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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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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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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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.

119

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. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 120 . c. e. use the same payment methods. will pay attention to marketing messages. market delineation. e. have common needs. be responsive to marketing research. b. c. d. market segmentation. be responsive to marketing research. use the same payment methods. c. consumer differentiation. aggregation marketing. respond similarly to a marketing action. go shopping on a regular basis.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. d. psychographics. 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. go shopping on a regular basis. e. d. b. pay attention to marketing messages. b.

have different needs and have potential for future growth. Market diversification b. organizational buyers. qualified prospect Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments AACSB: 3 121 . have different needs and respond similarly to market actions. represent a large share of the entire market and have critical buying power. have common needs and respond similarly to market actions. organizational buyer d. a. Market segmentation d. 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. qualified prospects. Market augmentation e.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. c. e. d. its members must 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. market segments. ultimate consumer e. market segment b. ultimate consumers. c. b. e. Market differentiation c. have potential for future growth and have potential for increased profit or ROI. demographic cluster c. 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. demographic clusters. a. b. d.

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

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

d. such needs and benefits must be related to specific marketing actions the organization can take. controllable environmental factors Answer: d Page: 227. top-level management. Fig. the organization's marketing program. self-regulatory industry standards b. splitting people randomly between markets e. 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.9-18 MARKET SEGMENTATION COMPREHENSION Market segmentation stresses __________ and relating needs and benefits to specific marketing actions. e. market sectioning c. c. grouping people according to similar needs d. controllable environmental factors. self-regulatory industry standards. 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. 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.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. top-level management d. government regulations c. Second. 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. Answer: e Page: 227. Fig. b. market needs e. grouping people randomly in a market b. product based market development Answer: c Page: 226 . 124 . a.

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

d. d. c. sales forecasting.9-24 MARKET SEGMENTATION Marketers use market segmentation to a. just-in-time manufacturing. Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability. synergy. This strategy is an example of a. c. market segmentation. e. c. This strategy is an example of a. sales forecasting. mass customization. d. COMPREHENSION Answer: e Page: 227 LO: 1 LL: 2 AACSB: 3 Other Location: web Rationale: The process of segmenting a market and selecting specific segments as targets is the link between the various buyers’ needs and the organization’s marketing program (Figure 9-1). 9-25 MARKET SEGMENTATION APPLICATION Small athletic shoe manufacturers such as Vans have targeted niche markets and made shoes designed to satisfy the needs of different specific groups of customers. b. mass customization. do all of the above. e. Reebok targets the specific needs of particular types of runners with its different types of shoes. link market needs to an organization’s product or price. link market needs to an organization’s advertising. just-in-time marketing. synergy. The Premier Control shoe is made for runners whose feet tend to turn out. Answer: d Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Market segmentation links market needs to an organization’s marketing program —specific marketing mix actions to satisfy those needs. b. increase overall sales and profitability. 126 . e. The Premier Road is made with extra cushioning for pavement runners. link market needs to an organization's marketing program. Answer: a Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Market segmentation links market needs to an organization’s marketing program —specific marketing mix actions to satisfy those needs. b. 9-26 MARKET SEGMENTATION APPLICATION Reebok makes shoes with DMX Shear and Foam cushioning. market segmentation.

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

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

a. manufacture products that appeal to different markets. which often entail extremely high research. it avoids the extra costs of developing. c. and producing additional versions of the product. 9-33 ONE PRODUCT. 129 . 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. indirect distribution and logistics problems d. which often results extremely high research. e. issue stock used for additional research and development for improved products. 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. strategic planning e. it avoids __________. develop and produce another version of the product. purchase another firm that has additional products that would appeal to multiple markets. creating a service gap c. develop a separate promotional campaign. d.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. 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. engineering. In this case. b. and manufacturing expenses. 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. engineering. the extra cost of developing and producing additional versions of the product b.

d. increased number of choices c. as is the case with Johnson's Baby Oil. and manufacturing expenses. it avoids the extra cost of developing and producing additional versions of the product. is much more profitable. 9-36 ONE PRODUCT. MULTIPLE MARKET SEGMENTS COMPREHENSION When compared to a multiple-products-multiple-market segments strategy. Reach Toothbrush makes several versions of its toothbrush. Kellogg's and Post both make bran cereals with raisins. and Weeboks. a one-product-andmultiple-market-segment strategy a. increased satisfaction of consumer wants and needs b. and hard bristle and a short or normal length head. c. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a single product with multiple market segments? a. 9-35 ONE PRODUCT. walking shoes. medium. which are available in a soft. lower retail prices because of lower production costs d. 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. improved service e. b. is a much more effective means of meeting consumers' individual needs. 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). Reebok makes tennis shoes. has significantly higher distribution costs. 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. e. 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. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. which often entails higher research. not marketing economies of scale (alternative E) When using one product and multiple market segments. c. e. 130 . Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. creates greater cost savings in manufacturing costs. engineering. d. running shoes. is a more effective way of meeting organizational objectives.9-34 ONE PRODUCT. marketing costs generally increase. b.

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

Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. 132 . Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. e. 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. c.S. stabilizes the sales revenues and profits. 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. A new movie used several different advertisements. 9-40 MULTIPLE PRODUCTS.9-39 MULTIPLE PRODUCTS. d. and a. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. Ford manufactures SUVs for those who wish to carry lots of people and pickup trucks for those who wish to carry lots of products. decreases the cost of the physical plant. b. 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. serves customers' needs better. c. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. are an example of multiple products aimed at multiple markets. conforms to all union regulations. b. doesn’t reduce quality or increase price. d. 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 the other set showed romantic scenes to attract another audience. doesn't reduce quality or increase price. reduces the number of employees required. One set of previews showed the action scenes in order to attract one audience. e. and adds to the manufacturer’s sales revenues and profits. 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.

