227 LO: 1 LL: 2 AACSB: 3 Rationale: Market segmentation first stresses the importance of 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. d. self-regulatory industry standards. Fig. controllable environmental factors. a. grouping people according to similar needs d. such needs and benefits must be related to specific marketing actions the organization can take. b. top-level management. 9-20 MARKET SEGMENTATION COMPREHENSION The process of segmenting a market and selecting specific segments as targets is the link between the various buyers’ needs and a.

create innovation. product positions Answer: d Page: 227 LO: 1 LL: 3 AACSB: 3 Other Location: SG Rationale: Economists relate supply and demand through price and quantity. it relates supply (__________) to demand (the customer needs). Market segmentation relates the market needs or demand to the marketing program executed by the company. In economist's terms. which includes price. and place. it relates supply (the organization's marketing program) to demand (the customer needs).9-21 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. which includes price. market segmentation relates supply (the organization's marketing program) to demand (__________). customer needs e. 125 . sustainable. a. strategic objectives e. a. increase sales and profitability. 9-22 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. c. In economist's terms. product. Market segmentation is only a means to an end: in economist's terms. 9-23 MARKET SEGMENTATION COMPREHENSION A basic test of the usefulness of the market segmentation process is whether it leads to tangible marketing actions that can a. are socially responsible. are legal. product. tactical goals b. b. Market segmentation is only a means to an end: in economist's terms. promotion. Answer: a Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: A basic test of the usefulness of the segmentation process is whether it leads to tangible marketing actions that can increase sales and profitability. d. and place. tactical goals Answer: b Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Economists relate supply and demand through price and quantity. strategic objectives d. the organization's marketing program c. Market segmentation relates the market needs or demand to the marketing program executed by the company. government regulations d. government regulations c. e. self-regulatory industry standards b. it relates supply (the organization's marketing program) to demand (the customer needs). promotion.

e. offering the absolute best selection of shoes and the absolute best service. c. a firm should not attempt to segment its market. it changes its advertising campaign. c. its pricing strategy. act as its own distributor. and return on investment. b. and ROI. discontinue manufacturing any products that are not in the mature stage of their product life cycle. e. Answer: a Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: The Zappos segmentation strategy is based on selling service elements that lead to a positive customer experience and repeat purchases—the absolute best selection of shoes and the absolute best service. which will lower quality. the firm should a. reduce production costs. Answer: d Page: 227 .9-27 ZAPPOS SEGMENTATION STRATEGY COMPREHENSION The Zappos segmentation strategy is based on a. When expenses are greater than the potentially increased sales from segmentation. c. it expects that this will increase its sales. d. e. not attempt to segment its market.228 LO: 1 LL: 2 AACSB: 3 Rationale: A business firm goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales. recession sets in. Answer: d Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: A business firm goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales. 9-28 MARKET SEGMENTATION COMPREHENSION A business firm goes to the trouble and expense of segmenting its markets when a. the environment becomes uncertain. b. competitors enter the marketplace. terminate as many employees as possible to save money. 9-29 MARKET SEGMENTATION COMPREHENSION A business firm segments its markets when this strategy increases its sales revenue. supplier geography. d. profit and return on investment. profit. designing shoes for every type of occasion. b. and return on investment. When expenses are greater than the potentially increased sales from segmentation. having a well-educated customer base. profit. 127 . profit. d.

the definition of a “one-product and multiple-market segments” situation.S. geographic segmentation Answer: e Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: The magazine has 14 different covers to appeal to sports fans in 14 different geographic regions. c. b. Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: There is only a single product. one product and multiple market segments. behavioral segmentation e. clearly using the geographic variable as the basis for market segmentation. the magazine stories inside the cover. segments of one.” Yet the 14 different covers enable the magazine with exactly the same stories to reach 14 different regional segments. income segmentation. this is an example of a. 9-31 MARKET SEGMENTATION STRATEGY COMPREHENSION Street & Smith publishes the same baseball magazine with exactly the same stories but with 14 different covers to appeal to baseball fans in 14 different regions of the U. outlet-type segmentation c. e. Four samples are shown in Figure 9-B. so the answer is “a. segmenting organizational markets. Four samples are shown in Figure 9-B. multiple products and multiple market segments.STREET & SMITH COVERS 9-30 MARKET SEGMENTATION STRATEGY COMPREHENSION Street & Smith publishes the same baseball magazine with exactly the same stories but with 14 different covers to appeal to baseball fans in 14 different regions of the U. demographic segmentation d. psychographic segmentation b. d. In terms of market segmentation strategies. or mass customization. 128 . What is the market segmentation strategy? a.S.

c. and manufacturing expenses. engineering. the extra cost of developing and producing additional versions of the product b. which often results extremely high research. purchase another firm that has additional products that would appeal to multiple markets. manufacture products that appeal to different markets. d. 129 . develop and produce another version of the product. Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: When an organization produces only a single product or service and attempts to sell it to two or more market segments. In this case. b.9-32 MARKET SEGMENTATION STRATEGY APPLICATION One marketing action that can be taken to sell a single product or service to multiple market segments is a. 9-33 ONE PRODUCT. it avoids __________. which often entail extremely high research. the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. creating a service gap c. a. develop a separate promotional campaign. indirect distribution and logistics problems d. engineering. and manufacturing expenses. amortization costs Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Other Location: web Rationale: The incremental costs of taking a product into new product segments are rarely as large as those for developing an entirely new product. MULTIPLE MARKET SEGMENTS COMPREHENSION When a firm produces only a single product or service and attempts to sell it to two or more market segments. issue stock used for additional research and development for improved products. strategic planning e. it avoids the extra costs of developing. e. and producing additional versions of the product.

e. is a much more effective means of meeting consumers' individual needs.9-34 ONE PRODUCT. increased satisfaction of consumer wants and needs b. is a more effective way of meeting organizational objectives. lower retail prices because of lower marketing costs Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Producing a single product and selling it to multiple market segments gives important production economies of scale and reduced costs that may be passed on to consumers as lower prices (alternative C). Reach Toothbrush makes several versions of its toothbrush. b. engineering. 9-35 ONE PRODUCT. improved service e. 9-36 ONE PRODUCT. d. which are available in a soft. creates greater cost savings in manufacturing costs. c. is much more profitable. MULTIPLE MARKET SEGMENTS COMPREHENSION When compared to a multiple-products-multiple-market segments strategy. has significantly higher distribution costs. which often entails higher research. b. c. and hard bristle and a short or normal length head. running shoes. and Weeboks. e. 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. Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: A one product and multiple market segment strategy simply involves producing a single product and selling it to two or more market segments. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. Reebok makes tennis shoes. a one-product-andmultiple-market-segment strategy a. and manufacturing expenses. increased number of choices c. 130 . it avoids the extra cost of developing and producing additional versions of the product. lower retail prices because of lower production costs d. walking shoes. as is the case with Johnson's Baby Oil. MULTIPLE MARKET SEGMENTS APPLICATION What is the most likely way for consumers to benefit because a firm uses a strategy of one product for multiple market segments? a. marketing costs generally increase. medium. Answer: c Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: When a firm produces only a single product or service and attempts to sell it to two or more market segments. d. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. not marketing economies of scale (alternative E) When using one product and multiple market segments.

one product with multiple market segments b. CRM Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: Scholastic is selling one book series (product) to multiple market segments— preteen.9-37ONE PRODUCT. The only difference in each magazine is that the advertisements in the magazine are different and are targeted to the appropriate geographic segment. 9-38 ONE PRODUCT. editions each targeted at unique geographic and demographic segments using a special mix of advertisements. and adult readers. mass customization e. CRM Answer: a Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Time is selling one magazine (product) to multiple geographic segments. 131 . multiple products with multiple market segments c. multiple products with multiple market segments c. Time is using which of the following segmentation strategies? a. teen. synergy d. one product with multiple market segments b. and adult readers around the world.S. These books have been marketed to preteen. the publisher of the Harry Potter books is using which of the following segmentation strategies? a. teen. Scholastic. the Harry Potter series of books were often at the top of The New York Times fiction best-seller list. MULTIPLE MARKET SEGMENTS APPLICATION Time magazine publishes 200 different U. synergy d. mass customization e. MULTIPLE MARKET SEGMENTS COMPREHENSION In the United States.

One set of previews showed the action scenes in order to attract one audience. and the other set showed romantic scenes to attract another audience. b. Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it adds to the manufacturer’s sales revenues and profits. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. e. and a. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. e. d. b. conforms to all union regulations. are an example of multiple products aimed at multiple markets. decreases the cost of the physical plant. c. Alternative C is an example of two types of vehicles for two different groups of consumers—those who wish to carry people and those who wish to carry products.9-39 MULTIPLE PRODUCTS. 9-40 MULTIPLE PRODUCTS. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. Answer: c Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: A multiple products and multiple markets strategy has a number of distinct products each targeted to a different type of user. Answer: e Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better. and adds to the manufacturer’s sales revenues and profits. A new movie used several different advertisements. doesn’t reduce quality or increase price.S. reduces the number of employees required. stabilizes the sales revenues and profits. d. each targeted at a different type of user. MULTIPLE MARKET SEGMENTS COMPREHENSION Which of the following is an example of a multiple products and multiple markets strategy? a. c. 132 . Ford manufactures SUVs for those who wish to carry lots of people and pickup trucks for those who wish to carry lots of products. doesn't reduce quality or increase price. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. serves customers' needs better.

Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it adds to the manufacturer’s sales revenues and profits. and adds to the manufacturer’s sales revenues and profits. e. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. whereas its Old Navy stores sell a slightly different version for \$22. each targeted at a different type of user. stabilizes the sales revenues and profits. reduces the number of employees required.9-41 MULTIPLE PRODUCTS. One set of previews showed the action scenes in order to attract one audience. Many firms are now offering different variations of the same basic product or service to high-end and low-end segments. c. Answer: d Page: 229 LO: 1 LL: 2 AACSB: 3 Rationale: A “Tiffany/Wal-Mart” strategy is a two-tier marketing strategy. d. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes.S. serves customers’ needs better. conforms to all union regulations. Answer: e Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better. MULTIPLE MARKET SEGMENTS COMPREHENSION Which of the following is an example of a “Tiffany/Wal-Mart” strategy? a. doesn’t reduce quality or increase price. doesn't reduce quality or increase price. are an example of multiple products aimed at multiple markets. c. b. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. and the other set showed romantic scenes to attract another audience. and a. d. e. 9-42 MULTIPLE PRODUCTS. A new movie used several different advertisements. decreases the cost of the physical plant. b. Gap’s Banana Republic chain sells blue jeans for \$58. 133 .

one product and multiple market segments. and the other set showed romantic scenes to attract another audience. price discrimination. A new movie used several different advertisements.9-43 MULTIPLE PRODUCTS. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. 9-44 MULTIPLE PRODUCTS. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. e. a “Tiffany/Wal-Mart” strategy. This is an example of a. Alternative C is an example of two types of cake mixes for two different groups of consumers—those with conventional ovens and those with microwave ovens. MULTIPLE MARKET SEGMENTS COMPREHENSION The Walt Disney Company carefully markets two distinct Winnie-the-Poohs—such as the original line-drawn figures on fine china sold at Nordstrom and a cartoon-like Pooh on polyester bed sheets sold at Wal-Mart. and another line of cake mixes for people with microwave ovens. synergy. One set of previews showed the action scenes in order to attract one audience. Answer: e Page: 229 LO: 1 LL: 2 AACSB: 3 Rationale: This is an example of the two-tiered strategy referred to as a “Tiffany/Wal-Mart” strategy.S. mass customization. Betty Crocker carries one line of cake mixes for people with conventional ovens. Many firms are now offering different products or services to high-end or low-end segments. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. b. c. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a multiple products and multiple markets strategy? a. 134 . e. d. Answer: c Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: A multiple products and multiple markets strategy has a number of distinct products each targeted to a different type of user. c. b. d.

stabilizes the sales revenues and profits. doesn't reduce quality or increase price. 135 . adds to the manufacturer's sales revenues and profits. each targeted at a different type of user. c. are an example of multiple products aimed at multiple markets. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: This is an example of the two-tiered strategy referred to as a “Tiffany/Wal-Mart” strategy. synergy. doesn’t reduce quality or increase price. Manufacturing these different cereals is clearly more expensive than producing one type of cereal but seems worthwhile if it serves customers' needs better.99 line of greeting cards. one product and multiple market segments. d. c. mass customization. decreases the cost of the physical plant. b. e. 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. price discrimination. d. a “Tiffany/Wal-Mart” strategy. 9-46 MULTIPLE PRODUCTS. and a.9-45 MULTIPLE PRODUCTS. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. b. and adds to the manufacturer’s sales revenues and profits. Many firms are now offering different products or services to high-end or low-end segments.50. e. reduces the number of employees required. This is an example of a. or you can buy a card that's not quite as nice but just as sentimental from the store's new \$. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better. conforms to all union regulations.

repositioning. 9-52 MASS CUSTOMIZATION APPLICATION To create a __________ strategy. target marketing. product extrapolation c. tailoring goods or services to the tastes of individuals on a high-volume scale. d. how the 80/20 rule is implemented. target marketing. d.com. mass customization d. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. c.9-50 MASS CUSTOMIZATION APPLICATION MyTwinn makes dolls that look like young girls. e. and a key clip when you order from LandsEnd. 137 .com allows customers to visit its website and design a sneaker to their own personal specifications. usage segmentation e. c. synergy. she could have a doll that is her twin! This is an example of a. psychographic segmentation Answer: c Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Today’s Internet ordering and flexible manufacturing and marketing processes have made mass customization possible. e. b. a. b. So. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. mass customization. This is an example of a. repositioning. if you send in the money and a photo of your young niece. synergy. how the 80/20 rule is implemented. For \$119 they will make a doll that looks just like a photograph. 9-51 MASS CUSTOMIZATION APPLICATION Lands’ End will custom fit the Marinac jacket and make it with additional features such as thumb loops. mass customization. product sampling b. nikeid. underarm ventilation slits.

synergy. mass production e. A customer can have gift wrap printed with the name of the person celebrating a birthday or the folks who are getting married. how the 80/20 rule is implemented. customer relationship management b. This made-to-order gift wrap is priced from \$24. target marketing. synergy c. and desires special tender loving care. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. 9-54 MASS CUSTOMIZATION APPLICATION Name Maker is an online company that sells high-end gift wrap printed with custom slogans. d. b. d. repositioning. target marketing. e. mass customization. c. repositioning. synergy. 9-55 CUSTOMER RELATIONSHIP MANAGEMENT KNOWLEDGE The essence of __________ is that each customer has unique needs and wants. b. e.95 to \$32.9-53 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Company will let you select cookies and put a photo of yourself on the tin. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. mass customization.95 per 12-foot roll. This is an example of a. This is an example of a. target marketing d. mass customization Answer: a Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—customer relationship management 138 . how the 80/20 rule is implemented. a. c.

and direct delivery. It is very similar to mass customization. e. repositioning. c. Synergy c. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. synergy. a customer does not have the ability to specify an unlimited number of features. "Think of Model E as the Dell of the auto industry. c. d. Answer: e Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—mass customization 9-58 BUILD-TO-ORDER APPLICATION Model E is a new type of car manufacturer that relies on the Internet to build new car designs from prototypes to marketable vehicles much faster than ever before possible. a one-product-one-market-segment strategy. Mass production e. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 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. mass aggregation. built-to-order (BTO). e. but because of production issues. Target marketing d. b. a. built-to-order (BTO). synergy." said William Santana Li. launch. a one-product-one-market-segment strategy. mass aggregation. customer relationship management (CRM). president and CEO of Model E. Model E manufactures a car only when there is an order from a customer. Model E relies on a. 139 . d.9-56 MASS CUSTOMIZATION KNOWLEDGE __________ is tailoring goods or services to the tastes of individual customers on a highvolume scale. Mass customization Answer: e Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—mass customization 9-57 BUILD-TO-ORDER KNOWLEDGE Manufacturing a product only when there is an order from a customer is called: a. b. Customer relationship management b.

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SYNERGY

KNOWLEDGE

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 __________, the increased customer value achieved through performing organizational functions like marketing or manufacturing more efficiently. a. segregation b. synergy c. segmentation d. selection e. value add Answer: b Page: 229 LO: 1 Rationale: Key term definition—synergy 9-60 SYNERGY LL: 1 AACSB: 3 COMPREHENSION

The ultimate criterion for an organization’s marketing success in customer relationship management is that __________ as a result of increased synergies. a. investors should make more money b. executives should get larger salaries c. products should be made more cheaply d. customers should be better off e. the government should collect more taxes Answer: d Page: 229 LO: 1 LL: 3 AACSB: 3 Other Location: web Rationale: The synergy called increased customer value can take the form of more products, improved quality on existing products, lower prices, easier access to product through improved distribution, and so on. So the ultimate criterion for an organization’s marketing success in customer relationship management is that customers should be better off as a result of the increased synergies. 9-61 SYNERGY Synergy is the increased customer value achieved through a. performing organizational functions more efficiently. b. larger rebates at the point of sale. c. higher trade-in values for older model cars. d. the ability to be exposed to more informative advertising messages. e. more tax revenues for government. Answer: a Page: 229 LO: 1 Rationale: Key term definition—synergy LL: 1 AACSB: 3 Other Location: SG KNOWLEDGE

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STEPS IN SEGMENTING AND TARGETING MARKETS

COMPREHENSION

The five key steps in segmenting and targeting markets a. help identify market needs. b. provide guidance to reposition products. c. help create ideas for new products. d. link market needs of customers to the organization’s marketing program. e. are required by law. Answer: d Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: Figure 9-2 shows the five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program. 9-63 STEPS IN SEGMENTING AND TARGETING MARKETS The first step in segmenting and targeting markets is to a. recognize a need. b. group potential buyers into segments. c. create product groupings. d. estimate size of the overall market. e. develop a market-product grid. Answer: b Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets. 9-64 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION COMPREHENSION

There are five steps involved in segmenting and targeting a market. What should a marketer do once he or she has selected a target market? a. create product groupings b. develop a market-product grid c. estimate size of market d. take marketing actions to reach that target market e. form prospective buyers into market segments Answer: d Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets.

