CHAPTER 9

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

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

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

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

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

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

190,193,194,195,199,226

Video Case: Nokia (pp.249-251)

205

204,206

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

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CHAPTER 9
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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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9-4

CHAPTER OPENING EXAMPLE: ZAPPOS.COM

COMPREHENSION

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

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

119

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

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

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

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

government regulations c. grouping people randomly in a market b. 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. government regulations. controllable environmental factors Answer: d Page: 227. market sectioning c. splitting people randomly between markets e. top-level management d. such needs and benefits must be related to specific marketing actions the organization can take. product based market development Answer: c Page: 226 . 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. grouping people according to similar needs d. a. a. Second. c. 124 . controllable environmental factors. 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. top-level management. market needs e.9-18 MARKET SEGMENTATION COMPREHENSION Market segmentation stresses __________ and relating needs and benefits to specific marketing actions. self-regulatory industry standards b. the organization's marketing program. 9-1 LO: 1 LL: 2 AACSB: 3 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to an organization’s marketing program. e. Fig. Answer: e Page: 227.227 LO: 1 LL: 2 AACSB: 3 Rationale: Market segmentation first stresses the importance of grouping people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. d. b. self-regulatory industry standards. Fig.

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

d. This strategy is an example of a. 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). b. This strategy is an example of a. increase overall sales and profitability. The Premier Control shoe is made for runners whose feet tend to turn out. b. just-in-time marketing.9-24 MARKET SEGMENTATION Marketers use market segmentation to a. c. do all of the above. sales forecasting. 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. Reebok targets the specific needs of particular types of runners with its different types of shoes. synergy. 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. c. mass customization. e. 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. e. 9-26 MARKET SEGMENTATION APPLICATION Reebok makes shoes with DMX Shear and Foam cushioning. b. d. Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability. 126 . just-in-time manufacturing. mass customization. sales forecasting. d. link market needs to an organization's marketing program. link market needs to an organization’s product or price. The Premier Road is made with extra cushioning for pavement runners. market segmentation. market segmentation. c. synergy. e. link market needs to an organization’s advertising.

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

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

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

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

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

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

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

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

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

000 cookies. and textures. color. 9-49 MASS CUSTOMIZATION APPLICATION ChoiceShirts is an online company that makes custom T-shirts. how the 80/20 rule is implemented. repositioning. market augmentation. Once you choose a boot style. d. you select materials. mass customization. 9-48 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Co. in Santa Ana. e. About 100 display boots provide style guidelines. There's no inventory for sale. d. mass customization. Custom Foot guarantees your boots will be ready within three weeks. 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 on a high volume scale. 136 . b. repositioning. The largest order has been for 15.000 tins or 360. 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 leather type. This is an example of a.9-47 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. This is an example of a. and customers go home empty-handed—at least initially. synergy. This is an example of a. b. mass customization. CA sells organic cookies to corporate customers in tins with the customer’s corporate logo printed on it. colors. but the only boots on hand are display models. mixing and matching design components such as style. price discrimination. At first glance none look any different from your basic old-fashioned shoe store. one product and multiple market segments. c. Customers can make their shirts using any downloaded photo inserted into 600 templates or even design a shirt from scratch. Customers browse the store. market melding. b. e. e. synergy. 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. how the 80/20 rule is implemented. market melding. c. c. d.

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

mass customization. a. how the 80/20 rule is implemented.95 per 12-foot roll. A customer can have gift wrap printed with the name of the person celebrating a birthday or the folks who are getting married. repositioning. and desires special tender loving care. target marketing. This made-to-order gift wrap is priced from $24. 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 production e. This is an example of a. 9-54 MASS CUSTOMIZATION APPLICATION Name Maker is an online company that sells high-end gift wrap printed with custom slogans. b. synergy c. d. 9-55 CUSTOMER RELATIONSHIP MANAGEMENT KNOWLEDGE The essence of __________ is that each customer has unique needs and wants. synergy. c. mass customization. d. target marketing. e.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. synergy.95 to $32. mass customization Answer: a Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—customer relationship management 138 . repositioning. 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. target marketing d. b. This is an example of a. customer relationship management b. e.