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

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. 134 . b. Many firms are now offering different products or services to high-end or low-end segments. 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. 9-44 MULTIPLE PRODUCTS. One set of previews showed the action scenes in order to attract one audience. This is an example of a. c. price discrimination.9-43 MULTIPLE PRODUCTS. b. a “Tiffany/Wal-Mart” strategy. 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. and another line of cake mixes for people with microwave ovens. synergy. d. and the other set showed romantic scenes to attract another audience. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. d. A new movie used several different advertisements. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a multiple products and multiple markets strategy? a. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. e. mass customization.S. Betty Crocker carries one line of cake mixes for people with conventional ovens. e. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. 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. one product and multiple market segments.

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

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. market melding. c. how the 80/20 rule is implemented. synergy. and customers go home empty-handed—at least initially. e. Custom Foot guarantees your boots will be ready within three weeks. Customers browse the store. d. market augmentation. CA sells organic cookies to corporate customers in tins with the customer’s corporate logo printed on it. e. b. in Santa Ana. color. 136 . There's no inventory for sale. repositioning. mass customization. mass customization. e.000 cookies. This is an example of a.9-47 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. one product and multiple market segments. At first glance none look any different from your basic old-fashioned shoe store. 9-48 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Co. This is an example of a. mixing and matching design components such as style. b.000 tins or 360. d. mass customization. b. About 100 display boots provide style guidelines. Customers can make their shirts using any downloaded photo inserted into 600 templates or even design a shirt from scratch. colors. market melding. c. Once you choose a boot style. d. price discrimination. synergy. but the only boots on hand are display models. The largest order has been for 15. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers on a high volume scale. 9-49 MASS CUSTOMIZATION APPLICATION ChoiceShirts is an online company that makes custom T-shirts. This is an example of a. you select materials. 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. and textures. and leather type. c. how the 80/20 rule is implemented. repositioning. multiple products in multiple segments.

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

This is an example of a. b. 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 Answer: a Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—customer relationship management 138 . 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. and desires special tender loving care. mass customization. d. 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. a. e. customer relationship management b. mass customization. repositioning.9-53 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Company will let you select cookies and put a photo of yourself on the tin. c. how the 80/20 rule is implemented. repositioning. target marketing. 9-54 MASS CUSTOMIZATION APPLICATION Name Maker is an online company that sells high-end gift wrap printed with custom slogans. synergy c. d. mass production e. target marketing. c. e. synergy. This is an example of a.95 to $32. synergy. 9-55 CUSTOMER RELATIONSHIP MANAGEMENT KNOWLEDGE The essence of __________ is that each customer has unique needs and wants. target marketing d.95 per 12-foot roll. b. This made-to-order gift wrap is priced from $24.

" said William Santana Li. customer relationship management (CRM).9-56 MASS CUSTOMIZATION KNOWLEDGE __________ is tailoring goods or services to the tastes of individual customers on a highvolume scale. Model E relies on a. "Think of Model E as the Dell of the auto industry. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. built-to-order (BTO). but because of production issues. e. Mass production e. Customer relationship management b. launch. d. a one-product-one-market-segment strategy. It is very similar to mass customization. Model E manufactures a car only when there is an order from a customer. 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. Target marketing d. a. e. mass aggregation. b. president and CEO of Model E. and direct delivery. synergy. synergy. b. mass aggregation. Synergy c. repositioning. 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. 139 . 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. built-to-order (BTO). a customer does not have the ability to specify an unlimited number of features. c. a one-product-one-market-segment strategy. c.

9-59

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

Answer: c Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: One of the five criteria to use in forming segments is the similarity of needs of potential buyers within a segment. Potential buyers within a segment should be similar in terms of a marketing action, such as product features sought or advertising media used. 9-69 CRITERIA FOR FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. potential for increased profit b. similarity of needs of potential buyers within a segment c. competitive position d. potential of marketing action to reach a segment e. simplicity and cost of assigning potential buyers to segments Answer: c Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Competitive position is a reason for selecting a market, not for segmenting it. The five criteria to be used in forming segments include (1) potential for increased profit; (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. 9-70 CRITERIA FOR FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. competitive position b. similarity of needs of potential buyers within a segment c. difference of needs of buyers among segments d. potential of marketing action to reach a segment e. simplicity and cost of assigning potential buyers to segments Answer: a Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Competitive position is a reason for selecting a market, not for segmenting it. The five criteria to be used in forming segments include (1) potential for increased profit; (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. COMPREHENSION COMPREHENSION

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This means being able to recognize the characteristics of potential buyers and __________ without encountering excessive costs. 144 . (3) difference of needs of buyers among segments. (4) potential of a marketing action to reach a segment. 9-73CRITERIA FOR FORMING SEGMENTS COMPREHENSION COMPREHENSION A marketing manager must be able to put a market segmentation plan into effect. (5) simplicity and cost of assigning potential buyers to segments. similarity of potential sellers within a segment c. simplicity and cost of assigning potential buyers to segments Answer: e Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. (5) simplicity and cost of assigning potential buyers to segments. similarity of potential sellers within a segment d. ignore any and all similarities Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. diversify their interests c. assign them to a segment e. (3) difference of needs of buyers among segments. 9-72 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. (3) difference of needs of buyers among segments.9-71 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. (2) similarity of needs of potential buyers within a segment. (2) similarity of needs of potential buyers within a segment. optimize their different needs d. difference of needs of retailers between segments e. competitive position b. competitive position c. company’s historical profitability COMPREHENSION Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. a. (5) simplicity and cost of assigning potential buyers to segments. maximize internal considerations b. company’s historical profitability b. potential of marketing action to reach a segment e. (4) potential of a marketing action to reach a segment. difference of needs of retailers between segments d. (4) potential of a marketing action to reach a segment. (2) similarity of needs of potential buyers within a segment.