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9-65STEPS IN SEGMENTING AND TARGETING MARKETS

COMPREHENSION

There are five steps involved in segmenting and targeting a market. What should a marketer do once he or she has selected a target market and grouped products to be sold into categories? a. create product groupings b. develop a market-product grid and estimate size of market c. identify market needs d. take marketing actions to reach that target market e. form prospective buyers into market segments Answer: b Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets. 9-66 CRITERIA FOR FORMING SEGMENTS COMPREHENSION

The best segmentation approach is the one that a. makes it easiest to reach the segment. b. recognizes different needs of buyers among different segments. c. recognizes similarities of needs of potential buyers within a segment. d. is simplest and least costly in assigning potential buyers to segments. e. maximizes the opportunity for future profit and ROI. Answer: e Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The best segmentation approach is the one that maximizes the opportunity for future profit and ROI. If this potential is maximized without segmentation, don’t segment. 9-67 CRITERIA FOR FORMING SEGMENTS COMPREHENSION

A different market segment usually requires a different marketing action that in turn means greater costs. If increased revenues don't offset extra costs, a marketer should __________ to reduce the number of marketing actions. a. increase the advertising budget b. try direct mail instead of broadcast advertising c. cancel current activities d. combine segments e. discontinue offering the good or service Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Other Location: SG Rationale: If the needs of the various segments aren’t very different, combine them into fewer segments. A different segment usually requires a different marketing action that, in turn, means greater costs. If increased sales don’t offset extra costs, combine segments and reduce the number of marketing actions.

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CRITERIA FOR FORMING SEGMENTS Potential buyers within a segment should be a. difficult to reach to prevent competitors from reaching them first. b. similar to buyers among different segments. c. similar in terms of a marketing action. d. high cost to assign to segments. e. interested in direct mail services.

COMPREHENSION

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perceptual Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Campbell’s is marketing a different sauce to different markets depending on where they are located. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. e. Answer: b Page: 231 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—geographic segmentation KNOWLEDGE 9-78 GEOGRAPHIC SEGMENTATION COMPREHENSION Campbell’s found that its canned nacho cheese sauce. Today. 146 . In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. This is geographic segmentation. behavioral c. c. NAICS code segmentation. b. b. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. zip code segmentation. MSA segmentation. d. geographic e. which could be heated and poured directly onto nacho chips. 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. regional segmentation. e. Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in the other plants. d. Campbell’s is using __________ segmentation. was too hot for Americans in the East and not hot enough for those in the West and Southwest. geographic segmentation. Answer: a Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: KFC has discovered that to be successful in globalization it must be willing to adapt to the taste preferences of different regions. socioeconomic d. age b.9-77 GEOGRAPHIC SEGMENTATION Segmentation based on where prospective customers live or work is called a. GE built a downsized microwave oven to hang under kitchen cabinets. 9-79 GEOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a. c. a.

c. demographic segmentation. a. This requires Universal Concerts to best segment its Canadian market according to __________ if it hopes to have a sold-out concert. demographic characteristics c. measurable. In general. and so on. Western Canadians much prefer country music. age Answer: a Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: Western Canadians prefer country music much more than do Eastern Canadians. such as gender. age. usage rate d. so Universal is using geographic characteristics in deciding where to hold a successful country music concert. income e. 9-81 DEMOGRAPHIC SEGMENTATION KNOWLEDGE Segmentation which is based on some objective physical. COMPREHENSION 147 . gender c. or other classification attribute among people. income. geographic characteristics b. personality b. personality segmentation. behavioral segmentation. socioeconomic characteristics d. needs e. Figure 9-3 lists the most common segmentation variables classified as demographic. b. MSA Answer: b Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Demographics are objective. measurable. Answer: b Page: 231 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—demographic segmentation 9-82 DEMOGRAPHIC SEGMENTATION Which of the following is a consumer demographic variable? a. education level.9-80 GEOGRAPHIC SEGMENTATION APPLICATION Universal Concerts is planning on bringing a series of concerts to Canada next year. yet in Eastern Canada a country music event is very likely to have lots of empty seats. usage segmentation. needs segmentation. d. e. or other classification attribute of prospective customers is called a.

regional b. education b. marital status. usage patterns c. income. usage rates b. geographic e. lifestyle d.S. a. Fig. and occupation. buyer situations d. AACSB: 3 148 . birth era. life stage. psychographic characteristics Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: The number of people in a household is a demographic characteristic that Campbell’s uses to segment the market. race/ethnicity. 9-85 DEMOGRAPHIC SEGMENTATION APPLICATION Proctor & Gamble Co. user status COMPREHENSION Answer: a Page: 232.9-83 DEMOGRAPHIC SEGMENTATION Which of the following is a consumer demographic variable? a. households are made up of only one or two persons. The target market is men aged 18 to 34. P & G is using which type of segmentation variable? a. 9-84 DEMOGRAPHIC SEGMENTATION APPLICATION More than half of all U. demographic characteristics e. education. NAICS code d. so Campbell’s packages meals with only one or two servings—from Great Starts breakfasts to L’Orient dinners. household size. MSA c. age. 9-3 LO: 3 LL: 2 AACSB: 3 Rationale: Consumer demographic variables include gender. psychographic Answer: b Page: 232 LO: 3 LL: 3 Rationale: Age is a demographic variable. Campbell’s is using __________ to segment its market. personality e. (P & G) decided to skip a generation of consumers when it began to market Old Spice deodorant. who don’t remember the Old Spice brand sold to their grandfathers many years ago. demographic c.

The Mahogany line is designed to appeal to African-Americans. demographic c. and Tree of Life cards—all made by Hallmark for sale in its stores and intended to appeal to different target markets.” This type of consumer segmentation is called a. regional b. or needs of prospective customers is called a. Answer: a Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Psychographic segmentation is based on some subjective mental or emotional attributes (personality). situational segmentation. d. aspirations. c. c. psychographic segmentation. b. aspirations (lifestyle). Maxine. e.9-89 DEMOGRAPHIC SEGMENTATION APPLICATION At a Hallmark store you can find several different product lines of greeting cards. likely including Fresh Ink. psychographic segmentation. geographic segmentation. or needs of prospective customers. a. behavioral segmentation. a type of psychographic segmentation. psychographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Ethnicity is a demographic segmentation variable. Answer: a Page: 232 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—psychographic segmentation 9-91 PSYCHOGRAPHIC SEGMENTATION COMPREHENSION Claritas’ lifestyle segmentation is based on the belief that “birds of a feather flock together. d. Shoebox. This is an example of __________ segmentation. geographic e. socioeconomic segmentation. Nature's Sketchbook. 150 . Mahogany. 9-90 PSYCHOGRAPHIC SEGMENTATION KNOWLEDGE Segmentation based on some subjective mental or emotional attributes. geographic segmentation. socioeconomic segmentation. situational segmentation. b. Claritas uses lifestyle segmentation. lifestyle d. e. behavioral segmentation.

sociocultural e. d. psychographic segmentation. a retail outdoor outfitter. psychographic Answer: e Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Lifestyle is a psychographic variable. These magazines are designed to appeal to people who enjoy certain lifestyles. buying situation d. This suggests that REI would segment the market based on which type of customer variable? a. psychographic b. demographic segmentation. and why they buy is called a. e. how frequently they buy. geographic d. outdoor life. Field & Stream. socioeconomic segmentation. Golf Digest. behavioral segmentation. what benefits they seek. geographic segmentation. Answer: d Page: 232 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—behavioral segmentation 151 . outdoor lives are part of the target market for REI. geographic Answer: a Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Psychographic segmentation includes lifestyle—including living an active. b. age c. a. 9-94 BEHAVIORAL SEGMENTATION KNOWLEDGE Segmentation based on some observable actions or attitudes by prospective customers—such as where they buy. 9-93 PSYCHOGRAPHIC SEGMENTATION APPLICATION Magazines like Fitness. demographic b. socioeconomic e. c. behavior c. and Health all use a __________ segmentation strategy.9-92 PSYCHOGRAPHIC SEGMENTATION APPLICATION People who live active.

demographic segmentation. demographic segmentation b. Magnavox uses behavioral segmentation to guide the types of TVs it sells since different consumers have different benefits they seek in a TV set. psychographic segmentation. The larger sets can be outfitted with surround sound at a higher price than the small set. The small set is much less expensive and allows the viewer to watch a DVD without extra equipment. or a distribution system. such as a new product. behavioral segmentation. demographic segmentation b. an ad campaign. and freezer targeted to these students. b. MicroFridge understands this and markets a combination microwave. e. Magnavox is using which type of segmentation variable in this example? a. psychographic segmentation c. geographic segmentation. an ad campaign. socioeconomic segmentation Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. However. socioeconomic segmentation. MicroFridge is using which type of segmentation basis? a. an ad campaign. 152 . c. 9-97 BEHAVIORAL SEGMENTATION APPLICATION Magnavox sells its target markets many different types of TVs from flat screens to a 20” combination TV/DVD. such as a new product. 9-96 BEHAVIORAL SEGMENTATION COMPREHENSION College dorm residents frequently want to keep and prepare their own food and snacks to save money or have a late night snack. Answer: d Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. or a distribution system. d. or a distribution system. geographic segmentation d.9-95 BEHAVIORAL SEGMENTATION COMPREHENSION Segmentation based on what features are important to different customers is known as a. socioeconomic segmentation Answer: d Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. such as a new product. psychographic segmentation c. geographic segmentation d. behavioral segmentation e. refrigerator. their dorm rooms are often woefully short of space. behavioral segmentation e.