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

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SYNERGY

KNOWLEDGE

The key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and achieving organizational __________, the increased customer value achieved through performing organizational functions like marketing or manufacturing more efficiently. a. segregation b. synergy c. segmentation d. selection e. value add Answer: b Page: 229 LO: 1 Rationale: Key term definition—synergy 9-60 SYNERGY LL: 1 AACSB: 3 COMPREHENSION

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

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STEPS IN SEGMENTING AND TARGETING MARKETS

COMPREHENSION

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

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

141

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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competitive position c. maximize internal considerations b. a. (5) simplicity and cost of assigning potential buyers to segments. (5) simplicity and cost of assigning potential buyers to segments. competitive position b. similarity of potential sellers within a segment c. (4) potential of a marketing action to reach a segment. 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. 9-72 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. difference of needs of retailers between segments d. 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. company’s historical profitability b.9-71 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. 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. (3) difference of needs of buyers among segments. (2) similarity of needs of potential buyers within a segment. (2) similarity of needs of potential buyers within a segment. potential of marketing action to reach a segment e. This means being able to recognize the characteristics of potential buyers and __________ without encountering excessive costs. 144 . assign them to a segment e. difference of needs of retailers between segments e. similarity of potential sellers within a segment d. (3) difference of needs of buyers among segments. (2) similarity of needs of potential buyers within a segment. (5) simplicity and cost of assigning potential buyers to segments. optimize their different needs d. (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. (4) potential of a marketing action to reach a segment.

and (4) behavioral segmentation. __________. usually mild. “Would segmentation be worth doing and is it possible?” c. to preservatives used in salad bars. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. “Is this product useful on a global scale?” b. “Is it possible to reposition this product?” d. 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. psychographic segmentation e. supplier segmentation b. 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. “Would segmentation be worth doing. consumer markets. similarity of needs of potential buyers within a segment d. 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. (2) demographic segmentation. a. 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. (3) psychographic segmentation. the limited benefit to consumers in the segment. demographic segmentation. “Is there too much competition for this product?” e. These four segmentation bases are: (1) geographic segmentation. instrumentality of sufficient marketing objectives to ignore that segment b. different needs of buyers among different segments c. and behavioral segmentation.9-74 CRITERIA FOR FORMING SEGMENTS APPLICATION Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question a. Restaurants might consider people with these "allergies" as a separate segment. “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. regional segmentation d. demand segmentation c. simplicity and cost of assigning potential buyers to segments e. 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. 145 . and the high cost of running a duplicate salad bar.S.

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

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

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

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

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

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

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

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

psychographic segmentation. e. 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. is a strategy that focuses on usage rate. b. d. sometimes called frequency marketing. b. This technique. 154 . service inventory. behavioral segmentation. is a strategy that focuses on usage rate. consumption rate. usage rate. d. usage rate. 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. d. turnover. This technique. consumption rate. trial. trial. c. 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. c. buying condition segmentation. a type of behavioral segmentation. service inventory. turnover. This technique uses a. e. c. demographic segmentation. Answer: c Page: 232 LO: 3 LL: 1 Rationale: Key term definition—usage rate 9-102 BEHAVIORAL SEGMENTATION BY USAGE Frequency marketing is a strategy that focuses on a. e.9-101 BEHAVIORAL SEGMENTATION BY USAGE KNOWLEDGE The quantity consumed or patronage—store visits—during a specific period is called a. sometimes called frequency marketing. b. geographic segmentation.

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

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

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

each heavy user spends $4. d. there are less of them than any other segment. their consumption percentage is higher than the percentage that they represent of the total users and non-users. 158 .FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4. c. For every $1. b. the heavy users have an index of 467.67. there are fewer of them than any other user segment. Answer: c Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: The Usage Index per Person column in Figure 9-4 emphasizes the importance of the heavy-user group even more. e.00 spent by a light user in one of these restaurants in a month. 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. heavy users are most important to a fast-food restaurant because a. the usage index is highest for that segment. the segment is at the top of the chart.

your restaurant is a market leader.2 percent) user segments are somewhat behind Burger King and far behind McDonald’s. that you need to devise a marketing program to win customers from McDonald’s and Burger King. most of the respondents think of Wendy’s as their primary fast food restaurant. b. 159 . primary (19. Burger King is closing in on your market share. c. so a natural strategy is to look at these two competitors and devise a marketing program to win customers from them. McDonald’s is not a serious competitor to you. Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The Wendy’s bar in Figure 9-5 shows that your sole (0.8 percent). and secondary (12. d.FIGURE 9-5 9-113 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. the information in Figure 9-5 suggests a. e.6 percent).

is the world's biggest parking lot for unwanted commercial aircraft. number of locations c. New menu items or promotional strategies may succeed in converting these prospects into users that patronize Wendy’s. d. new menu items or promotional strategies may succeed in converting the prospects into users that patronize Wendy’s. 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. Arizona. 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. McDonald’s is not a serious competitor to you. the North American Industry Classification System (NAICS) code. NAICS sector b.4 percent of the Wendy’s bar shown as prospects may be worth detailed thought. b. statistical area e. But the 56. forecast sales to a consumer market. get around gatekeepers and reach buyers. Burger King is closing in on your market share. segment an organizational market. 9-116 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Evergreen Air Center in Marana. The warm. 9-115 ORGANIZATIONAL MARKET SEGMENTATION COMPREHENSION Variables such as location. promote buyer loyalty.9-114 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. dry air where the operation is located serves as a cheap and effective airplane preservative. demographic. d. c. nonprospects may be the best segment to go after to increase Wendy’s sales. and number of employees are all examples of ways to a. area density d. e. the information in Figure 9-5 suggests a. segment a consumer market. 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. and behavioral bases. Which organizational segmentation variable might Evergreen use to segment the market? a. your restaurant is a market leader. These adults use the product category (fast food) but do not go to Wendy’s. b. e. 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. Airlines pay from $750 to $5.000 a month for its storage service. c. 160 .