“Would segmentation be worth doing and is it possible?” c. demand segmentation c. and is it possible?” 9-75 CRITERIA FOR FORMING SEGMENTS APPLICATION Between two and three percent of the population have some degree of allergic reaction. and (4) behavioral segmentation. __________. the limited benefit to consumers in the segment. “Would segmentation be worth doing. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. supplier segmentation b. Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question. 9-76 CONSUMER SEGMENTATION VARIABLES COMPREHENSION Four general categories used to segment consumer markets are geographic segmentation. similarity of needs of potential buyers within a segment d. “Is the market loyal to the product?” Answer: b Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: It’s not always a good idea to segment a market. 145 . Restaurants might consider people with these "allergies" as a separate segment. regional segmentation d. different needs of buyers among different segments c. consumer markets. and behavioral segmentation. “Is there too much competition for this product?” e. potential for increased profit and ROI Answer: e Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: The segment would probably not provide increased profit and ROI—given the size of the market. (2) demographic segmentation. “Is this product useful on a global scale?” b.S.9-74 CRITERIA FOR FORMING SEGMENTS APPLICATION Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question a. and the high cost of running a duplicate salad bar. usually mild. NAICS code segmentation Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Figure 9-3 shows four general bases of segmentation and the typical variables that can be used to segment U. (3) psychographic segmentation. demographic segmentation. to preservatives used in salad bars. psychographic segmentation e. instrumentality of sufficient marketing objectives to ignore that segment b. This multiple product and multiple market segment strategy would have the greatest difficulty meeting which of the following criteria used to form market segments? a. “Is it possible to reposition this product?” d. simplicity and cost of assigning potential buyers to segments e. a. These four segmentation bases are: (1) geographic segmentation.

9-77 GEOGRAPHIC SEGMENTATION Segmentation based on where prospective customers live or work is called a. which could be heated and poured directly onto nacho chips. age b. e. a. d. b. 9-79 GEOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a. Campbell’s is using __________ segmentation. c. was too hot for Americans in the East and not hot enough for those in the West and Southwest. 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. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. geographic segmentation. regional segmentation. Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in the other plants. Today. NAICS code segmentation. d. b. zip code segmentation. c. This is geographic segmentation. 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. MSA segmentation. GE built a downsized microwave oven to hang under kitchen cabinets. behavioral c. 146 . socioeconomic d. geographic e. 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. e. In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. 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.

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

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

socioeconomic d. the first question the telemarketer asks is whether the person answering the phone has a family. behavior c. life stage. 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. and restyled it to hang under cabinets. GE downsized its microwave oven. Since the apparent target of these ads is traditional families. e. it appears the State of Alabama Board of Tourism has segmented the market using __________ variables. Campbell's makes spicier nacho cheese sauce for its distributors in Texas than it does in Maine. 9-88 DEMOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on household size? a.9-86 DEMOGRAPHIC SEGMENTATION APPLICATION When a telemarketer calls to sell a consumer life insurance. d. regional b. a. b. geographic e. GE built a downsized microwave oven to hang under kitchen cabinets. psychographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Marital status. demographic d. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. Whether the prospect has a family indicates the use of which type of consumer segmentation variable by the telemarketer? a. demographic c. c. 149 . usage b. and household size are demographic variables. psychographic Answer: c Page: 232 LO: 3 LL: 3 Rationale: Life stage is a demographic variable. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. 9-87 DEMOGRAPHIC SEGMENTATION AACSB: 3 APPLICATION The State of Alabama Board of Tourism ran a series of ads showing traditional families enjoying various attractions in the state. Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Household size is a demographic customer characteristic. Because smaller households need to cook less food. buying situation e.

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

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

or a distribution system. behavioral segmentation e. demographic segmentation. demographic segmentation b. psychographic segmentation c. The small set is much less expensive and allows the viewer to watch a DVD without extra equipment. behavioral segmentation. their dorm rooms are often woefully short of space. refrigerator.9-95 BEHAVIORAL SEGMENTATION COMPREHENSION Segmentation based on what features are important to different customers is known as a. However. psychographic segmentation c. or a distribution system. an ad campaign. Magnavox is using which type of segmentation variable in this example? a. geographic segmentation. behavioral segmentation e. 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. d. geographic segmentation d. such as a new product. 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. c. an ad campaign. 152 . an ad campaign. psychographic segmentation. e. 9-97 BEHAVIORAL SEGMENTATION APPLICATION Magnavox sells its target markets many different types of TVs from flat screens to a 20” combination TV/DVD. socioeconomic segmentation. 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. b. or a distribution system. and freezer targeted to these students. demographic segmentation b. MicroFridge is using which type of segmentation basis? a. The larger sets can be outfitted with surround sound at a higher price than the small set. such as a new product. MicroFridge understands this and markets a combination microwave. geographic segmentation d. 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. such as a new product. Magnavox uses behavioral segmentation to guide the types of TVs it sells since different consumers have different benefits they seek in a TV set.