Participants bring casseroles. Both provide high mileage for the automobile class. demographic d. life stage segmentation. the Highlander. a small sedan. 153 . c. behavioral segmentation. industry sector segmentation. attractive and inexpensive disposable dishes for transporting food. lifestyle segmentation. e. Toyota is using which type of segmentation variable to market these cars? a. psychographic e. BA's strategy is an example of a. 9-99 BEHAVIORAL SEGMENTATION APPLICATION Many families today hold potluck meals during holidays or special events. Reynolds responded to this problem by creating Pot Lux cookware. psychographic b. geographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Reynolds is using behavioral segmentation (benefits the prospective customers seek) to sell cookware that is disposable and can be left behind. Promotions to frequent fliers stress that passengers can sleep in fully reclining seats and arrive refreshed to carry out a full day's schedule. and desserts and all share the food. behavioral c. geographic b. psychographic segmentation.9-98 BEHAVIORAL SEGMENTATION APPLICATION Toyota makes two types of hybrid automobiles. and an SUV. family size e. the Prius. Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: BA is using behavioral segmentation (benefits the prospective customers seek) to sell airline tickets to frequent fliers who wish to sleep on a transatlantic flight. behavioral d. demographic Answer: c Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Toyota is using behavioral segmentation (benefits the prospective customers seek) to sell two types of vehicles that provide exceptional gasoline mileage. so that very few business people are authorized to fly first class. b. British Airways (BA) has grown market share for its transatlantic business class by offering greater comfort. breads. d. vegetables. socioeconomic c. 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. Despite the shrinking pool of business-class travelers. a. 9-100 BEHAVIORAL SEGMENTATION APPLICATION Many companies have cut travel budgets.

Answer: b Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers. consumption rate. sometimes called frequency marketing. sometimes called frequency marketing. demographic segmentation. b. c. 9-103 BEHAVIORAL SEGMENTATION BY USAGE COMPREHENSION AACSB: 3 COMPREHENSION Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly. e. e. trial. c. is a strategy that focuses on usage rate. buying condition segmentation. service inventory. This technique. usage rate. d. This technique uses a. 154 . turnover. turnover. d. consumption rate. behavioral segmentation. psychographic segmentation. Answer: c Page: 232 LO: 3 LL: 1 Rationale: Key term definition—usage rate 9-102 BEHAVIORAL SEGMENTATION BY USAGE Frequency marketing is a strategy that focuses on a. service inventory. a type of behavioral segmentation. b. Answer: c Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers. usage rate. geographic segmentation. e. b.9-101 BEHAVIORAL SEGMENTATION BY USAGE KNOWLEDGE The quantity consumed or patronage—store visits—during a specific period is called a. trial. This technique. c. d. is a strategy that focuses on usage rate.

Post recently launched a campaign to increase consumption of the cereal by inviting consumers to try the crunchy cereal on top of their yogurt. c. and people who were familiar with the product to use it in a variety of different ways. undefined prospects. Its market is likely segmented by a. disenfranchised prospects. behavioral d. d. demographic c. Answer: d Page: 233 LO: 3 LL: 1 AACSB: 3 Rationale: Among nonusers of a product. lifestyle e. c. their salad. b. b. people who might become users are prospects and people who are never likely to become users are nonprospects. In this example. nonprospects. geography. e. and most likely never will. benefits offered. 155 . demographics. are called a. which Post is trying to increase by suggesting other product uses. d. needs Answer: c Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Usage rate is a behavioral segmentation variable that refers to the quantity consumed. or their bowl of soup as a delicious addition. "over 40 weeks per year" is a measure of usage rate. In this case. usage.9-104 BEHAVIORAL SEGMENTATION BY USAGE APPLICATION Post Grape-Nuts cereal has been marketed since early in the 20 th century. Its market share has been steadily declining as consumers began associating it with something their grandfather ate. nonqualified prospects. Post was trying to convince people who had never tried the cereal to try it. Post is using which segmentation variable? a. 9-105 BEHAVIORAL SEGMENTATION BY USAGE APPLICATION A national car rental firm targets 50 percent of its advertising to salespeople who rent a car over 40 weeks per year. psychographic b. psychographics. Answer: a Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Rate of use and user status are both behavioral segmentation variables. e. 9-106 NONPROSPECTS KNOWLEDGE People who do NOT use a firm's product or service. leads.

e. d. are called a. b. c. d. non-prospects. prospects. eighty percent of a firm's sales are obtained from twenty percent of its customers. eighty percent of a firm's expenditures are tax deductible and twenty percent are not. nonqualified prospects. e. d. undefined prospects. people who might become users are prospects and people who are never likely to become users are nonprospects. and are never likely to become users. remote chances. eighty percent of a firm's inventory should be readily available. and twenty percent should be reserved for emergency demand. leads. nonprospects. b. and twenty percent will not. Answer: c Page: 234 LO: 3 LL: 1 Rationale: Key term definition—80/20 rule AACSB: 3 Other Location: SG 156 . cold leads. b. people who might become users are prospects and people who are never likely to become users are nonprospects. Answer: d Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: Among nonusers of a product. 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. 9-109 80/20 RULE KNOWLEDGE The 80/20 rule is a concept that suggests a. 9-108 PROSPECTS KNOWLEDGE People who might become users of the type of good or service your firm sells are called a.9-107 NONPROSPECTS COMPREHENSION The nearly 14 percent of adult Americans who don't go to fast-food restaurants in a typical month. Answer: c Page: 233 LO: 3 LL: 1 AACSB: 3 Rationale: Among nonusers of a product. e. c. c. eighty percent of a firm's products will ultimately be sold at the original markup price. undefined prospects. ultimate consumers.

usage Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Other Location: web Rationale: According to the 80/20 rule. the primogeniture rule Answer: b Page: 234 LO: 3 LL: 3 AACSB: 3 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. This suggests that heavy users contribute disproportionately to a firm’s sales. eighty percent of a firm's sales are obtained from twenty percent of its customers. 157 . the 80/20 rule c.9-110 80/20 RULE APPLICATION Todd Harris and Associates. the survival of the fittest d. the law of inverse proportions b. geographic b. This is an example of what classic concept? a. psychographic c. 9-111 80/20 RULE COMPREHENSION The 80/20 rule is most closely related to which consumer segmentation variable? a. the law of eminent domain e. benefits sought d. a New York sales promotion agency. discovered from analysis of its files that one-fifth of its clients accounted for more than three-quarters of its fees and commissions. geographic e.

the heavy users have an index of 467. Giving the light users an index of 100. there are less of them than any other segment. For every \$1. d. This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. their consumption percentage is higher than the percentage that they represent of the total users and non-users. b. there are fewer of them than any other user segment. Answer: c Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: The Usage Index per Person column in Figure 9-4 emphasizes the importance of the heavy-user group even more. heavy users are most important to a fast-food restaurant because a. c. the segment is at the top of the chart.FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4.67. 158 .00 spent by a light user in one of these restaurants in a month. the usage index is highest for that segment. each heavy user spends \$4. e.

d.FIGURE 9-5 9-113 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. b. so a natural strategy is to look at these two competitors and devise a marketing program to win customers from them.2 percent) user segments are somewhat behind Burger King and far behind McDonald’s. 159 . the information in Figure 9-5 suggests a.8 percent).6 percent). primary (19. most of the respondents think of Wendy’s as their primary fast food restaurant. and secondary (12. your restaurant is a market leader. Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The Wendy’s bar in Figure 9-5 shows that your sole (0. Burger King is closing in on your market share. McDonald’s is not a serious competitor to you. e. that you need to devise a marketing program to win customers from McDonald’s and Burger King. c.

b. e. geographic b. The company believes its target market is businesses that use a lot of energy like its first customer. This basis of venue segmentation is a. One of these devices is capable of generating energy equal to \$2 million of natural gas per year. 161 . income d. 9-118 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Australia-based Renewable Energy Ltd.S. Imagine that the agency decided the singer would not perform at venues located in small town communities that have less than 100. psychographic c. It most likely will use which of the following strategies to segment its market? behavioral and geographic number of employees and behavioral purchase location and purchase type NAICS code and geographic behavioral and NAICS code Answer: d Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: Renewable Energy would most likely use the NAICS code to locate other fertilizer manufacturers and geographic segmentation to find prospects in rural areas where there is a ready supply of manure. needs e. 9-119 ORGANIZATIONAL MARKET SEGMENTATION COMPREHENSION Which of the following is a basis used to segment U. usage. d. psychographic.000 people. geographic. nature of good. a fertilizer manufacturer. demographic. Answer: c Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: Population density includes whether the area is urban.9-117 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION William Morris Agency represents country singer Trace Adkins in negotiations with various venues in which he could perform. organizational markets include geographic. c. suburban. and behavioral. and that are located in rural areas. organizational markets? a. small town or rural and is a geographic variable.S. sells a \$10 million device that converts manure into energy. buying condition. education Answer: a Page: 235 LO: 3 LL: 2 AACSB: 3 Rationale: Figure 9-6 shows the segmentation bases for U.

which of the following product groupings would likely make the most sense? a. grouping by usage e. c. e. Product groupings should not be used in Wendy’s. Answer: c Page: 236 LO: 3 LL: 3 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. The products are grouped so people can relate to these product groupings in a more meaningful way. Consumers buy more in illogically organized environments. grouping by product type such as types of drinks b. these must be grouped in some way so buyers can relate to them.9-120 PRODUCT GROUPING COMPREHENSION If Wendy’s customers are buying an eating experience. so the product grouping that makes the most marketing sense is by meal or time of day. If the firm has only one product or service. but when it has dozens or hundreds. If the firm has only one product or service. this isn’t a problem. Why would Safeway display product groupings in this manner? a. All of the above are reasons why Safeway would use product groups. grouping by price c. Answer: c Page: 236 LO: 3 LL: 2 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. The groupings increase the number of market-product combinations on the marketproduct grid into a more manageable framework for subsequent analysis. d. these must be grouped in some way so buyers can relate to them. this isn’t a problem. Examples would be the pet food aisle or the paper product aisle. or a meal occasion that satisfies a need at a particular time of day. Wendy’s customers really buy an eating experience. 162 . b. but when it has dozens or hundreds. grouping by meal d. Product groupings can be generated quantitatively to show which adhere to the 80/20 rule. 9-121 PRODUCT GROUPING APPLICATION Safeway displays the thousands of items it sells in aisles containing related items or product groupings.