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

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

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

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

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

b.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. whether the student lives near the campus or far away. c. d. 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). e. the meals eaten at the restaurant. whether the student has the discretionary income to eat at Wendy’s. combining the factors of where the student lives and when (s)he is on campus. whether the student is a faculty or staff member. The best way to describe how the student market is segmented is by a. 166 .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

statistical inference. and making the final forecast. technological forecast c. b. a. experimental estimation. lost-horse forecast b. Delphi forecast e. jury of executive opinion b. lost-horse forecast. linear trend extrapolation. 188 . 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. statistical method e. c. d. 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. survey of buyers' intentions forecast.9-191 LOST-HORSE FORECAST KNOWLEDGE A __________ involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future. a. e. This is an example of a a. trend extrapolation d. technological c. listing the facts that could affect the forecast. Delphi d. assessing whether they have a positive or negative impact. 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 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. 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. she knew the person who was talking was planning to use a __________. trend extrapolation d. a. 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 . lost-horse forecast b. I think sales will increase next year by 5 percent. lost-horse forecast b. a. All those things are positive. Delphi e. 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. and makes the final forecast.9-194 LOST-HORSE FORECAST APPLICATION When a marketing student overheard the following comments. trend extrapolation c. trend extrapolation d. technological forecast c. “We're increasing TV advertising. Delphi forecast e. lists factors that could affect the forecast.” a. 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. So on balance. lost-horse d. technological forecast c. we're going to increase prices across the board by 20 percent. and adding 3 new product models. The Ohio River Boatworks uses the __________ method of forecasting. technological b. Delphi forecast e. adding some sales representatives. But on the negative side. assesses whether they have a positive or negative impact.

judgments of individuals b.750. 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. This is an example of a __________ forecast.000 for the quarter. lost-horse Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—survey of buyers' intentions forecast 9-198 SALESFORCE SURVEY FORECAST KNOWLEDGE A __________ forecast involves asking the firm’s sales people to estimate sales during a coming period. salesforce survey d. 190 . judgments of individuals b. statistical method e. a. a. technological c. jury of executive opinion c. survey of experts e. jury of executive opinion b. 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. survey of experts e. survey of buyers' intentions d. 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.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. the forecast is set at $4. a. Based on this information. jury of executive opinion c. salesforce survey d.

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

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

9-206 VIDEO CASE: ROLLERBLADE APPLICATION The 4D™ refers to an innovative. Rollerblade is implementing a __________ strategy with its innovative skate technology. 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 extrapolation c. to help consumers perceive the product as being different and better than competing products. 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. 193 . product sampling b. usage segmentation. product differentiation d. such as product features and advertising. a.

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

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

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

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

organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic. usage rate. 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. demographic or behavioral segments. Product features.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. Page: 237 LO: 4 LL: 2 AACSB: 3 198 . In a complete marketproduct grid analysis. and awareness/intentions are similar to the consumer market variables used for segmentation and may also be used to segment organizational markets. each cell in the grid can show the estimated market size of a given product sold to a specific market segment.S. 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.

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

246 LO: 6 LL: 2 AACSB: 3 COMPREHENSION 9-225 SURVEYS OF KNOWLEDGEABLE GROUPS What are the two common groups surveyed to develop sales forecasts? Describe the information contained in the forecasts that result. Page: 246 LO: 6 LL: 2 AACSB: 3 200 . this can be effective. 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. For industrial products with few prospective buyers. companies obtain three types of data from consumers. Answer: Survey of buyers' intentions asks prospective customers whether they are likely to purchase a specific product during a specified future period of time.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. They are: (1) identification of the important attributes for a product class (2) judgments of existing products or brands with respect to these attributes (3) ratings of an "ideal" product’s or brand's attributes Page: 244 LO: 5 LL: 2 AACSB: 3 COMPREHENSION 9-224 MARKET POTENTIAL AND SALES FORECAST Differentiate between market potential and sales forecast. Salesforce survey forecast asks the firm's salespeople to estimate product sales during a specified future period of time since they are in close contact with their current and prospective customers. Sales forecast is also known as company forecast. 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. Answer: Market potential is also known as industry potential. 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.

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

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