It is easy to forget to take the bowl that you brought to the dinner home with you. 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. industry sector segmentation. Both provide high mileage for the automobile class. Reynolds responded to this problem by creating Pot Lux cookware. attractive and inexpensive disposable dishes for transporting food. Participants bring casseroles. 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. the Prius. breads. the Highlander. 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. family size e. Toyota is using which type of segmentation variable to market these cars? a. lifestyle segmentation. b. e. geographic b. d. so that very few business people are authorized to fly first class. BA's strategy is an example of a. vegetables. and desserts and all share the food. behavioral segmentation. behavioral d. c. Promotions to frequent fliers stress that passengers can sleep in fully reclining seats and arrive refreshed to carry out a full day's schedule. socioeconomic c. British Airways (BA) has grown market share for its transatlantic business class by offering greater comfort. 9-99 BEHAVIORAL SEGMENTATION APPLICATION Many families today hold potluck meals during holidays or special events. a small sedan. psychographic b. a. Despite the shrinking pool of business-class travelers. psychographic segmentation. Reynolds has recognized how to use _________ variables to segment its market. life stage segmentation. demographic d.9-98 BEHAVIORAL SEGMENTATION APPLICATION Toyota makes two types of hybrid automobiles. psychographic e. and an SUV. 153 . 9-100 BEHAVIORAL SEGMENTATION APPLICATION Many companies have cut travel budgets. behavioral c.

turnover. service inventory. psychographic segmentation. 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. 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. geographic segmentation. This technique. c. consumption rate. sometimes called frequency marketing. is a strategy that focuses on usage rate. trial. 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. c. This technique uses a. d. turnover. sometimes called frequency marketing. b. buying condition segmentation. e. e. usage rate. This technique. demographic segmentation. d. is a strategy that focuses on usage rate. b. 154 . a type of behavioral segmentation. behavioral segmentation. consumption rate. usage rate. 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. c. b. service inventory. d.9-101 BEHAVIORAL SEGMENTATION BY USAGE KNOWLEDGE The quantity consumed or patronage—store visits—during a specific period is called a. trial.

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

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

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

c. the heavy users have an index of 467. the segment is at the top of the chart. 158 . For every $1. the usage index is highest for that segment. e. This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. Giving the light users an index of 100. each heavy user spends $4. d. b. 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. there are less of them than any other segment.00 spent by a light user in one of these restaurants in a month. their consumption percentage is higher than the percentage that they represent of the total users and non-users.FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4. heavy users are most important to a fast-food restaurant because a. there are fewer of them than any other user segment.67.

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

These adults use the product category (fast food) but do not go to Wendy’s. promote buyer loyalty. Answer: b Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The nonusers part of the Wendy’s bar in Figure 9-5 also provides ideas. the North American Industry Classification System (NAICS) code. Answer: c Page: 235 LO: 3 LL: 2 AACSB: 3 Rationale: Variables for segmenting organizational markets are shown in Figure 9-6 and include geographic. McDonald’s is not a serious competitor to you. New menu items or promotional strategies may succeed in converting these prospects into users that patronize Wendy’s. is the world's biggest parking lot for unwanted commercial aircraft. b. new menu items or promotional strategies may succeed in converting the prospects into users that patronize Wendy’s. c. forecast sales to a consumer market. 9-115 ORGANIZATIONAL MARKET SEGMENTATION COMPREHENSION Variables such as location. 160 . Airlines pay from $750 to $5. area density d. b. segment a consumer market. The warm.000 a month for its storage service. e. and behavioral bases. get around gatekeepers and reach buyers. But the 56. number of employees Answer: a Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: The NAICS sectors would reveal other companies that fly commercial planes and might be interested in Evergreen's services.4 percent of the Wendy’s bar shown as prospects may be worth detailed thought. c. NAICS sector b. Arizona. e. d. 9-116 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Evergreen Air Center in Marana. number of locations c. segment an organizational market. demographic. d. Burger King is closing in on your market share. and number of employees are all examples of ways to a. Which organizational segmentation variable might Evergreen use to segment the market? a. It shows that 11 percent of adult Americans don’t go to fast-food restaurants in a typical month and are really nonprospects—unlikely to ever patronize your restaurant. nonprospects may be the best segment to go after to increase Wendy’s sales. the information in Figure 9-5 suggests a.9-114 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. your restaurant is a market leader. statistical area e. dry air where the operation is located serves as a cheap and effective airplane preservative.

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

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

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

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

relate the product life cycle to consumer demand. e. 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. 165 . e. c. make optimal decisions under conditions of uncertainty. which products to reposition. determine which target market segments to select and which product groupings to offer. d.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. b. 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. b. screen many new product ideas in order to select the one with best long-run market potential. d. which product groupings to offer. c. which products to be sold into groups. how to implement a harvesting strategy. 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. how to implement the 80-20 rule. select representative samples of consumers for marketing research studies.

b. whether the student is a faculty or staff member. e. The best way to describe how the student market is segmented is by a. whether the student has the discretionary income to eat at Wendy’s. d. c.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. 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 . whether the student lives near the campus or far away. combining the factors of where the student lives and when (s)he is on campus. the meals eaten at the restaurant.