customers better relate to these groupings. b. d. it is more profitable to define product groupings in terms of large market segment because it reduces manufacturing and marketing costs. Answer: b Page: 236 LO: 3 LL: 3 AACSB: 3 Other Location: web Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. these must be grouped in some way so buyers can relate to them. b. you decide that what you are really selling is memory keeping. scrapbooks. target market selection. d. cross-tabulation Answer: c Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 163 . You decide to display all of these products together to inspire your customers to create and keep memories. 9-124 MARKET-PRODUCT GRID KNOWLEDGE A __________ is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization. market-product grid development. market segmentation of prospects. these must be grouped in some way so buyers can relate to them. this isn’t a problem. market-product grid d. payoff table c. Memory-keeping is the meaningful category in this case. but when it has dozens or hundreds. this isn’t a problem. product differentiation table e. not photo albums. it is easier to estimate the industry sales for fewer market-product combinations. If the firm has only one product or service. growth-share matrix b. This strategy is an example of a. competitors better relate to these groupings for benchmarking purposes. taking marketing actions to reach target markets. 9-123 PRODUCT GROUPINGS APPLICATION Hallmark placed its scrapbook supplies. but when it has dozens or hundreds. and related supplies. a.9-122 PRODUCT GROUPING APPLICATION In developing a marketing strategy for your Hallmark store. its competitors engage in no product groupings. product grouping. c. If the firm has only one product or service. e. Memory-keeping is the category to which customers can best relate in this case. e. photo albums and related supplies into one product group because a. c. Answer: b Page: 236 LO: 3 LL: 3 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments.

estimated expenses for products sold b. b. market share compared to closest competitor. total anticipated revenue c. d.9-125 MARKET-PRODUCT GRID KNOWLEDGE A market-product grid is a framework to relate a. total anticipated profit d. estimated expenses for products sold to various market segments. estimated expenses for products sold. total anticipated revenue. Answer: e Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 164 . market segments of potential buyers Answer: e Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 9-127 MARKET-PRODUCT GRID KNOWLEDGE A market-product grid is a framework to relate the market segments of potential buyers to a. c. a. b. total anticipated profit for each product to segments. the market segments of potential buyers to relative market share compared to closest competitor. market share compared to closest competitor e. c. e. d. e. total anticipated profit. total anticipated revenue for each product to market segments. the market segments of potential buyers to products offered or potential marketing actions by an organization. Answer: d Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 9-126 MARKET-PRODUCT GRID Other Location: web KNOWLEDGE A market-product grid is a framework to relate the __________ to products offered or potential marketing actions by an organization. products offered or potential marketing actions by an organization.

e. d. Answer: c Page: 237 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: A market-product grid is a framework to relate the segments of a market to the products offered. 9-129 MARKET-PRODUCT GRID COMPREHENSION Determining the size of specific markets using a market-product grid is helpful in determining which target market segments to select and a. 165 . relate the product life cycle to consumer demand. e. b. how to implement the 80-20 rule. Answer: d Page: 237 LO: 4 LL: 2 AACSB: 3 Rationale: Even “guesstimates” of the size of specific markets using a market-product grid are helpful in determining which target market segments to select and which product groupings to offer. c. select representative samples of consumers for marketing research studies. make optimal decisions under conditions of uncertainty. d. determine which target market segments to select and which product groupings to offer.9-128 MARKET-PRODUCT GRID COMPREHENSION One advantage of a market-product grid is that it can be used to a. It is helpful in determining which target market segments to select and which product groupings to offer. which products to be sold into groups. b. which product groupings to offer. which products to reposition. c. screen many new product ideas in order to select the one with best long-run market potential. how to implement a harvesting strategy.

d. b. whether the student has the discretionary income to eat at Wendy’s. whether the student is a faculty or staff member. c. e. combining the factors of where the student lives and when (s)he is on campus. Answer: d Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: The method of segmenting the student market combines where they live if they are not a commuter (dormitory or apartment) and when they are on campus if they are a commuter (day or night). 166 .FIGURE 9-8 9-130 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. the meals eaten at the restaurant. whether the student lives near the campus or far away. The best way to describe how the student market is segmented is by a.

9-131 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). b. e. students that live in a dormitory. dormitory customers. faculty or staff members. d. e. 167 . students that are day commuters. Answer: e Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Marketing synergies and efficiencies run horizontally across the rows because a single kind of marketing action can reach customers that buy different “products”—in this case meals. 9-132 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. assume the medium market (shown by a “2”) is twice the size of the small market. d. Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Totaling the market segment rows horizontally shows that students that live in an apartment is the largest segment with 9 “units” of sales. lunch customers. c. The meal occasion (product grouping) that comprises the largest market is a. c. c. after-dinner snack. Similarly. The largest potential market segment is for a. between-meal snack customers. dinner customers. d. For example. dinner. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). Similarly. 9-133 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. between-meal snack. Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Totaling the meal columns vertically shows the “lunch” meal occasion to have the most “units” of sales (14) of any meal column. students that are night commuters. a flyer placed on a bulletin board in a dormitory or under the door of dormitory residents could promote the entire restaurant and several of its meals to dormitory customers. b. lunch. after-dinner snack customers. students that live in an apartment. b. assume the medium market (shown by a “2”) is twice the size of the small market. e. breakfast. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a.

day commuter customers. 168 . size of the market b. cost of reaching the segment d. b. Sending out coupons for “10 percent off all purchases between 2:00 PM and 4:30 PM” during fall term would be especially targeted at potential a. Placing flyers under windshield wipers of cars parked in student parking lots on weekdays between 7:00 AM and 4:00 PM that offer a \$2 off coupon on any meal during spring term would be especially targeted at potential a. expected growth. which is a vertical column in Figure 9-8. c. e.9-134 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. e. cost of reaching the segment. dormitory customers. answer “c. All of the above are criteria used for selecting a target market. faculty customers. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Cars parked in student parking lots between 7:00 AM and 4:00 PM generally belong to day commuters. b. Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. competitive position.” This is a market segment. d. dinner customers. and compatibility with the organization’s objectives and resources. night commuter customers. apartment customers. c. expected growth c. who might be reached by this coupon that is intended to increase sales during the 2:00 PM to 4:30 PM time period. d. This is a “product” or “meal” in the market-product grid. which is a horizontal row in Figure 9-8. staff customers. Assume students who live in dormitories or apartments on or near the campus cannot use student parking lots. 9-136 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. compatibility with the organization’s objectives and resources e. after-dinner snack customers. night commuter customers. between-meal snack customers. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The target here is potential between-meal snack customers. 9-135 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus.

This market would use the rehabilitation services that the company now provides. expected growth of the market segment d. b. have no expected growth. compatibility with the company's objectives Answer: a Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Similarity of needs is a criterion for segmenting a market. be very small. 9-148 SELECT 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.9-146 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion for selecting a market segment? a. 9-147 SELECT TARGET SEGMENTS APPLICATION Best Foods Company is considering expanding beyond the regional market segments now served by its Hellmann's mayonnaise. cost of reaching the segment e. be readily accessible to the firm's marketing programs. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The market would grow as people continue skiing—although it may be slow growth. 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. be accurately described by all of the above. d. e. Because it would be so small. compatibility with Best Food's objectives and resources Answer: e Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: New equipment to reach a new market segment relates to the organization's resources. This is an example of which criterion used to select target market segments? a. not be compatible with the company's current resources. this market would a. competitive position d. not for selecting one. Best Food's created product groupings c. Best Food's competitive position in the segment b. In terms of the criteria used for selecting a target segment. size of the market segment e. 172 . expected growth c. similarity of needs of potential buyers b. it would not be readily accessible by marketing programs. c.