The meal occasion (product grouping) that comprises the largest market is a. 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. e. assume the medium market (shown by a “2”) is twice the size of the small market. dinner. after-dinner snack. students that live in an apartment. dormitory customers. b. 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. 167 . between-meal snack customers. b. lunch customers. Similarly. c. students that live in a dormitory. c. b. faculty or staff members. 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. Similarly. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). 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. students that are day commuters. dinner customers. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a. d.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. e. e. The largest potential market segment is for a. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). after-dinner snack customers. c. d. 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. For example. assume the medium market (shown by a “2”) is twice the size of the small market. breakfast. lunch. d. between-meal snack.

c. compatibility with the organization’s objectives and resources e. day commuter customers. apartment customers. Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. dinner customers. dormitory customers. d. which is a vertical column in Figure 9-8. expected growth. staff customers.” This is a market segment. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The target here is potential between-meal snack customers. size of the market b. c. competitive position. 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. b. who might be reached by this coupon that is intended to increase sales during the 2:00 PM to 4:30 PM time period. and compatibility with the organization’s objectives and resources. All of the above are criteria used for selecting a target market. night commuter customers. e. 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. d. 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. night commuter customers. expected growth c.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. answer “c. 9-136 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. which is a horizontal row in Figure 9-8. 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. 168 . cost of reaching the segment. This is a “product” or “meal” in the market-product grid. b. faculty customers. Assume students who live in dormitories or apartments on or near the campus cannot use student parking lots. cost of reaching the segment d. e. after-dinner snack customers.

which are often confused with those used to select segments. 9-139 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. To form segments the criteria include potential for increased profit. potential of a marketing action to reach a segment. cost of reaching the segment and compatibility with the organization’s objectives and resources. There are also five criteria to use in forming the segments. size of the market b. not for selecting one. There are also five criteria to use in forming the segments. potential for increased profit b. similarity of needs of potential buyers within a segment c. which are often confused with those used to select segments. cost of reaching the segment and compatibility with the organization’s objectives and resources. expected growth. competitive position. difference of needs of buyers among segments d. similarity of needs of potential buyers within a segment. simplicity and cost of assigning potential buyers to segments. difference of needs of buyers among segments. simplicity and cost of assigning potential buyers to segments. similarity of needs of potential buyers within a segment c.9-137 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion used for selecting a market segment? a. potential for increased profit b. competitive position. 9-138 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. To form segments the criteria include potential for increased profit. difference of needs of buyers among segments. potential of a marketing action to reach a segment e. cost of reaching the segment. similarity of needs of potential buyers within a segment. potential of a marketing action to reach a segment e. expected growth. similarities of needs of potential buyers c. expected growth. market size Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. expected growth 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 d. cost of reaching the segment e. Similarities of needs of buyers within a segment is a criterion for segmenting a market. difference of needs of buyers among segments d. competitive position. compatibility with the organization’s objectives and resources Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. 169 . potential of a marketing action to reach a segment. and compatibility with the organization’s objectives and resources.

competitive position. What is the fifth criterion? a. competitive position Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. similarity of needs of potential buyers within a segment c. difference of needs of buyers among segments. similarity of needs of potential buyers within a segment c. competitive position. cost of reaching the segment and compatibility with the organization’s objectives and resources. potential of a marketing action to reach a segment. expected growth of the market. potential for increased profit b. expected growth. difference of needs of buyers among segments d. difference of needs of buyers among segments.9-140 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. which are often confused with those used to select segments. potential of a marketing action to reach a segment. need to conform to government regulations d. simplicity and cost of assigning potential buyers to segments. 9-141 SELECT TARGET MARKETS COMPREHENSION Five general criteria are often used to pick target segments. 170 . competitive position of the firm with respect to the market. To form segments the criteria include potential for increased profit. expected growth. and cost of reaching the segment. how long target market members have been customers e. competitive position. difference of needs of buyers among segments d. They include the size of the market. similarity of needs of potential buyers within a segment. compatibility with the organization’s objectives b. There are also five criteria to use in forming the segments. time required to create awareness c. potential of a marketing action to reach a segment e. simplicity and cost of assigning potential buyers to segments. cost of reaching the segment and compatibility with the organization’s objectives and resources. potential of a marketing action to reach a segment e. 9-142 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. similarity of needs of potential buyers within a segment. cost of reaching the segment and compatibility with the organization’s objectives and resources. potential for increased profit b. which are often confused with those used to select segments. expected growth. There are also five criteria to use in forming the segments. To form segments the criteria include potential for increased profit. cost of reaching the segment Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. amount of publicity likely to result Answer: a Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size.

cost of reaching the segment and compatibility with the organization’s objectives and resources. competitive position.9-143 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. difference of needs of buyers among segments. feasibility of a marketing action to reach a segment d. potential for increased profit b. 9-145 SELECT TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. potential of a marketing action to reach a segment e. To form segments the criteria include potential for increased profit. The less the competition. 9-144 SELECT TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. COMPREHENSION COMPREHENSION 171 . compatibility with the organization’s objectives and resources Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. simplicity and cost of assigning potential buyers to segments e. simplicity and cost of assigning potential buyers to segments Answer: d Page: 238 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: Competitive position is a criterion for selecting a target market. the more attractive the segment is. potential of a marketing action to reach a segment. feasibility of a marketing action to reach a segment d. similarity of needs of potential buyers within a segment c. expected growth of segment Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: Expected growth is a criterion for selecting a target market. competitive position. difference of needs of buyers among segments d. similarity of needs of potential buyers within a segment b. similarity of needs of potential buyers within a segment. expected growth. difference of needs of sellers between segments c. which are often confused with those used to select segments. perhaps it is growing significantly or is expected to grow in the future. difference of needs of buyers between segments c. Although the size of market in the segment may be small now. There are also five criteria to use in forming the segments. or amount of competition in the segment e. simplicity and cost of assigning potential buyers to segments. similarity of needs of potential buyers within a segment b.

this market would a. have no expected growth. 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. expected growth c. similarity of needs of potential buyers b. it would not be readily accessible by marketing programs. Best Food's created product groupings c. be readily accessible to the firm's marketing programs. 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. size of the market segment e. In terms of the criteria used for selecting a target segment. Best Food's competitive position in the segment b. 172 . e. 9-147 SELECT TARGET SEGMENTS APPLICATION Best Foods Company is considering expanding beyond the regional market segments now served by its Hellmann's mayonnaise. 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. Because it would be so small. competitive position d. This is an example of which criterion used to select target market segments? a. not be compatible with the company's current resources. 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. b. One criterion management wants to use to evaluate potential new geographic market segments is whether new equipment must be bought to serve each new segment. This market would use the rehabilitation services that the company now provides. expected growth of the market segment d. be accurately described by all of the above.9-146 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion for selecting a market segment? a. d. c. cost of reaching the segment e. not for selecting one.

formed 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. d.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. Lewis has just a. c. Lewis decided to join Goodness Grows in North Carolina. forming products to be sold into groups. LexisNexis. Zillow is an online real estate service that answers the most important question. b. formed prospective buyers into segments. zillow.com.com. 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. “How much is my home really worth?” 9-151 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. 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. 173 . b. a specialty food association that advertises local products and distributes them to local supermarkets and gourmet shops.Q. taken marketing actions to reach target markets. d. c. b. e. e. Inc. the neighborhood and look around there. forming prospective buyers into segments.. This is an example of a. c. selected target market segments to reach. Nike decided to concentrate on affluent teens rather than members of high school basketball teams. Sauce. 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. d. the website of the local newspaper. taking marketing actions to reach target markets. developing a market-product grid and estimating size of markets. developed a market-product grid and estimating size of markets.com. In developing a marketing strategy to sell the sauce. e. wsj. a company that makes Tongue Tinglin' B. selecting target market segments to reach. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce.B.

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. 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. competitive positioning. The company saves money on marketing but spends more in production. d. production e. product perception. e. b. marketing c. marketing d. marketing b. distributors. 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. competitors. profits. e. coherent product lines targeted to identifiable market segments. product positioning. marketing. 9-154 PRODUCT POSITIONING KNOWLEDGE The place an offering occupies in consumers' minds on important attributes relative to competitive products is called a. c. each of which will have to be designed and manufactured. production. 9-153 MARKETING MATTERS COMPREHENSION In the early 1980s Apple Computer Company was often called "Camp Runamok" because the innovative company had no a. relative positioning. Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 174 . d. each of which will have to be designed and manufactured. marketing research. investment capital. a. The company saves money on __________ but spends more on __________. b. competition. c. selective perception. marketing.

9-155 PRODUCT POSITIONING KNOWLEDGE What does the term product positioning refer to? a. 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. and department stores c. psychographics. often within major metropolitan areas d. perceptual mapping. differentiate c. b. The dairies wanted to __________ milk in the minds of the consumer. dairies. segment b. geographic segmentation. reposition d. explain e. e.S. 175 . The dairy industry tried to reposition milk in the minds of adult consumers. repositioning. product differentiation. struggling to increase milk sales. U. tried to change the way adults thought about milk. the place a product offering occupies in consumers' minds on important attributes e. shelf locations in major chain. c. a careful analysis of cross tabulations b. d. grocery. a. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product repositioning 9-157 REPOSITIONING APPLICATION Recently. product positioning. represent Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Changing the place an offering occupies in consumers’ minds is called repositioning.

e. head-to-head and parallel market. repositioning e. d. Head-to-head c. Segment b. The advertising message was that using applesauce in baking cuts calories and also makes the resulting baked good healthier. Motts Applesauce was attempting to expand the use of the product from a dinnertime side dish to a baking ingredient. Differentiation d. c. Consumer Answer: c Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 176 . competitive and differentiation. head-to-head and differentiation. competitive and distinctive. Motts was using a __________ strategy. a. 9-159 PRODUCT POSITIONING Two major types of product positioning are a. differentiation and parallel market. perceptual mapping b. In this case. a. psychographics Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Repositioning is changing a product's image in consumers' minds. 9-160 DIFFERENTIATION POSITIONING KNOWLEDGE COMPREHENSION __________ positioning involves seeking a less competitive. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Two main approaches to positioning a new product in the market are head-tohead and differentiation.9-158 REPOSITIONING APPLICATION Motts Applesauce used an advertising campaign to change the way consumers thought about applesauce from a dinnertime side dish to a replacement for cooking oil in baking. Competitive e. product positioning c. product differentiation d. smaller market niche in which to locate a brand. b.

differentiation d. e. repositioning. smaller market niche in which to locate a brand. 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. compete with competitors on similar product attributes but in a different market. head-to-head positioning. d. a. lateral positioning. Differentiation positioning involves seeking a less competitive. c. b. differentiation positioning. firms often use a. e.9-161 DIFFERENTIATION POSITIONING KNOWLEDGE Differentiation positioning requires a product to a. 177 . compete directly with competitors but emphasize unique product attributes. 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. compete against other products of the same company. 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. d. consumer positioning e. head-to-head positioning b. b. lateral positioning c. c. cognitive positioning. seek a less competitive. 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. smaller market niche. compete with competitors on similar product attributes in the same market.