Nike decided to concentrate on affluent teens rather than members of high school basketball teams. Inc. b. Answer: d Page: 239 LO: 4 LL: 2 AACSB: 3 Rationale: Zillow provides “zillions” of data for the place(s) where your “pillow” is located. Zillow is an online real estate service that answers the most important question. d. formed products to be sold into groups. the neighborhood and look around there.com. c. 173 . the website of the local newspaper. e. This is an example of a. forming prospective buyers into segments. developed a market-product grid and estimating size of markets. Lewis decided to join Goodness Grows in North Carolina.B.com. “How much is my home really worth?” 9-151 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. formed prospective buyers into segments. selecting target market segments to reach. LexisNexis. d. b. forming products to be sold into groups. 9-150 GOING ONLINE COMPREHENSION If you want to reach families in a particular income segment and believe the value of their home is a good indicator you would most likely go to a. In developing a marketing strategy to sell the sauce. developing a market-product grid and estimating size of markets. e. wsj. b. a specialty food association that advertises local products and distributes them to local supermarkets and gourmet shops. selected target market segments to reach. e. zillow. c.Q. taking marketing actions to reach target markets. a company that makes Tongue Tinglin' B. taken marketing actions to reach target markets. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce.. d. Answer: a Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: A decision to concentrate on affluent teenagers is the selection of a target market segment. Sauce. Answer: d Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Alternative d is the final result in the process of segmenting and targeting markets.com. Lewis has just a. c.9-149 SELECT TARGET SEGMENTS APPLICATION In developing a marketing strategy for the recently released Nike Air Jordan XVII with a price tag of \$200.

e. each of which will have to be designed and manufactured. distributors. production e. competitors. e. 9-154 PRODUCT POSITIONING KNOWLEDGE The place an offering occupies in consumers' minds on important attributes relative to competitive products is called a. b. c. marketing d. marketing c. Answer: b Page: 243 LO: 4 LL: 2 AACSB: 3 Rationale: Apple’s lack of a segmentation strategy in the early 1980s and its current segmentation strategy are described in the Marketing Matters. The company saves money on marketing but spends more in production. Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 174 . d. selective perception. production. marketing research. profits.9-152 MARKET-PRODUCT SYNERGIES COMPREHENSION A choice to take advantage of marketing synergies can often come at the expense of production ones because a single customer segment will likely require a variety of products. investment capital. competitive positioning. marketing b. each of which will have to be designed and manufactured. marketing. product perception. The company saves money on __________ but spends more on __________. marketing. 9-153 MARKETING MATTERS COMPREHENSION In the early 1980s Apple Computer Company was often called "Camp Runamok" because the innovative company had no a. coherent product lines targeted to identifiable market segments. relative positioning. competition Answer: d Page: 242 LO: 4 LL: 2 AACSB: 3 Rationale: A choice to take advantage of marketing synergies can often come at the expense of production ones because a single customer segment will likely require a variety of products. d. a. c. competition. product positioning. b.

S. perceptual mapping. geographic segmentation. an old and outdated concept no longer worthy of consideration in marketing planning Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 9-156 REPOSITIONING Other Location: SG KNOWLEDGE Changing the place an offering occupies in consumers' minds relative to competitive products is called a. The dairy industry tried to reposition milk in the minds of adult consumers. 175 . shelf locations in major chain. psychographics. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product repositioning 9-157 REPOSITIONING APPLICATION Recently. segment b. grocery. b. dairies. the place a product offering occupies in consumers' minds on important attributes e. product positioning. d. differentiate c.9-155 PRODUCT POSITIONING KNOWLEDGE What does the term product positioning refer to? a. repositioning. product differentiation. c. e. a. tried to change the way adults thought about milk. explain e. struggling to increase milk sales. and department stores c. The dairies wanted to __________ milk in the minds of the consumer. U. often within major metropolitan areas d. reposition d. represent Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Changing the place an offering occupies in consumers’ minds is called repositioning. a careful analysis of cross tabulations b.

c. compete against other products of the same company. compete with competitors on similar product attributes but in a different market. repositioning. head-to-head positioning. differentiation d. firms often use a. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Companies use a differentiation positioning strategy among brands within their own product line to minimize cannibalization of a brand's sales or market share. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 9-162 DIFFERENTIATION POSITIONING To avoid cannibalization within company product lines. smaller market niche. 177 . d. b. seek a less competitive. c. e. lateral positioning. head-to-head positioning b. b. compete with competitors on similar product attributes in the same market. e. smaller market niche in which to locate a brand.9-161 DIFFERENTIATION POSITIONING KNOWLEDGE Differentiation positioning requires a product to a. compete directly with competitors but emphasize unique product attributes. lateral positioning c. d. a. Differentiation positioning involves seeking a less competitive. 9-163 DIFFERENTIATION POSITIONING COMPREHENSION COMPREHENSION When McDonald’s introduced its low-fat McLean Deluxe hamburger it used __________ positioning to avoid direct competition with Wendy’s and Burger King. cognitive positioning. differentiation positioning. consumer positioning e. cognitive positioning Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market.

d. b. By using distinctly different pricing and distribution strategies. The Rolex brand tends to be perceived as an expensive status symbol. parallel market positioning b. For most products. 9-165 DIFFERENTIATION POSITIONING APPLICATION Some Timex wristwatches can be purchased for less than \$30. and inexpensive.9-164 DIFFERENTIATION POSITIONING COMPREHENSION Which type of product positioning would most likely be used to avoid cannibalization? a. However. build customer loyalty through direct competition. create cognitive dissonance in consumers who are considering the purchase of a wristwatch. and department stores in all sizes of communities. In general. and are often available only in fine jewelry stores or specialty shops. use a product differentiation strategy. many comparable alternatives are available to the consumer. Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: In today's market place. compete for the same segment. In this example. some Rolex wristwatches carry a price tag of several thousand dollars. consumers view Timex watches as being dependable. the marketers of Timex and Rolex watches have attempted to a. repositioning d. c. relatively accurate. head-to-head positioning Answer: d Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Companies follow a differentiation strategy among brands within their own product line to minimize cannibalization of a brand's sales or market share. each marketer has attempted to create a distinct product image in the mind of the consumer. discount stores. 178 . Rolex watches are distributed more selectively. distinction positioning c. The image of the Timex is very different from that of Rolex. develop similar products. in order to compete in the wristwatch market. both the Timex and the Rolex wristwatches will satisfy the consumer's need to know the time of day. differentiation positioning e. e. competition is extreme. Timex watches can be purchased in drug stores.

consumer d. distinction c. b. Answer: c Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map AACSB: 3 Other Location: web AACSB: 3 KNOWLEDGE 180 . d. c. 9-170 PERCEPTUAL MAP KNOWLEDGE Marketers use perceptual maps as a means to display or graph in two dimensions the location of products or brands a. e. within selected retail outlets. normally in major metropolitan areas. Differentiation positioning involves seeking a smaller market niche that is less competitive in which to locate a brand. consumer map of likes and dislikes. c. Nike and Reebok practice head-to-head positioning. d.9-169 HEAD-TO-HEAD POSITIONING APPLICATION In the sneaker market. in the minds of consumers. indicating accessibility by consumers. with respect to the geographic areas in which they are manufactured. Reebok and Nike practice __________ positioning since both manufacturers compete in the same target market with similar product attributes. two-dimensional graph. head-to-head Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: In the sneaker market. parallel market b. three-dimensional cube. a. Answer: d Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map 9-171 PERCEPTUAL MAP A perceptual map is most like a a. which involves competing directly with competitors on similar product attributes in the same target market. e. b. pyramid design. within distribution channels. differentiation e. as they are clustered by type of outlet. database.

growth matrix. identification of the important attributes for a product class d. consumer preference matrix. rank order of the ratings of a existing brand's preference relative to its competitors e. b. Answer: d Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map 9-173 PERCEPTUAL MAP AACSB: 3 Other Location: SG COMPREHENSION 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. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: A key to positioning a product or brand effectively is the perceptions of customers. d. consumers. d.9-172 PERCEPTUAL MAP KNOWLEDGE A graph displaying consumers' perceptions of product attributes across two dimensions is a a. perceptual map. and ratings of an “ideal” product’s or brand’s attributes. competitors. c. 9-174 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a. judgments of existing products or brands with respect to these attributes. b. a listing of all prospective brands and products b. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. intermediaries. The map is based on perceptions of a. c. three types of data are needed: identification of important attributes for a product class. competitors. independent rating organizations such as Consumer Reports. 181 . e. managerial judgments about how consumers perceive products c. payoff table. consumers. e. All of the above types of data are collected from consumers. market-product grid. and the firm itself.

a listing of all prospective brands and products b. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. a listing of all prospective brands and products b. three types of data are needed: identification of important attributes for a product class. managerial judgments about how consumers perceive products c. and ratings of an “ideal” product’s or brand’s attributes. rank order of the ratings of a existing brand's preference relative to its competitors e. and ratings of an “ideal” product’s or brand’s attributes. 182 . rank order of the ratings of a existing brand's preference relative to its competitors e. judgments of existing products or brands with respect to important attributes d. managerial judgments about how consumers perceive products c. 9-176 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a. All of the above data are collected from consumers. All of the above data are collected from consumers. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. ratings of an “ideal” product’s or brand’s attributes d. judgments of existing products or brands with respect to these attributes. three types of data are needed: identification of important attributes for a product class. judgments of existing products or brands with respect to these attributes.9-175 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a.

fruit-flavored drinks. In the ads. e.FIGURE 9-10 9-177 PRODUCT POSITIONING APPLICATION The perceptual map in Figure 9-10 shows how various drinks are seen in the minds of adult consumers. Such drinks are seen as less nutritious. the coffee producer should position its coffee against drinks in the figure that are lower than coffee on the vertical nutrition axis. c. b. Answer: b Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: For the planned ads. Suppose a coffee producer wants to increase sales. fruit-flavored drinks and sugared soft drinks. coffee should be compared with a. sugared soft drinks. The only such drink in the figure is sugared soft drinks. 183 . both sugared soft drinks and skinny lattes. Its advertising agency recommends that it run ads showing that coffee is healthier than one or more competitive drinks shown in the figure. skinny lattes. d.