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

which involves seeking a smaller market niche that is less competitive in which to locate a brand. and thereby reduce or avoid cannibalization. e. distinction d. c. detachable wheel in the shoe’s heel. a. head-to-head b. In the sneaker business. d. Heelys practices differentiation positioning. seek out its own market niche. differentiation Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. compete with competitors on similar product attributes but in a different market. Answer: b Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—head-to-head positioning 179 . compete with competitors on similar product attributes in the same market. differentiation e. segmentation d. a. b. perceptual b. 9-167 HEAD-TO-HEAD POSITIONING KNOWLEDGE An approach to positioning a new product in the market is __________ positioning. compete against other products of the same company. head-to-head Answer: e Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—head-to-head positioning 9-168 HEAD-TO-HEAD POSITIONING Other Location: SG KNOWLEDGE Head-to-head positioning requires a product to a. repositioning e.9-166 DIFFERENTIATION POSITIONING APPLICATION Heelys sneakers come with an imbedded. parallel market c. psychological c. compete with competitors using unique attributes. which involves competing directly with competitors on similar product attributes in the same target market. Heelys is practicing __________ positioning.

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

181 . three types of data are needed: identification of important attributes for a product class. and ratings of an “ideal” product’s or brand’s attributes.9-172 PERCEPTUAL MAP KNOWLEDGE A graph displaying consumers' perceptions of product attributes across two dimensions is a a. growth matrix. b. consumer preference matrix. judgments of existing products or brands with respect to these attributes. 9-174 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 types of data are collected from consumers. a listing of all prospective brands and products b. 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. 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. intermediaries. perceptual map. d. consumers. payoff table. consumers. b. c. and the firm itself. competitors. e. identification of the important attributes for a product class d. market-product grid. d. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. The map is based on perceptions of a. rank order of the ratings of a existing brand's preference relative to its competitors e. competitors. independent rating organizations such as Consumer Reports. e. c. 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. rank order of the ratings of a existing brand's preference relative to its competitors e. 182 . 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. managerial judgments about how consumers perceive products c. All of the above data are collected from consumers. three types of data are needed: identification of important attributes for a product class. a listing of all prospective brands and products b. All of the above data are collected from consumers. and ratings of an “ideal” product’s or brand’s attributes. managerial judgments about how consumers perceive products c. 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 these attributes. three types of data are needed: identification of important attributes for a product class. and ratings of an “ideal” product’s or brand’s 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. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. judgments of existing products or brands with respect to these attributes. a listing of all prospective brands and products b. judgments of existing products or brands with respect to important attributes d.

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

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

environmental forecast. market potential. c. market potential e. the minimum anticipated sales in related industries not including federal. Delphi forecast c. 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. market share Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 185 . 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. industry potential. a. and local taxes e. e. the total of all products sold nationally c. d. state. b. company forecast. the sum of products in a particular industry sold domestically under normal economic conditions d. sales forecast b. total industrial products sold worldwide b. market share.9-181 MARKET POTENTIAL KNOWLEDGE The term market potential or industry potential refers to what important marketing factor? a. industry potential d.

survey of knowledgeable groups. judgments of the decision maker b. statistical methods b. 9-187 JUDGMENTS OF THE DECISION MAKER The most commonly used forecasting technique is the a. (2) surveys of knowledgeable groups. 9-186 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. 9-185 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. and (3) statistical methods. statistical method. judgment of the decision maker.9-184 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. surveys of competitors c. surveys of competitors c. (2) surveys of knowledgeable groups. technological method. 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. and (3) statistical methods. technological methods e. judgments of trade associations d. surveys of knowledgeable groups b. b. 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. linear trend extrapolation method. and (3) statistical methods. 186 COMPREHENSION COMPREHENSION COMPREHENSION . 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. technological methods e. judgments of trade associations d. 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. d. (2) surveys of knowledgeable groups. technological methods e. c. e. judgments of trade associations d. surveys of competitors c.

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. b. Delphi forecast. Delphi forecast e. survey of buyers intentions forecast. c. 9-190 DIRECT FORECAST The least complex sales forecasting technique is likely the a. d. direct forecast c. Delphi forecast c. statistical forecast e. buildup forecast b. Alternatives B. direct forecast. C. APPLICATION AACSB: 3 COMPREHENSION 187 . lost-horse forecast d. sales force survey forecast. 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.9-188 DIRECT FORECAST KNOWLEDGE A __________ is an estimate of the value to be forecast without any intervening steps. 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. direct forecast d. 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. e. trend extrapolation. and E are surveys of knowledgeable groups that are more time-consuming and costly than judgment forecasts. a. technological forecast b.