As an adult. Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: On the vertical nutrition scale. b. 9-179 MARKET POTENTIAL KNOWLEDGE The maximum total sales of a product by all firms to a segment under specified environmental conditions and marketing efforts of the firms are called a. industry potential. b. Answer: a Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential KNOWLEDGE 184 . this is not true for either diet drinks or skinny latte (choices a or c). more adult than nutritionally-designed diet drinks. this is true for fruit-flavored drinks (choice e) but not tea or milk shakes (choices b or d). Additionally. e. growth potential. c. Delphi forecast. market forecast.. market share. top-down forecast. e. d. Also. c. Answer: b Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential 9-180 MARKET POTENTIAL Another commonly used term for market potential is a. d. e. I am a heavy consumer of mineral water. company growth potential. b. I am very concerned about nutrition and don’t want to look like a kid. c. on the horizontal scale. more nutritious than a milk shake.9-178 PRODUCT POSITIONING APPLICATION The perceptual map in Figure 9-10 shows how various drinks are seen in the minds of adult consumers. sales forecast. more nutritious than tea. d. market potential. sales forecast. So fruitflavored drinks (choice e) is the correct answer. more nutritious than a fruit-flavored drink. mineral water must be to the right of the drink compared. Suppose this map describes accurately how I see the drinks shown. mineral water must be above the drink compared. more adult than a skinny latte. A likely reason I drink mineral water according to this perceptual map is that I see it as a.

and local taxes e. total industrial products sold worldwide b. sales forecast b. a. b. e. company forecast. market share. state. the total of all products sold nationally c. Delphi forecast c. market potential e. the minimum anticipated sales in related industries not including federal. Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 9-183 SALES (COMPANY) FORECAST KNOWLEDGE KNOWLEDGE The term __________ is defined as the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. the sum of products in a particular industry sold domestically under normal economic conditions d.9-181 MARKET POTENTIAL KNOWLEDGE The term market potential or industry potential refers to what important marketing factor? a. d. environmental forecast. market share Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 185 . c. industry potential d. industry potential. the maximum total sales of a product by all firms to a segment under specified environmental conditions and marketing efforts of the firms Answer: e Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential 9-182 SALES (COMPANY) FORECAST Another commonly used term for sales forecast is a. market potential.

Answer: c Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: 99% of all sales forecasts are judgments of the person who must act on the results of the forecast—the individual decision maker. statistical methods b. and (3) statistical methods. judgments of trade associations d. 9-185 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. 9-187 JUDGMENTS OF THE DECISION MAKER The most commonly used forecasting technique is the a. statistical method. judgments of the decision maker b.9-184 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. (2) surveys of knowledgeable groups. survey of knowledgeable groups. linear trend extrapolation method. technological methods e. b. technological method. c. surveys of knowledgeable groups b. 9-186 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. and (3) statistical methods. d. surveys of competitors c. surveys of competitors c. judgments of trade associations d. e. technological methods e. government document survey analysis Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker. (2) surveys of knowledgeable groups. 186 COMPREHENSION COMPREHENSION COMPREHENSION . technological methods e. and (3) statistical methods. judgment of the decision maker. government document survey analysis Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker. surveys of competitors c. (2) surveys of knowledgeable groups. judgments of trade associations d. government document survey analysis COMPREHENSION Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker.

Answer: a Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: Alternative A is correct because a direct forecast is developed using the heuristic judgment of the decision maker. lost-horse forecast d. direct forecast. technological forecast b. direct forecast d. d. C. Delphi forecast. statistical forecast e. direct forecast c. e. and E are surveys of knowledgeable groups that are more time-consuming and costly than judgment forecasts. c. buildup forecast b. 9-190 DIRECT FORECAST The least complex sales forecasting technique is likely the a. survey of knowledgeable groups forecast Answer: c Page: 246 LO: 6 LL: 1 Rationale: Key term definition—direct forecast 9-189 DIRECT FORECAST “How many quarts of milk should I buy?” is an example of a a. Delphi forecast e. Alternative D is a statistical method that involves the greatest cost in terms of time and money due to the data collection and analysis involved. trend extrapolation. field sales forecast Answer: b Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: The decision-maker makes the forecast without having any data to work with. Alternatives B.9-188 DIRECT FORECAST KNOWLEDGE A __________ is an estimate of the value to be forecast without any intervening steps. a. survey of buyers intentions forecast. APPLICATION AACSB: 3 COMPREHENSION 187 . sales force survey forecast. b. Delphi forecast c.

survey of buyers' intentions forecast. b. a. This is an example of a a. linear trend extrapolation. 188 . jury of executive opinion b. lost-horse Answer: e Page: 246 LO: 6 LL: 1 Rationale: Key term definition—lost-horse forecast 9-192 LOST-HORSE FORECAST AACSB: 3 KNOWLEDGE A __________ forecast involves starting with the last known value of the item being forecasted. lost-horse forecast b. technological c. a. Delphi forecast e. Delphi d. survey of buyers' intentions forecast Answer: a Page: 246 LO: 6 LL: 1 Rationale: Key term definition—lost-horse forecast 9-193 LOST-HORSE FORECAST AACSB: 3 APPLICATION Deluxe Cleaners uses last year's sales as a starting point to estimate next year's sales and then looks at positive and negative influences that may affect sales. lost-horse forecast. listing the facts that could affect the forecast. trend extrapolation d. e. and making the final forecast.9-191 LOST-HORSE FORECAST KNOWLEDGE A __________ involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future. statistical inference. statistical method e. c. technological forecast c. experimental estimation. assessing whether they have a positive or negative impact. Answer: d Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: A lost-horse forecast involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future. d.

9-197 SURVEY OF BUYERS' INTENTIONS FORECAST KNOWLEDGE A __________ forecast asks prospective customers whether they are likely to buy a good or service during some future time period. survey of experts e. statistical Answer: c Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. statistical Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. salesforce survey d. technological c. survey of buyers' intentions d. judgments of individuals b. a. This is an example of a __________ forecast. survey of experts e. statistical method e.750.000 for the quarter. jury of executive opinion b. jury of executive opinion c. a. 190 . a. jury of executive opinion c. lost-horse Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—survey of buyers' intentions forecast 9-198 SALESFORCE SURVEY FORECAST KNOWLEDGE A __________ forecast involves asking the firm’s sales people to estimate sales during a coming period. salesforce survey d. judgments of individuals b. the forecast is set at \$4. Based on this information. 9-199 SALESFORCE SURVEY FORECAST APPLICATION All the salespeople in the Southwest regional office are asked to provide estimates of anticipated sales revenues for the next quarter.

d. inductive extrapolation. exponential interpolation c. a. e. information extension d. b. reliance on computers for computation. c. simplicity. c. deductive interpolation Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—trend extrapolation 9-201 TREND EXTRAPOLATION The key strength of trend extrapolation is a. which is the basis of the method’s key strength: simplicity. 9-202 LINEAR TREND EXTRAPOLATION KNOWLEDGE COMPREHENSION The best-known statistical method of forecasting involves extending a pattern observed in past data into the future. inductive extrapolation e. d. reliance on facts. trend extrapolation b. e. exponential extrapolation. information extension.9-200 TREND EXTRAPOLATION KNOWLEDGE The best-known statistical method of forecasting is called __________. b. Answer: d Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Trend extrapolation assumes that the underlying relationships in the past will continue into the future. which involves extending a pattern observed in past data into the future. it is referred to as a. lack of assumption. the Delphi method. When the pattern of data is described with a straight line. its near-perfect accuracy of prediction. Answer: e Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—linear trend extrapolation 191 . linear trend extrapolation.

Rollerblade is using a. Junior skaters. 250 LO: 3 LL: 3 AACSB: 3 Rationale: Psychographic segmentation is based on some subjective mental or emotional attributes. linear trend extrapolation e. market segmentation. which involves extending a pattern observed in past data into the future. consumer differentiation.” The CEO was most likely using a __________ forecast. it is linear trend extrapolation as is the case here. or needs of prospective customers. Answer: c Page: 231. e. e. d. “The sales for 2007 were 1000 units higher than 2006. 9-205 VIDEO CASE: ROLLERBLADE COMPREHENSION APPLICATION By dividing its market into categories. such as product features. geographic. and Race skaters. Rollerblade segments on consumer needs. c. market delineation. b. b. d. and the sales for 2008 were 1000 units higher than 2007. which it labels Urban/Street skaters.9-203 LINEAR TREND EXTRAPOLATION COMPREHENSION The CEO says to her marketing manager. behavioral segmentation variables. c. I'd say we’re safe in forecasting 2009 sales as 1000 units greater than 2008. demographic. Fitness/Recreation skaters. aspirations. socioeconomic. aggregation marketing. a. Answer: d Page: 250 LO: 3 LL: 2 AACSB: 3 Rationale: Market segmentation helps Rollerblade best service different consumers’ needs. 192 . psychographic. 9-204 VIDEO CASE: ROLLERBLADE The segmentation strategy used by Rollerblade is a. direct d. jury of executive opinion c. buildup Answer: d Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: The best-known statistical method of forecasting is trend extrapolation. resource based. Potential buyers within a segment should be similar in terms of their needs and the resulting marketing action. Delphi b. When the pattern is described with a straight line.

9-206 VIDEO CASE: ROLLERBLADE APPLICATION The 4D™ refers to an innovative. Having a variety of products available allows consumers in each segment to select skate best suited to their usage needs. product extrapolation c. to help consumers perceive the product as being different and better than competing products. 193 . adjustable aluminum frame Rollerblade developed that when shorter allows for tighter turns and when longer permits more speed. product differentiation d. product sampling b. a. usage segmentation. market differentiation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm using different marketing mix activities. e. such as product features and advertising. Rollerblade is implementing a __________ strategy with its innovative skate technology.

product differentiation relates to market segmentation. Page: 226 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-208 PRODUCT DIFFERENTIATION 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. How does it link needs with marketing actions? Answer: Market segmentation involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action. it can contribute to increased revenues for the firm. In a narrower sense. tangible marketing actions the firm can take to satisfy those needs. Thus. to help consumers perceive the product as being different and better than competing products. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. AND FORECASTING MARKETS SHORT ESSAY QUESTIONS 9-207 MARKET SEGMENTATION COMPREHENSION Define market segmentation. In its broadest sense it involves a firm's using different marketing mix activities. such as product features and advertising. POSITIONING. 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. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. Differences may involve nonphysical features as well. such as image or price. Page: 226 LO: 1 LL: 2 AACSB: 3 194 . Such needs and benefits must be related to specific.CHAPTER 9 SEGMENTING. as the text points out in connection with Zappos. As long as a new product does not take a significant amount of sales away from an existing product. Segmentation links needs to actions. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price.

Build-to-order involves manufacturing a product only when there is an order from a customer. and adds to the organization’s sales revenues and profits. MULTIPLE MARKETS COMPREHENSION 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. they are rarely as large as those for developing an entirely new product. Page: 229 LO: 1 LL: 2 AACSB: 3 195 . the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. doesn’t reduce quality or increase price. Although these expenses can be high. engineering. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-211 MASS CUSTOMIZATION Explain the difference between mass customization and build-to-order. Answer: Mass customization involves the tailoring of goods or services to the tastes of individual customers on a high-volume scale. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-210 MULTIPLE PRODUCTS. MULTIPLE MARKETS Why would an organization produce multiple products or services and then attempt to sell them to two or more market segments? Answer: Organizations may target different products or services to multiple market segments.9-209 SINGLE PRODUCT. In this case. and manufacturing expenses. Producing these different products or services is clearly more expensive than producing only one product or service but is effective if it meets customers’ needs better. which often entails high research.

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 not-for-profit criteria. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. it is now much more likely to serve its clients more effectively with the new segmentation strategy. 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) potential of a marketing action to reach a segment (5) simplicity and cost of assigning potential buyers to segments Page: 231 LO: 3 LL: 2 AACSB: 3 APPLICATION 9-214 CRITERIA FOR FORMING SEGMENTS A nonprofit food bank was gathering and handing out food to anyone who requested it. Fig. Page: 231 LO: 3 LL: 3 AACSB: 3 196 .9-212 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION There are five key steps in segmenting and targeting markets. List these important factors in marketing planning. 9-2 LO: 2 LL: 2 AACSB: 3 COMPREHENSION 9-213 CRITERIA FOR FORMING SEGMENTS A marketing manager should develop segments for a market that meet five principal criteria. Answer: The five key steps are: (1) group potential buyers into segments (2) group products to be sold into categories (3) develop a market-product grid and estimate size of markets (4) select target markets (5) take marketing actions to reach target markets Page: 230. which link market needs of customers to the organization’s marketing program. This will be the market segment it targets. It now wants to give free food only to people who go hungry on a regular basis. Compared to the food bank's previous policy. List these five key steps.

Answer: [Students might select any segmentation variables from Figure 9-3. Louis. including homeowners. probably with children. (2) demographic segmentation. and (4) behavioral segmentation. aspirations (lifestyle). or needs of prospective customers. what benefits they seek. income) or other classification attribute (birth era. young adults. a franchised restaurant that has newly opened in St. Also important would be household income. city size).9-215 CONSUMER SEGMENTATION VARIABLES COMPREHENSION What are the four general bases by which consumer markets can be segmented? Answer: Four general bases of segmentation are: (1) geographic segmentation. They could be defined by ZIP Code. gregarious. 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. how frequently they buy. using as many segmentation variables as you can. which is based on where prospective customers live or work (region. The Outback manager would seek those people who had not only the need. occupation) of prospective customers. it would be well to seek medium and heavy users including. and why they buy. census tract. and demographic correlations can be rather easily made with regard to those factors. measurable (age. which is based on some subjective mental or emotional attributes (personality). or subdivision. and explaining why each variable is appropriate. but also the means to dine at the restaurant. and economy relative to more expensive restaurants. married. The psychographic dimension would include variables such as extroverted. As for the usage dimension. Page: 231 LO: 3 LL: 2 AACSB: 3 APPLICATION 9-216 SEGMENTATION VARIABLES Assume you are manager of The Outback Steak House. which is based on some objective physical (gender. race). Segmentation according to the benefits dimension could include convenience. perhaps related to occupations. (3) psychographic segmentation. Describe how you would segment the market according to segmentation bases. and those fond of pleasures such as eating out. Page: 232 LO: 3 LL: 3 AACSB: 3 197 . since repeat business is the key to success in this sort of venture. which is based on some observable actions or attitudes by prospective customers—such as where they buy. perhaps. The next dimension should be demographics.] However. those people who might dine at The Outback more than once a month.

each cell in the grid can show the estimated market size of a given product sold to a specific market segment. Page: 235 LO: 3 LL: 2 AACSB: 3 COMPREHENSION 9-218 CRITERIA TO FORM SEGMENTS What are the five essential criteria that segments should have to ensure the success of segmentation? Answer: (1) Simplicity and cost-effectiveness of assigning potential buyers to segments (2) Potential for increased profit (3) similarity of needs of potential buyers within a segment (4) difference of needs of buyers among segments (5) potential of a marketing action to reach a segment Page: 231 LO: 3 LL: 2 AACSB: 3 COMPREHENSION 9-219 MARKET-PRODUCT GRID Explain what a market-product grid is and how it is used.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. Answer: A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization.S. organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic. In a complete marketproduct grid analysis. usage rate. Product features. and awareness/intentions are similar to the consumer market variables used for segmentation and may also be used to segment organizational markets. Page: 237 LO: 4 LL: 2 AACSB: 3 198 . demographic or behavioral segments.

Marketing efforts can be streamlined with a focus on fewer segments. Dollar Rental Cars is positioned head-to-head with Avis and Hertz."). Page: 242 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-222 APPROACHES TO PRODUCT POSITIONING What are two approaches to product positioning? Give an example of each approach. Answer: Marketing synergies run horizontally across a market-product grid and represent an opportunity for efficiency in terms of a market segment. (1) market size (2) expected growth (3) competitive position (4) cost of reaching the segment (5) compatibility with the organization’s objectives and resources Page: 238 . For example. Page: 244 LO: 5 LL: 2 AACSB: 3 199 . Product synergies run vertically down the market-product grid and each column represents an opportunity for efficiency in research and development and production. Five criteria can be used to select the target segments. For example. Answer: There are two major approaches to positioning a product. Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. reduce R & D and production expenses. Differentiation positioning involves seeking a smaller market niche that is less competitive in which to locate a brand.9-220 CRITERIA TO SELECT THE TARGET SEGMENTS What are the criteria used to select target markets? COMPREHENSION Answer: There are two different kinds of criteria in the market segmentation process: those used to (1) divide the market into segments and (2) actually pick the target segments.239 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-221 MARKETING SYNERGIES/PRODUCT SYNERGIES Explain the difference between marketing synergies and product synergies. Curtis Mathis positions its televisions as a high quality product ("The most expensive television sets money can buy. To simplify product lines. a company might only wish to manufacture one or a few products and could determine which to make based on the number of segments with an interest in that product.

Page: 246 LO: 6 LL: 2 AACSB: 3 200 . Market potential refers to the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firms. Sales forecast is also known as company forecast. Sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. Salespeople can be unreliable forecasters—painting too rosy a picture if they are enthusiastic about a new product and too grim a forecast if their sales quota and future compensation are based on it.9-223 DATA NEEDED FOR PERCEPTUAL MAP COMPREHENSION 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. For industrial products with few prospective buyers. companies obtain three types of data from consumers. They are: (1) identification of the important attributes for a product class (2) judgments of existing products or brands with respect to these attributes (3) ratings of an "ideal" product’s or brand's attributes Page: 244 LO: 5 LL: 2 AACSB: 3 COMPREHENSION 9-224 MARKET POTENTIAL AND SALES FORECAST Differentiate between market potential and sales forecast. Salesforce survey forecast asks the firm's salespeople to estimate product sales during a specified future period of time since they are in close contact with their current and prospective customers.246 LO: 6 LL: 2 AACSB: 3 COMPREHENSION 9-225 SURVEYS OF KNOWLEDGEABLE GROUPS What are the two common groups surveyed to develop sales forecasts? Describe the information contained in the forecasts that result. Page: 245 . Answer: Market potential is also known as industry potential. Answer: Survey of buyers' intentions asks prospective customers whether they are likely to purchase a specific product during a specified future period of time. this can be effective.

What statistical method of forecasting future sales might you use? Answer: The best-known statistical method of forecasting is trend extrapolation. Trend extrapolation assumes the underlying relationships in the past will continue into the future. (If the trend is thought to be a straight line. In the case of 3M's adhesives. and had actual sales revenue figures on adhesives for the past ten years.9-226 TREND EXTRAPOLATION APPLICATION Suppose you are a sales forecaster for 3M Company. and the history so excellent that a trend extrapolation would make great sense. the quality is so good. the volume is so great. the forecaster may choose to use linear trend extrapolation). or extending a pattern observed in past data into the future. Page: 246 LO: 6 LL: 3 AACSB: 3 201 .