This is an example of a a. a. 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. Delphi forecast e. statistical method e. technological c. a. 188 . experimental estimation. c. assessing whether they have a positive or negative impact. statistical inference. listing the facts that could affect the forecast. lost-horse forecast. 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. survey of buyers' intentions forecast. trend extrapolation d. b.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. linear trend extrapolation. 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. e. lost-horse forecast b. d. technological forecast c. Delphi d. jury of executive opinion b. and making the final forecast.

technological b. technological forecast c. trend extrapolation c. technological forecast c. lost-horse d. and adding 3 new product models. “We're increasing TV advertising. But on the negative side. a.9-194 LOST-HORSE FORECAST APPLICATION When a marketing student overheard the following comments. and makes the final forecast. lost-horse forecast b. we're going to increase prices across the board by 20 percent. lists factors that could affect the forecast. 9-196 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. Delphi e.” a. assesses whether they have a positive or negative impact. trend extrapolation d. lost-horse forecast b. survey of buyers' intentions Answer: c 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. she knew the person who was talking was planning to use a __________. Delphi forecast e. So on balance. 9-195 LOST-HORSE FORECAST APPLICATION The Ohio River Boatworks uses last year’s sales as a starting point to estimate next year’s sales of its boats. survey of buyers' intentions forecast Answer: e Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—survey of buyers’ intentions forecast 189 . a. The Ohio River Boatworks uses the __________ method of forecasting. survey of buyers' intentions forecast Answer: a 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. adding some sales representatives. Delphi forecast e. All those things are positive. trend extrapolation d. I think sales will increase next year by 5 percent.

190 . a. 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. jury of executive opinion b. judgments of individuals b. salesforce survey d. technological c.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.000 for the quarter. 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. 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. a. jury of executive opinion c. statistical method e.750. survey of buyers' intentions d. jury of executive opinion c. salesforce survey d. survey of experts e. the forecast is set at $4. a. This is an example of a __________ forecast. judgments of individuals 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. the Delphi method. inductive extrapolation e. d. b. c. linear trend extrapolation. a. 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. simplicity. exponential interpolation c. c. which involves extending a pattern observed in past data into the future. it is referred to as a. its near-perfect accuracy of prediction. Answer: e Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—linear trend extrapolation 191 . inductive extrapolation. 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. trend extrapolation b. information extension d. b. exponential extrapolation. which is the basis of the method’s key strength: simplicity. reliance on computers for computation. lack of assumption. e. d. information extension.9-200 TREND EXTRAPOLATION KNOWLEDGE The best-known statistical method of forecasting is called __________. reliance on facts. When the pattern of data is described with a straight line. e.

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

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

to help consumers perceive the product as being different and better than competing products. It stresses the importance of aggregating—or grouping—people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. as the text points out in connection with Zappos. product differentiation relates to market segmentation. Segmentation links needs to actions. In a narrower sense. Thus. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. Such needs and benefits must be related to specific. In its broadest sense it involves a firm's using different marketing mix activities. 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. it can contribute to increased revenues for the firm. tangible marketing actions the firm can take to satisfy those needs. such as product features and advertising. Differences may involve nonphysical features as well. AND FORECASTING MARKETS SHORT ESSAY QUESTIONS 9-207 MARKET SEGMENTATION COMPREHENSION Define market segmentation. such as image or price. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. Page: 226 LO: 1 LL: 2 AACSB: 3 194 . 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.CHAPTER 9 SEGMENTING. POSITIONING. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price. As long as a new product does not take a significant amount of sales away from an existing 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. 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. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-211 MASS CUSTOMIZATION Explain the difference between mass customization and build-to-order. engineering. doesn’t reduce quality or increase price. Although these expenses can be high.9-209 SINGLE PRODUCT. In this case. 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. Build-to-order involves manufacturing a product only when there is an order from a customer. they are rarely as large as those for developing an entirely new product. which often entails high research. and manufacturing expenses. Answer: Mass customization involves the tailoring of goods or services to the tastes of individual customers on a high-volume scale. 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. and adds to the organization’s sales revenues and profits.

It now wants to give free food only to people who go hungry on a regular basis.9-212 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION There are five key steps in segmenting and targeting markets. Page: 231 LO: 3 LL: 3 AACSB: 3 196 . 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. List these five key steps. 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. 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. List these important factors in marketing planning. Fig. Compared to the food bank's previous policy. 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. which link market needs of customers to the organization’s marketing program. This will be the market segment it targets. it is now much more likely to serve its clients more effectively with the new segmentation strategy. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively.

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

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. In a complete marketproduct grid analysis.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. 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 . organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic. 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. each cell in the grid can show the estimated market size of a given product sold to a specific market segment. usage rate. demographic or behavioral segments. Product features.S.

Answer: There are two major approaches to positioning a product. Product synergies run vertically down the market-product grid and each column represents an opportunity for efficiency in research and development and production. reduce R & D and production expenses.239 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-221 MARKETING SYNERGIES/PRODUCT SYNERGIES Explain the difference between marketing synergies and product synergies. Answer: Marketing synergies run horizontally across a market-product grid and represent an opportunity for efficiency in terms of a market segment. Dollar Rental Cars is positioned head-to-head with Avis and Hertz. For example. 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. To simplify product lines. (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 . Marketing efforts can be streamlined with a focus on fewer segments. Page: 244 LO: 5 LL: 2 AACSB: 3 199 . 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. Five criteria can be used to select the target segments. 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. Curtis Mathis positions its televisions as a high quality product ("The most expensive television sets money can buy."). Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. For example.

Answer: Survey of buyers' intentions asks prospective customers whether they are likely to purchase a specific product during a specified future period of time. 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. 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. 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. For industrial products with few prospective buyers. Page: 246 LO: 6 LL: 2 AACSB: 3 200 . 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. Page: 245 . 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. Sales forecast is also known as company forecast.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.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. this can be effective. companies obtain three types of data from consumers. Answer: Market potential is also known as industry potential.

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

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